RALEIGH — The North Carolina Supreme Court delivered a unanimous opinion in a case involving the state’s certificate-of-need laws on Oct. 18.
North Carolina certificate-of-need (CON) laws require a provider to obtain such a certificate before adding “new institutional health services” in a wide range of health care settings, including buying equipment, adding beds and more. Obtaining a CON is not cheap either, with a minimum filing fee of $5,000 and a maximum of $50,000.
A lawsuit by Dr. Jay Singleton, an eye doctor in New Bern, argued that CON laws prevent him from buying the equipment he needs for certain services, which in turn allows him to provide more affordable services to his patients compared to the local hospital. In his initial filing, Singleton said he could perform cataract surgery for $1,800 with the proper equipment CON laws are barring him from obtaining compared to the $6,000 the local hospital charges for the procedure.
Singleton’s attorneys have argued that the CON law violates the law of the land clause, the anti-special privileges clause and the anti-monopoly clause of the state constitution.
The Supreme Court determined that Singleton’s complaint asserts both facial and “as-applied” challenges to the CON law, contrary to earlier rulings by both the trial court and N.C. Court of Appeals. The court stated that Singleton’s allegations, “if proven, could render the CON law unconstitutional in all its applications.”
The Supreme Court’s order essentially resets the case, allowing Singleton’s constitutional challenge to proceed by sending it back to the trial court for additional proceedings to address whether the CON law violates the North Carolina Constitution’s law of the land, anti-monopoly and exclusive-privilege clauses.
The high court also directed the trial court to consider two recent unanimous Supreme Court decisions: Askew v. City of Kinston and Kinsley v. Ace Speedway Racing, Ltd.
Due to the facial challenge aspect, the case has to be heard by a three-judge Superior Court panel.
“As ‘keeper of the public purse’ and having responsibility for nearly 750,000 members of the State Health Plan, I am very pleased with the Court’s decision,” North Carolina State Treasurer Dale Folwell said in a statement applauding the Supreme Court’s order. “We spend $4 billion a year of taxpayers’ money providing medical and pharmaceutical coverage for those that teach, protect and otherwise serve the people of this state.
“CON laws are exactly what they sound like — a con,” said Folwell. “Every year the hospital cartel, through the North Carolina Healthcare Association, prevents any meaningful change to CON laws. Now, we have an opportunity for the courts to finally recognize that these laws are unconstitutional.”
Folwell filed an amicus curiae brief in support of Singleton’s lawsuit in August 2022 concurring with Singleton’s assertion that CON law violates multiple sections of the North Carolina Constitution.
“CON laws create insurmountable barriers to entry that shield existing institutional healthcare providers from competition,” Folwell’s brief states. “In turn, the accessibility, quality, and affordability of healthcare decreases while profits dramatically increase, to the detriment of North Carolinians.
According to a recent Forbes Advisor article, North Carolina is the 10th-worst state in the nation for health care access and the most expensive state for family coverage with a $7,180 average annual premium and $4,061 annual average deductible.
The conservative John Locke Foundation says CON laws stifle competition, assert too much government control, and may increase costs rather than reduce them. It is backing Singleton and his lawsuit.
North Carolina Healthcare Association will likely be the big opponent to changes in the state’s CON laws and have CON laws as one of its top advocacy issues on its website, which includes two 2021 videos about “Why Repealing CON is devastating for North Carolina’s rural hospitals.”
