Trial Court Upholds Virginia’s “Certificate of Monopoly” for Medical Facilities

J. Justin Wilson
J. Justin Wilson · October 27, 2014

Arlington, Va.—On Thursday, October 23, a federal judge ruled that Virginia’s prohibition on medical providers from doing business in the Commonwealth, without first getting approval from the State Health Commissioner, is constitutional.

Challenging the prohibition are two qualified medical providers who want to invest their own money to offer safe and uncontroversial medical imaging services, specifically CT and MRI services, in Virginia. However, Virginia’s certificate-of-need (or CON) program makes it illegal for them and others to do so without first persuading the State Health Commissioner that their proposed services will be “needed” in an administrative process that can take several years and cost hundreds of thousands of dollars.

U.S. District Judge Claude Hilton ruled Thursday that Virginia’s CON program “does not have a discriminatory effect on interstate commerce and any burden it imposes on interstate commerce does not outweigh its putative local benefits.” In so ruling, the court ignored the mountains of evidence produced showing the burdens imposed by Virginia’s CON program. For example, Virginia’s CON program results in keeping $100 million of medical imaging equipment from being imported into the Commonwealth.

The medical professionals challenging the CON program and their public-interest lawyers at the Institute for Justice vow to appeal Judge Hilton’s ruling.

“The evidence shows that CON programs like Virginia’s have predictable results: fewer choices and higher prices for patients,” said Institute for Justice Senior Attorney Robert McNamara. “Most states don’t have a CON program for inexpensive medical equipment, and more than a dozen states don’t have any medical CON requirements at all. There is no evidence Virginia’s program accomplishes anything other protecting the business.”

Complying with Virginia’s CON requirement can be as costly as the imaging equipment sought to be purchased and imported into Virginia. Worse, existing medical facilities are allowed to oppose CON applications in a process that can resemble full-blown litigation. Frequently the process results in new services being forbidden from being offered in the Commonwealth at all.

IJ clients participating in the lawsuit include Dr. Mark Baumel, a physician and entrepreneur who is trying to bring an innovative colon-cancer screening and treatment service to Virginia, and Dr. Mark Monteferrante, the head of Progressive Radiology, a team of Virginia-licensed radiologists who are barred by the law from opening an office to treat their patients in the state.

“Under our Constitution, courts are required to engage with actual facts and look at real evidence when deciding about citizens’ constitutional rights,” said McNamara. “We intend to appeal this ruling, and we look forward to presenting this overwhelming evidence to the court of appeals in Richmond.”

“Virginia’s CON program is nothing more than the government’s permission slip to compete, amounting to a certificate of monopoly for favored established businesses,” said IJ Attorney Darpana Sheth. “When private citizens want to invest in innovative and effective healthcare services, the last thing the government should be doing is stopping them.”

For more on the ongoing lawsuit, visit Founded in 1991, the Virginia-based Institute for Justice is the nation’s leading legal advocate for economic liberty.