By The Carolina Journal

State Treasurer Brad Briner and the State Employees Association of North Carolina support a New Bern eye surgeon's lawsuit challenging the state's certificate-of-need health care restrictions.
Briner and SEANC filed court documents this week urging a three-judge panel to reject state government's motion to dismiss Dr. Jay Singleton's lawsuit.
Briner's office oversees the State Health Plan. His brief argues that the CON law "raises costs and diminishes access" to health care in North Carolina.

State Treasurer Brad Briner and the State Employees Association of North Carolina are supporting a New Bern eye surgeon’s ongoing challenge of the state’s certificate-of-need health care restrictions.

Briner and SEANC filed a joint brief this week siding with Dr. Jay Singleton in his lawsuit against state health regulators. The brief specifically asked the three-judge panel overseeing the case to reject state government’s efforts to have the lawsuit dismissed.

The panel is scheduled to hear arguments in the case on Nov. 18 in Raleigh.

The brief filed Wednesday explained that Briner is interested in Singleton’s case because the treasurer’s office oversees the State Health Plan serving 750,000 active and retired state employees. Nearly all of SEANC’s 42,000 members are also members of the State Health Plan.

“In Treasurer Briner’s view, Dr. Singleton has properly alleged that the Certificate of Need (‘CON’) law has an improper purpose and is not a reasonable means of achieving even its asserted purpose,” Briner’s lawyers wrote. “This Court should deny Defendants’ motion to dismiss Plaintiffs’ complaint and permit this action to proceed to discovery.”

“Although the CON law’s stated purpose is to lower healthcare costs while increasing access, the CON law’s actual purpose is to protect institutionalized and incumbent healthcare providers at the expense of would-be competitors, those who need healthcare, and taxpayers,” according to the brief.

“Further, even assuming the CON law’s stated purpose is its actual purpose, the CON law is not a reasonable means of achieving that purpose,” Briner’s lawyers added. “Rather than lowering healthcare costs and improving access to healthcare, the CON law has the opposite effect — it raises costs and diminishes access. In addition, the CON law effectively prohibits new providers from entering the market, imposing a draconian burden. Thus, in the Treasurer’s view, Plaintiffs’ complaint alleges colorable claims under both the Fruits of Their Own Labor Clause and the Law of the Land Clause of the North Carolina Constitution. The Treasurer therefore supports Dr. Singleton’s contention that this Court should deny Defendants’ motion to dismiss.”

Three self-described CON scholars also submitted a brief Wednesday supporting Singleton’s case. Thomas Stratmann and Matthew Mitchell of the Mercatus Center at George Mason University joined Christopher Koopman of the Abundance Institute.

“When reinstating North Carolina’s CON program in 1977, the General Assembly outlined findings of fact, claiming the program would control costs, increase quality, regulate utilization, and ensure geographic distribution of new health service facilities,” according to the scholars’ brief. “These goals offer several different ways to measure the effectiveness of the CON program. The empirical evidence shows, however, that none of the intended goals have been achieved.”

“New peer-reviewed causal evidence confirms that North Carolina’s CON regime restricts access especially in rural areas without offsetting benefits,” the three scholars added.

“Contrary to the promised outcomes, CON intervention in the health care marketplace has undermined the Legislature’s goals,” the brief added. “Research reveals that CON laws limit patient access to health care, increase costs, and reduce the overall quality of services provided.”

The John Locke Foundation, which oversees Carolina Journal, filed a friend-of-the-court brief Wednesday urging trial judges to reject state government’s efforts to dismiss the case. Singleton filed a separate brief also opposing the state’s motion to dismiss his suit.

Meanwhile, the North Carolina Department of Health and Human Services filed a competing brief arguing against Singleton’s motion for summary judgment in the case. A group of hospital systems and health organizations supported DHHS.

“Unlike a professional or facility license, a CON does not regulate health or safety,” Singleton’s lawyers wrote. “Instead, whether a provider can obtain a CON turns entirely on whether a state agency projects a ‘need’ for more services — a decision that depends, at root, on whether there are already providers serving that region.”

“Put differently: Whether a new provider can enter the market depends on whether old providers got there first,” the brief continued. “Plaintiff Dr. Singleton is a case in point. He wants to perform surgeries in his own operating room at far better prices than those offered at the only other nearby option: CarolinaEast hospital. But the CON law bans Dr. Singleton from doing that — precisely because CarolinaEast got there first and the state has never declared a ‘need’ for new services.”

The state’s motion “fails on every front,” Singleton’s lawyers argued.

Singleton argues that the state’s CON requirements violate his state constitutional rights by limiting his ability to perform most eye surgeries at his New Bern vision center. DHHS defends the CON law against Singleton’s complaint. The case involves a “facial” constitutional challenge.

“First, in order to successfully mount a facial challenge, Plaintiffs must prove that the CON Law is unconstitutional in all of its applications,” DHHS’ lawyers wrote. “If the law is found to be constitutional in any instance, then Plaintiffs claims fail. Second, it is within the General Assembly’s province alone to determine the policy of the State and the courts have determined that enactment of the CON Law falls squarely within the General Assembly’s ordinary police powers to regulate public health. Finally, Defendants will show that Plaintiffs’ claims are erroneous and it is Defendants – and not Plaintiffs – who are entitled to judgment as a matter of law.”

Atrium Health, Cape Fear Valley Health System, the North Carolina Healthcare Association, the North Carolina Health Care Facilities Association, the Association for Home and Hospice Care of North Carolina, the North Carolina Senior Living Association, and Bio-Medical Applications of North Carolina filed a joint brief supporting state regulators.

“The Legislature found that the CON Law is necessary to improve healthcare quality and access while decreasing costs,” lawyers representing the health care groups wrote. “Plaintiffs seek to have the entire CON Law declared unconstitutional based on unsupported (and very as-applied) assumptions that they could not obtain a CON for a single service — an ambulatory surgical facility — in a single county — Craven. Plaintiffs do not even attempt to address the numerous other CON-regulated services and 99 other counties in their ‘facial’ constitutional challenge. Their arguments fail as a matter of law.”

A unanimous state Supreme Court ruled in October 2024 that Singleton could move forward with his lawsuit. That decision reversed lower courts that had ruled against Singleton.

Judges Jeffery Foster of Pitt County, Jacqueline Grant of Buncombe County, and Troy Stafford of Iredell County will hear oral arguments in Singleton’s case this month. Foster and Stafford are Republicans. Grant is a Democrat. Supreme Court Chief Justice Paul Newby, a Republican, appointed the panel.

Singleton filed a motion on Aug. 25 for partial summary judgment in the case. The court filing reserved Singleton’s right to argue at a future date that the CON law is unconstitutional “as applied” to the particular facts of his case. An as-applied challenge would proceed before a single trial judge.

The state Supreme Court’s October 2024 decision revived Singleton’s complaint that state government violates his constitutional rights by blocking him from performing most eye surgeries at his own facility.

In an unsigned unanimous four-page opinion, the court directed the case back to a trial court.

At the trial level, justices said the court must take into account two unanimous state Supreme Court decisions. One dealt with claims that Kinston engaged in racial discrimination when choosing which city properties to condemn. The other involved Ace Speedway’s claim that state officials violated the Alamance County racetrack owners’ rights when targeting the track for a shutdown during the COVID-19 pandemic.

Health care providers must secure a CON from state government before building or expanding facilities or purchasing more expensive medical equipment.

Singleton argues that North Carolina’s CON regime forces him to direct his patients to a nearby hospital, CarolinaEast, for most surgeries. The hospital holds the region’s only CON. Singleton says that arrangement proves more expensive and less convenient for patients.

“Plaintiffs brought claims alleging that the Certificate of Need law violates their rights under the Monopolies Clause, Exclusive Emoluments Clause, and Law of the Land Clause of the North Carolina Constitution,” according to the state Supreme Court opinion. “Plaintiffs described their constitutional claims as ‘as-applied’ challenges in the complaint. Both the trial court and the Court of Appeals accepted plaintiffs’ characterization of these claims and evaluated the claims as as-applied challenges.”

“[W]e conclude that plaintiffs’ complaint asserts both facial and as-applied challenges,” Supreme Court justices wrote.

A facial constitutional challenge targets a law in its entirety. The plaintiff asserts that there is no circumstance in which a court could uphold the law as constitutional. An as-applied challenge asserts only that the targeted law is unconstitutional when considering the facts of a particular plaintiff’s complaint.

“Here, plaintiffs’ complaint alleges facts that could undermine the Certificate of Need law’s constitutionality far beyond the particular circumstances of these plaintiffs,” according to the Supreme Court opinion. “Indeed, in their supplemental briefing, plaintiffs acknowledge that, should they prevail, the ‘need for relief that extends beyond [plaintiffs] will likely arise here’ and ‘will likely entail facial relief.’”

“We agree. The complaint contains allegations that, if proven, could render the Certificate of Need law unconstitutional in all its applications,” Supreme Court justices wrote.

Labeling the case both a facial and as-applied challenge is a “crucial determination,” justices wrote. State law requires facial challenges to go before a three-judge Superior Court panel. Singleton had argued his case initially before a single trial judge.

“Because the trial court and the Court of Appeals mistakenly treated plaintiffs’ claims exclusively as as-applied challenges, we vacate the decision of the Court of Appeals and remand this matter to the Court of Appeals with instructions to vacate the trial court’s judgment and remand for further proceedings,” Supreme Court justices ordered.

“Because we vacate the decision of the Court of Appeals on this basis, we need not address plaintiffs’ challenges to that decision asserted in the briefing before this Court,” Supreme Court justices added. “However, for the benefit of the trial court on remand, we disavow the Court of Appeals’ jurisdictional analysis concerning the exhaustion of administrative remedies and direct the trial court to this Court’s recent decisions in Askew v. City of Kinston … and Kinsley v. Ace Speedway Racing, Ltd.”

Singleton cited the Ace Speedway ruling in a September 2024 filing with the state Supreme Court. His lawyers wrote that the Ace Speedway ruling served as an “additional authority” supporting the surgeon’s legal arguments.

“The court’s decision in Kinsley reaffirms that in North Carolina, economic liberty matters,” Joshua Windham of the Institute for Justice told CJ. Windham helps represent Singleton. “The court held that when the state restricts our right to earn a living, we can use evidence, under the fruits of their labor clause, to show the restriction is not ‘reasonably necessary’ to protect the public. That’s exactly the same test the court applied in 1973 when it struck down the state’s first certificate of need law under the law of the land clause.”

“Why does that matter? It means that courts can’t dismiss challenges to economic laws just because government lawyers utter the words ‘public health,’” Windham said. “It means that the state’s supposed reasons for destroying your business aren’t gospel; you can challenge them with facts and show that — in the real world — the law isn’t meaningfully serving the public.”

The John Locke Foundation and constitutional law scholar John Orth filed an earlier friend-of-the court brief supporting Singleton in November 2023.

Link to original article - https://www.carolinajournal.com/treasurer-state-employees-group-back-challenge-to-nc-con-law/

Treasurer, state employees group back challenge to NC CON law

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