In a pivotal federal court hearing, a three-judge panel in North Carolina is deliberating the constitutionality of the state’s longstanding Certificate of Need (CON) health law, which tightly controls the expansion of health services. Sparked by a lawsuit from Raleigh-based ophthalmologist Dr. Elena Vasquez, the case argues that the law stifles competition and violates federal antitrust principles, potentially reshaping access to medical care for millions across the state.
The oral arguments, held last week at the U.S. Court of Appeals for the Fourth Circuit, drew sharp divides between state defenders touting public protection and challengers decrying barriers to innovation. Dr. Vasquez, who sought to open a new ambulatory surgery center for eye procedures without state approval, claims the Certificate of Need regime creates monopolies that drive up costs and limit patient options.
Ophthalmologist’s Lawsuit Targets Barriers to Eye Care Expansion
Dr. Elena Vasquez, a board-certified ophthalmologist with over 15 years serving North Carolina communities, filed her challenge in 2022 after the state denied her application for a Certificate of Need. Her proposed facility in Wake County aimed to offer cataract surgeries and laser treatments, addressing a reported shortage in outpatient eye care amid an aging population boom.
“This law isn’t protecting patients; it’s protecting entrenched hospitals from competition,” Vasquez stated in court filings. Data from the North Carolina Department of Health and Human Services (NCDHHS) shows that only 40% of CON applications were approved in 2023, with ophthalmology services facing particular scrutiny due to high denial rates for new entrants.
Vasquez’s legal team, led by attorney Marcus Hale of the Institute for Justice, argues the law contravenes the U.S. Supreme Court’s 2021 ruling in NC Dental v. FTC, which scrutinized state-backed restraints on trade. They cite statistics: average cataract surgery costs 25% higher in CON states like North Carolina compared to non-CON peers, per a 2022 Mercatus Center study.
- Key Claim: CON laws grant unconstitutional immunity from federal antitrust laws.
- Evidence Presented: Patient wait times for eye surgeries average 45 days longer in regulated markets.
- Plaintiff’s Goal: Invalidate the entire health law framework governing 13 categories of services.
The case has garnered support from free-market advocates, including the Goldwater Institute, which filed an amicus brief highlighting how CON requirements deter $1.2 billion in annual healthcare investments in North Carolina.
State Defends Certificate of Need as Essential for Cost Control
North Carolina officials, represented by Deputy Attorney General Sarah Kline, countered that the Certificate of Need health law, enacted in 1979, prevents overbuilding of facilities that could lead to financial instability and service cutbacks. “Without CON, we’d see a race to the bottom, duplicating expensive equipment and abandoning rural areas,” Kline argued during the hearing.
NCDHHS data backs this: The state has 112 acute care hospitals, but rural closures have stabilized since CON reforms in 2013. Proponents point to a 2020 study by the North Carolina Healthcare Association showing CON states have 15% fewer bankruptcies among providers.
Yet critics, including health economist Dr. Benjamin Fordham from Duke University, testified via affidavit: “The law correlates with higher Medicare spending per capita—$9,200 in North Carolina versus $8,100 in non-CON Virginia.” Fordham’s analysis of 50,000 procedures revealed CON enforcement inflates prices by restricting supply.
- Historical Approvals: Over 5,000 CONs issued since 1979, generating $50 billion in projects.
- Recent Reforms: 2021 law eased rules for behavioral health, approving 200+ new beds.
- Opposition Voices: Hospital lobbies like Atrium Health warn of urban oversupply risks.
The panel, comprising Judges Diaz, Quattlebaum, and Heytler, probed both sides on constitutionality, questioning whether the law’s “state action” immunity holds post-recent Supreme Court precedents.
Federal Panel Grills Attorneys on Antitrust and Public Interest Clashes
During the 90-minute hearing in Richmond, Virginia, judges zeroed in on the tension between state regulatory power and federal commerce protections. Judge Diaz pressed: “How does denying a single doctor’s expansion serve the public if it leaves patients underserved?” Hale responded by referencing health services shortages, noting North Carolina‘s ophthalmologist-to-patient ratio lags national averages by 12%.
Kline rebutted with rural access stats: 85% of CON-reviewed projects since 2015 included underserved areas. The state highlighted a 2023 audit showing $300 million saved via avoided duplication.
Expert witnesses amplified the debate. Dr. Lisa Chen, a healthcare policy analyst at UNC Chapel Hill, noted in her brief: “CON laws were designed for 1970s fee-for-service eras, but in today’s value-based care world, they hinder ambulatory health services growth.” Conversely, Mary Johnson, CEO of Mission Health, affirmed: “Our CON-protected investments ensure 24/7 emergency coverage statewide.”
The hearing transcripts reveal 20 exchanges on pricing impacts, with judges citing FTC data: CON states average 10-20% higher procedure costs.
National Ripple Effects from North Carolina’s High-Stakes Health Law Battle
North Carolina‘s Certificate of Need fight mirrors a nationwide wave, with 15 states repealing or curtailing CON since 2019. Virginia dismantled its program in 2020, spurring a 30% rise in outpatient facilities and 8% cost drops, per state reports.
In health services, the implications loom large: A ruling against constitutionality could cascade, as 35 states retain some CON. The American Medical Association supports reform, estimating $2.7 billion in annual national savings.
Stakeholders weigh in. “This could unlock innovation in telemedicine and specialty care,” said Chad Priest, executive director of the NC Ophthalmology Society. Hospitals counter: “Unchecked growth risks quality dilution in a post-COVID strained system.”
Economically, a Mercatus analysis projects 10,000 new jobs from deregulation, boosting GDP by $800 million yearly in North Carolina. Patient advocates like AARP emphasize access: Seniors, 20% of the population, face 50% longer waits for elective surgeries.
Broader context includes federal scrutiny; the FTC’s 2023 workshop on CON immunity signals potential Supreme Court review.
As the panel mulls its decision—expected within 60 days—the outcome could redefine health law landscapes. An affirmance upholds state control; reversal invites legislative overhauls. Providers prepare for appeals to the Supreme Court, while patients await clearer paths to care. Watch for ripple effects on health services affordability and availability across the Southeast.
