RICHMOND, Va. (AP) - A Virginia law that requires government approval for new or expanded health care facilities is constitutional, a federal appeals court ruled Thursday.
A three-judge panel of the 4th U.S. Circuit Court of Appeals unanimously rejected a claim that Virginia’s “certificate of public need” program impermissibly interferes with interstate commerce.
“While we cannot say whether Virginia’s program is ultimately wise, it most certainly is constitutional,” Judge J. Harvie Wilkinson III wrote.
Virginia requires medical providers to prove to the State Board of Health that proposed new facilities, expansions or major equipment purchases are necessary in a geographic area. According to the appeals court, 36 states have similar programs.
Colon Health Centers of America and Progressive Radiology challenged Virginia’s law. U.S. District Judge Claude M. Hilton ruled against the plaintiffs, and the appeals court upheld Hilton’s decision.
“The program left in place by today’s ruling amounts to nothing more than a certificate of monopoly for favored established businesses, which comes at enormous cost to ordinary Virginians,” said Robert McNamara, a lawyer at the Institute for Justice who represented the plaintiffs.
McNamara said no decision has been made on whether to appeal to the U.S. Supreme Court. He said such a petition would be due April 20, and the General Assembly might take action on the issue before then.
The future of the certificate of public need program is being fiercely debated at the Capitol, where several Republican lawmakers have introduced bills that would curtail much of it. They argue hospitals have used certificate of public need laws as a way of unfairly shutting out competition and keeping health care costs high.
“COPN laws limit competition, which means fewer choices and higher costs for Virginia families,” said Del. John O’Bannon.
The powerful Virginia Hospital & Healthcare Association, however, supports keeping the current scheme mostly intact, saying certificate of public need laws help avoid unsustainable over-expansion of certain types of care and help offset the costs of providing charitable care. Hospitals argue they don’t operate in a free-market system and need certificate of public need laws to remain economically viable.
“Eliminating COPN would weaken many hospitals throughout Virginia by allowing new entrants to cherry pick and provide only the most profitable types of care, making the remainder of services a community needs - services that often operate at a loss - the full burden of the community hospital,” said Augusta Health CEO Mary N. Mannix.
Wilkinson said the arguments advanced by the program’s critics “overlook the fact that the health care market has its own idiosyncrasies,” such as patients who lack the normal incentives to shop for price, and providers whose price-setting practices are influenced by insurers, regulation and an obligation to provide indigent care at a loss.
“Many of the classic features of a free market are simply absent in the health care context, and that fact counsels caution when courts are urged to dismantle regulatory efforts to counter perceived gaps and inefficiencies in the healthcare market,” he wrote.
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Associated Press Writer Alan Suderman contributed to this report.
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