Another Lawsuit Challening State Certificate of Need Laws – Virginia

On June 5, 2012, a lawsuit was filed in federal court in Virginia challenging the constitutionality of Virginia’s certificate of need (“CON”) law. This is the second recent lawsuit of its type challenging the constitutionality of state CON laws, and suggests an increased willingness of health care providers to challenge state CON laws following the relative success of the plaintiffs in the case of Yakima Valley Memorial Hospital v. Washington State Department of Health.

In the Yakima Valley case, the Ninth Circuit Court of Appeals reversed the ruling of the district court in favor of the hospital and sent the case back to the trial court to determine whether Washington’s CON law violated the dormant commerce clause. At issue in Yakima Valley is a provision of the Washington CON law which provides that state officials could only grant one CON to perform percutaneous coronary interventions (“PCIs”) for every 300 procedures needed in a given service area. The Yakima Valley case is set for trial later this year. (The Commerce Clause of the Constitution explicitly grants Congress the authority to regulate interstate commerce. As a corollary, the Commerce Clause implicitly limits the regulatory authority of the states – this is commonly referred to as the dormant commerce clause).

In the recently filed Virginia Case, Colon Health Centers of America v. Bill Hazel, two physician-practices filed suit claiming thatVirginia’s CON law also violated the dormant commerce clause. One physician practice was denied a CON to open colon screening clinics in Virginia, while the other seeks to avoid the “burdens, delays, and uncertainties of the state’s certificate of need process before opening new facilities inVirginia”. We will continue to monitor both cases and will provide updates as soon as they are available.

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