Certificate of need law will be tested in court 

Dr. Gajendra Singh at his Forsyth County imaging practice. Provided by Institute for Justice.

RALEIGH — A trial court is allowing Forsyth County doctor Gajendra Singh’s case challenging the state’s controversial “certificate of need” laws to proceed. A late November ruling denying the state’s motion to dismiss the case moves Singh once step closer in his constitutional challenge. Singh and other opponents of certificate of need laws, which control who can operate certain medical equipment, have tried for years to get the rules repealed, saying allowing more health providers in the market would open up competition and lower costs.  

The state’s motion to dismiss argued that Singh needed to apply for a CON before challenging the process. The judge’s denial of this motion gives Singh standing to sue, allowing the case to proceed.  

“The injury itself is the entire CON application process,” Josh Windham, an Institute for Justice attorney who represents Dr. Singh, told NSJ. “Requiring someone to apply for a CON in the first place is the injury. It would make no sense to make him suffer that injury before he could challenge it.” 

The hospitals, organized through the North Carolina Healthcare Association, are the main opposition to ending the CON laws. Cody Hand, senior vice president of advocacy and policy at NCHA, told NSJ, “The fact that he never even tried to get a CON is troubling to me — that anybody that hasn’t been harmed can proceed with a lawsuit.” 

Hand and NCHA argue that because of money lost in indigent care, hospitals need areas to make up the difference, and CON laws help them do that.  

“Hospitals are required under federal law to do a lot of services that nobody else is required to do,” Hand said. “As long as we live in an environment where we have to treat anybody who walks in our door, and can’t even refer them for better care, we need the CON law to make sure we have the resources available and the providers available to treat those patients.”  

“I understand the position the hospitals are in,” Windham said. “The entire market is incredibly regulated. But the solution to overregulation when it burdens one part of the market isn’t to shackle everybody else. It’s to make the lives of hospitals easier on the regulatory side, so that they’re not having to lobby legislatures to tamp down on additional competition.” 

Dr. Singh brought the lawsuit after a CON board determined there was no need for another MRI machine in his area, preventing him from purchasing one for his imaging practice. For a while, he used a loophole in the law that allowed him to rent a mobile MRI. But after realizing a single year of renting would cost him more than purchasing an MRI machine, Singh decided to take the issue to court.  

Sen. Joyce Krawiec, a Republican state legislator who represents Forsyth County, where Singh’s practice is, has been leading the charge to repeal CON for years.  

“I would absolutely love for Dr. Singh to win his case, because I don’t think we’ll ever get a full repeal unless the court decides we can,” Krawiec told NSJ. “The hospitals are just so powerful, and I just can’t get the support from my colleagues to get it done [legislatively].”  

Krawiec said after six editions, her latest attempt at CON repeal “fell apart” this session. “We even put it in the budget, but then the governor vetoed that,” Krawiec said.  

She said she still hopes to get some form of CON passed before the 2019-2020 session is over. 

“It’s not surprising,” Windham said of the legislative attempts at repeal failing. “It seems like a CON bill is under consideration every year in North Carolina, and every year, like clockwork, the hospitals are able to convince legislators to keep the monopoly in place. But that’s why we felt the need to litigate this matter, because legislative reform is going nowhere.”  

For a year and a half, the case didn’t seem to make much progress, but with this latest decision by the judge, opponents of CON see a new hope for repealing the regulations. 

“We are very excited that our lawsuit will continue,” said Dr. Singh said in a statement on IJ’s website. 

Singh’s lawyer, Windham, agreed in calling the decision exciting. “It’s an exciting thing that the trial court decided to deny the government’s motion to dismiss here, because what it’s saying is that whether it’s going to be over the next couple weeks or the next few months, this case is finally going to move forward.” 

Krawiec will be watching closely, saying she is “pulling for him.”  

“He will make my job so much easier,” Krawiec said of her attempts to repeal CON. “If Dr. Singh wins his case that would be a wonderful step towards lowering health care costs.” 

At the moment, Windham said there is confusion over what the next steps for Singh’s case will be. He said the two sides are debating which venue will be more appropriate and then, sometime in December, will likely send the court a “motion for clarification” on where the case will proceed.  

Windham says if they don’t hear back by early 2020, they plan to ask for the case to be scheduled in their current venue and to proceed with discovery. 

“At some point it becomes a miscarriage of justice if you are just waiting around in a procedural wormhole,” Windham said. 

The case, Singh v. NCDHHS, was originally filed July 31, 2018 in the Wake County Superior Court.