On Monday, State Sen. Larry Stutts argued that Certificate of Need (CON) laws waste health care resources in Alabama and called for reform.
I remember running into this issue early in my legal career. In 2015, the Alabama Court of Civil Appeals released an opinion in HealthSouth of Alabama, LLC v. Shelby Ridge Acquisition Corp. Health care providers wanted to build a rehabilitation facility in Shelby County. The problem was that they had a lot of administrative hoops to jump through before they did, especially complying with CON laws. The frustrated Court of Civil Appeals wrote:
“The complex, frustrating, and costly procedural histories of these appeals arise from an administrative process required to be followed before a demonstrated health-care need can be met. We are required by current law to conduct a judicial review of the administrative decisions, applying standards provided by the legislature. We cannot change the applicable statutes or rules promulgated pursuant to those statutes, and we must apply the legislatively required standard of review to the facts.”
You can tell the court thought the CON laws were bad law. Nevertheless, it felt bound to apply them because courts are not at liberty to change the law.
Judge Thomas put it more poignantly in a concurring opinion, urging “the legislature to consider repealing the legislation” creating the planning agency and requiring health care providers to get Certificates of Need:
“Allowing free-enterprise competition to control the decisions of the health-care providers to build facilities and add additional health services will, in my opinion, prevent such a huge waste of time and resources and will, in the end, result in the provision of quality health services at the price the market will bear as determined by the health-care consumer.”
Thomas’ concurrence should have been framed and posted in the halls of the legislature. I agree with her and Stutts that the legislature should reconsider the law. However, I also think there is a constitutional case against CON laws that could be tried as we wait on the legislature.
Since the early 20th century, the U.S. Supreme Court has held that the 14th Amendment requires any law a state passes to bear a rational relationship to a legitimate state interest. In plain English, this means that the Constitution forbids absolutely arbitrary laws. They must both serve an objective that the government may lawfully pursue, and the means must make a minimal level of sense.
Reasonable minds, of course, can differ on whether a law makes sense. That’s what a legislature is for: the people’s representatives need to consider multiple reasonable ways to address a problem, picking the course of action they think is best. The fact that there might have been a better way to solve the problem does not mean a law is unconstitutional.
But a law that makes absolutely no sense at all is another matter.
So in this case, the question is whether CON laws have any kind of rational relationship to a legitimate state interest. The law’s purported interests are (1) providing quality care, (2) continuity of care, and (3) reasonable costs to the consumer. No reasonable person can argue that these laws have helped keep costs down.
The question also must be asked whether these laws could reasonably ensure quality care and continuity of care. It seems that if people need health care, the thing to do is let the doctors take care of people. And as Thomas observed, the free market can do a lot more to weed out bad health care providers than a torturous Certificate of Need process can do on the front end.
What really may be going on here, as Stutts told 1819 News, is that the people with Certificates of Needs want to keep the process. Why? Because it keeps new competitors out of the field. However, multiple federal circuit courts have held that protecting people in business from new competition is not a legitimate state interest. In other words, if the only reason you have a law is to protect the good-ol’-boy-network from new competitors, then that’s unconstitutional.
If health care providers are already spending a ton of money on legal fees dealing with CON laws, then they may as well take a shot at the one legal argument that would make the entire problem go away. Both the medical industry and the people of Alabama would benefit if it succeeds.
Matt Clark is the President of the Alabama Center for Law and Liberty, a conservative nonprofit law firm that fights for limited government, free markets, and strong families in the courts. His column appears every Friday in 1819 News. The opinions expressed in this column are those of the author. The views and opinions expressed here are those of the author and do not necessarily reflect the policy or position of 1819 News. To comment, please send an email with your name and contact information to Commentary@1819News.com.
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