Georgia Supreme Court upholds Certificate of Need laws

October 16, 2017 GMT

ATLANTA — The Georgia Supreme Court on Monday upheld the constitutionality of the state’s certificate of need statutes and regulations when medical facilities are built or expanded.

The case stems from a challenge of the state’s CON laws by a women’s surgical center in Cartersville that wanted to expand its facility.

According to facts of the case from the Georgia Supreme Court, Women’s Surgical Center LLC, known as the Georgia Advanced Surgery Center for Women, provides outpatient surgical services in Cartersville. In 2014, the owners decided to add a second operating room to create opportunities to contract with other surgeons who could use the center in connection with their medical practices.

On June 30, 2015, the center and its owners sued the commissioner of the Department of Community Health and the department’s health planning director, seeking “declaratory” relief — asking the trial court to declare as unconstitutional the state’s statutes and regulations that govern the CON program because it restrains competition, economic liberty and consumer choice. The center and its owners also sought injunctive relief to prevent the state from requiring the center to get a CON before expanding its facility.

In August 2015, DCH filed a motion to dismiss the center’s complaint, arguing the center had failed to exhaust administrative remedies before filing a lawsuit and therefore lacked standing to bring its declaratory action. The trial court denied DCH’s motion.

In September 2016, the center and the department each filed motions requesting that the court grant summary judgment. In an October 2016 order, the trial court rejected all of the center’s constitutional challenges and granted summary judgment to DCH.

The center and its owners appealed to the state Supreme Court. In a cross-appeal, DCH appealed the trial court’s denial of its motion asking the court to dismiss the suit.

The high court, in the opinion written by Presiding Justice Harold D. Melton, rejected the cross-appeal, saying the center had standing to pursue a declaratory judgment because it faced threat of an injury that is “actual and imminent, not conjectural or hypothetical.”

The Supreme Court, however, also rejected the center’s claims that the CON process violates the Anti-Competitive Contracts Clause of the Georgia Constitution and that the CON statute violated its right to due process under the state and U.S. constitutions. The General Assembly established Georgia’s CON program in 1979.

“By its plain terms, [the CON statute] does not authorize monopolistic ‘contracts’ relating to providers of new institutional health services,” the court opinion says. “It only requires that all such providers obtain a certificate of need before adding new services.”

As for due process violations, the Supreme Court opinion says if the challenged laws have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, under previous Georgia Supreme Court rulings, which have found that promoting quality health care services is a legitimate legislative purpose.

“This decision put profits over patient care. Georgia hospitals can still use the certificate of need bureaucracy to veto new options for care,” Jim Manley, one of the Goldwater Institute attorneys who filed the case, said in a news release Monday. “Bureaucrats will continue to restrict access to quality care.”

The Goldwater Institute represents Drs. Hugo Ribot and Malcolm Barfield, OB-GYN surgeons who own the Cartersville medical facility. The law firm said the DCH turned down a CON application from Women’s Surgical Center, saying that because the center isn’t already used every day, there was no need to allow other doctors to use the facility or to add another operating room. The Supreme Court said that previous CON application was not part of the case decided Monday.

“In states that have done away with certificate of need laws, we see greater access to lower-cost, higher-quality care,” Manley said. “Georgia deserves better, and we will continue to fight for health care freedom.”

In a footnote, the Supreme Court emphasized that “this is a case about the General Assembly’s ability to regulate health care,” and noted there are few other private sector markets so dominated by government regulation, particularly federal regulation, as health care.

“Nothing in today’s opinion should be understood to support sweeping economic regulation of this sort beyond this unique context,” the footnote says.