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CON Fight Continues With a New Court Challenge to Restrictive Medical Law
Publisher's note: This post appears here courtesy of the Carolina Journal, and written by Julie Havlak.
A surgeon's challenge to make health care more affordable for his patients is another casualty of the coronavirus. But another surgeon has carried on the fight, suing to overturn the certificate of need laws that restrict the supply of health care in North Carolina.
Surgeon Dr. Gajendra Singh sued to dismantle the CON laws that prevented him from giving affordable MRI scans to his patients for a transparent, upfront price. But his imaging center folded under financial pressure from the coronavirus, social distancing measures, and the CON laws themselves. His lawsuit collapsed with his practice.
But the fight against CON laws isn't over. Ophthalmologist Dr. Jay Singleton is suing to overturn state controls on who can own medical equipment and facilities. He argues that CON laws are monopolistic and unconstitutional. The case could put the first crack in CON laws in decades.
Lawmakers won't take up CON reform until late July, says Joyce Krawiec, R-Forsyth.
Singleton's patients pay thousands of dollars more for their surgeries because CON laws largely forbid him from operating in his clinic.
North Carolina ranks fifth among the nation's most restrictive CON regimes.
Singleton can remove cataracts for less than $1,800 in his office. The local hospital CarolinaEast charges almost $6,000 for the facility fee alone, the lawsuit says. In the Triangle area, that same procedure ranges from roughly $1,400 to $12,758, depending on its setting.
Singleton's crusade against CON laws began when his patients told him they couldn't afford to pay $12,000 for cataract surgery.
"That was when I awoke to the injustice here," Singleton said. "Some people couldn't afford to have a basic surgery that would keep them driving, doing what they like to do, even seeing their grandkids. These patients didn't have any escape valve. There's no competition to drive the prices down."
Some of his patients have delayed surgery for years because they can't afford hospital prices. CON laws block Singleton from operating in the office.
"Patients tell me, 'I can't wait until I get old. When I turn 65, I can actually have this surgery. Right now, I have some money saved away, but there's no way I can spend $12,000 on this surgery,'" Singleton said. "You have a lot of patients out there waiting to turn 65, for something that can take five minutes."
For those who can get surgery, CON laws mean they have to move locations during the process. Singleton must keep his laser machine in his office, but he has to move patients to the hospital after using the laser.
"They have to get up off the operating table, into a wheelchair, into a family members' car, and drive to the surgery center to finish the surgery," Singleton said. "And there is no reason at all to do this except the CON and it's rigid enforcement by the hospital systems. It's a huge waste of time and resources."
Getting CON permission can cost more than $400,000, and the process exposes CON applications to incumbent providers, including competitors. The 25 members of the N.C. State Health Coordinating Council represent hospitals, academic medical centers, nursing homes, insurers, lawmakers, businesses, and others. Health systems have waged legal battles over CON permission, and Singleton says he can't afford to apply.
"It's like being invited to a wedding in India tomorrow," Singleton said. "They can say they invited you, but you can't go. You can only get that certificate if you're a hospital."
CON laws weren't developed as quality controls. When Congress pushed states into adopting CON laws, the intention was to suppress the cost of health care by restricting its supply and thereby preventing overtreatment.
The federal government has since flatly rejected CON laws. The Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission have blasted CON.
"CON laws can be subject to various types of abuse, creating additional barriers to entry, as well as opportunities for anti-competitive behavior," one report warns. "They undercut consumer choice, stifle innovation, and weaken markets' ability to contain health care costs."
The N.C. Supreme Court struck down the first iteration of CON laws for "establishing a monopoly" in 1973, but the legislature has since protected the laws with "findings of fact," arguing the laws protect the supply and affordability of health care.
"North Carolina's CON law has nothing to do with protecting the health or safety of real patients," Singleton's lawsuit says. "Banning Dr. Singleton from offering surgeries to all patients at his clinic serves one purpose only: protecting established providers from competition."
The lawsuit faces opposition. The constitutional challenge of Singleton's predecessor, Singh, remained mired in procedural purgatory for more than a year. His lawyer was outnumbered three-to-one during a hearing, when some eight lawyers joked that there were thousands of dollars' worth of attorneys in the courtroom.
"There's so many parallels. Here we have an entrepreneur trying to expand his business, but he can't," said Jordan Roberts, John Locke foundation health care policy analyst. "These regulations are artificially restricting the supply and raising the prices. Everyone loses - except for the people who have the CON."
Lawmakers won't be able to tackle CON reform when they come back next week for the short session. They expect only to pass consensus legislation and allocate federal funding for the crisis, says Krawiec.
"Hopefully, we'll be dealing with it at a later date," Krawiec said. "One thing that this pandemic has shown is that CON restrictions prevent access during a pandemic."
Singh lost his imaging center, but his attorneys with the Institute of Justice say they will continue to challenge CON laws as unconstitutional.
"Dr. Singh's situation is more a casualty of the CON law than the virus," said Joshua Windham, attorney for the Institute for Justice. "The CON law prevented Dr. Singh from keeping his imagining center alive, but it can't stop Dr. Singleton from keeping his challenge alive. A protectionist law that thrives on destroying those who challenge it can't survive forever."
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Photo: Julie Havlak/Carolina Journal
A surgeon's challenge to make health care more affordable for his patients is another casualty of the coronavirus. But another surgeon has carried on the fight, suing to overturn the certificate of need laws that restrict the supply of health care in North Carolina.
Surgeon Dr. Gajendra Singh sued to dismantle the CON laws that prevented him from giving affordable MRI scans to his patients for a transparent, upfront price. But his imaging center folded under financial pressure from the coronavirus, social distancing measures, and the CON laws themselves. His lawsuit collapsed with his practice.
But the fight against CON laws isn't over. Ophthalmologist Dr. Jay Singleton is suing to overturn state controls on who can own medical equipment and facilities. He argues that CON laws are monopolistic and unconstitutional. The case could put the first crack in CON laws in decades.
Lawmakers won't take up CON reform until late July, says Joyce Krawiec, R-Forsyth.
Singleton's patients pay thousands of dollars more for their surgeries because CON laws largely forbid him from operating in his clinic.
North Carolina ranks fifth among the nation's most restrictive CON regimes.
Singleton can remove cataracts for less than $1,800 in his office. The local hospital CarolinaEast charges almost $6,000 for the facility fee alone, the lawsuit says. In the Triangle area, that same procedure ranges from roughly $1,400 to $12,758, depending on its setting.
Singleton's crusade against CON laws began when his patients told him they couldn't afford to pay $12,000 for cataract surgery.
"That was when I awoke to the injustice here," Singleton said. "Some people couldn't afford to have a basic surgery that would keep them driving, doing what they like to do, even seeing their grandkids. These patients didn't have any escape valve. There's no competition to drive the prices down."
Some of his patients have delayed surgery for years because they can't afford hospital prices. CON laws block Singleton from operating in the office.
"Patients tell me, 'I can't wait until I get old. When I turn 65, I can actually have this surgery. Right now, I have some money saved away, but there's no way I can spend $12,000 on this surgery,'" Singleton said. "You have a lot of patients out there waiting to turn 65, for something that can take five minutes."
For those who can get surgery, CON laws mean they have to move locations during the process. Singleton must keep his laser machine in his office, but he has to move patients to the hospital after using the laser.
"They have to get up off the operating table, into a wheelchair, into a family members' car, and drive to the surgery center to finish the surgery," Singleton said. "And there is no reason at all to do this except the CON and it's rigid enforcement by the hospital systems. It's a huge waste of time and resources."
Getting CON permission can cost more than $400,000, and the process exposes CON applications to incumbent providers, including competitors. The 25 members of the N.C. State Health Coordinating Council represent hospitals, academic medical centers, nursing homes, insurers, lawmakers, businesses, and others. Health systems have waged legal battles over CON permission, and Singleton says he can't afford to apply.
"It's like being invited to a wedding in India tomorrow," Singleton said. "They can say they invited you, but you can't go. You can only get that certificate if you're a hospital."
CON laws weren't developed as quality controls. When Congress pushed states into adopting CON laws, the intention was to suppress the cost of health care by restricting its supply and thereby preventing overtreatment.
The federal government has since flatly rejected CON laws. The Antitrust Division of the U.S. Department of Justice and the Federal Trade Commission have blasted CON.
"CON laws can be subject to various types of abuse, creating additional barriers to entry, as well as opportunities for anti-competitive behavior," one report warns. "They undercut consumer choice, stifle innovation, and weaken markets' ability to contain health care costs."
The N.C. Supreme Court struck down the first iteration of CON laws for "establishing a monopoly" in 1973, but the legislature has since protected the laws with "findings of fact," arguing the laws protect the supply and affordability of health care.
"North Carolina's CON law has nothing to do with protecting the health or safety of real patients," Singleton's lawsuit says. "Banning Dr. Singleton from offering surgeries to all patients at his clinic serves one purpose only: protecting established providers from competition."
The lawsuit faces opposition. The constitutional challenge of Singleton's predecessor, Singh, remained mired in procedural purgatory for more than a year. His lawyer was outnumbered three-to-one during a hearing, when some eight lawyers joked that there were thousands of dollars' worth of attorneys in the courtroom.
"There's so many parallels. Here we have an entrepreneur trying to expand his business, but he can't," said Jordan Roberts, John Locke foundation health care policy analyst. "These regulations are artificially restricting the supply and raising the prices. Everyone loses - except for the people who have the CON."
Lawmakers won't be able to tackle CON reform when they come back next week for the short session. They expect only to pass consensus legislation and allocate federal funding for the crisis, says Krawiec.
"Hopefully, we'll be dealing with it at a later date," Krawiec said. "One thing that this pandemic has shown is that CON restrictions prevent access during a pandemic."
Singh lost his imaging center, but his attorneys with the Institute of Justice say they will continue to challenge CON laws as unconstitutional.
"Dr. Singh's situation is more a casualty of the CON law than the virus," said Joshua Windham, attorney for the Institute for Justice. "The CON law prevented Dr. Singh from keeping his imagining center alive, but it can't stop Dr. Singleton from keeping his challenge alive. A protectionist law that thrives on destroying those who challenge it can't survive forever."
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