Virginia provision upheld in rule seen as restrictive by doctors

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Virginia Attorney General Kenneth T. Cuccinelli’s office has successfully defended a provision in the state’s health care law that doctors claim is unconstitutional, stifles business and drives up health care costs.

A group of doctors unsuccessfully argued that the state’s Certificate of Public Need provision violates the Commerce Clause and the 14th Amendment of the U.S. Constitution. The provision forbids medical professionals from offering certain new services or purchasing certain types of equipment without first getting an official go-ahead from the state Department of Health.

But U.S. District Judge Claude M. Hilton’s 25-page opinion rejected the plaintiffs’ argument, saying they had failed to “plausibly plead a claim upon which relief may be granted.”

Darpana Sheth, an attorney at the Institute for Justice, which argued the case, said the group is evaluating whether to appeal and added that the opinion includes “very cursory treatment” of the group’s Commerce Clause claims. The Arlington-based group, founded in 1991, describes itself as “the nation’s leading legal advocate for economic liberty.”

“It doesn’t seem like much thought was put into the opinion,” she said. “The court’s opinion basically precludes anyone from bringing a claim.”

A spokesman for Mr. Cuccinelli said his office was always confident the law was constitutional and was gratified the court agreed.

“The plaintiffs failed to state a claim because they were wrong about the law, which is what the court ruled,” said Brian Gottstein. “The judge rejected all of the plaintiffs’ claims as a matter of law.”

Congress passed a law in 1974 requiring states to adopt certificate-of-need programs to receive certain federal health care subsidies, but it was repealed in 1986 after the federal government changed the Medicare and Medicaid reimbursement system to fee-for-service, in which hospitals receive a given amount of money per patient regardless of the cost of services.

In 2004, the Federal Trade Commission and the U.S. Department of Justice issued a joint report reaffirming a 1988 FTC study that said such programs serve as barriers for new health care providers and encourage hospitals to use less efficient services and equipment.

Thirty-five states, plus the District, have certificate-of-need” requirements.

According to the Virginia Department of Health, the program is intended to contain health care costs and avail the entire state of reasonably priced health care. Criteria for a Certificate of Public Need includes the relationship of the project to the state’s long-term health goals, the need for enhanced facilities to serve the population of a given area, and the extent to which the project is accessible to all residents in that area.

Ms. Sheth said she thought there was “a little disconnect” on Virginia’s part, considering Mr. Cuccinelli’s challenge to President Obama’s health care overhaul. The Institute for Justice joined a friend-of-the-court brief to argue against the federal health care law as well.

“When it comes to what the state of Virginia is doing, they seem to be turning a blind eye,” she said.

But Mr. Gottstein said in an email that the office was being entirely consistent because it was defending Virginia law in both cases.

“We argued in the Obamacare case that under existing constitutional doctrine, the mandate violated the Commerce Clause, and a majority on the Supreme Court agreed with us,” he wrote. “Here we also argued that under existing constitutional doctrine, that the law was constitutional, and the court agreed with us. We are entirely consistent: We argued in both instances to uphold existing constitutional doctrine.”

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