Thursday, October 24, 2013
The Fourth Circuit ruled in Colon Health Centers of America v. Hazel that two out-of-state medical providers alleged a sufficient challenge to Virginia's "certificate of need" requirement to survive a motion to dismiss. The court remanded the case for fact-finding on the dormant Commerce Clause question.
The court suggested that the requirement wouldn't ultimately survive. The case, when it comes back to the Fourth Circuit after remand, may be significant, if, as the concurrence says, "in Virginia, and throughout much of the country, state certificate of need regimens continue to grow and now regulate an enormous segment of the national economy." Op. at 27-28.
Virginia's certificate-of-need program requires medical providers that seek to launch a medical enterprise in the state to show a public need for the service that it seeks to offer. (Judge Wilson puts a finer point on it in dissent: "Plaintiffs would like to render medical services in Virginia with equipment they cannot utilize without first proving to the Commonwealth that the competition they bring with them will not harm established local health care providers.") The plaintiffs, two corporations that provide colon screening and treatment, alleged that the program violates the dormant Commerce Clause (among other constitutional claims, rejected by both the district court and the Fourth Circuit).
The court ruled that the plaintiffs alleged sufficient facts to survive a motion to dismiss and to trigger discovery and fact-investigation by the trial court. The court gave unusually specific directions to the trial court to find facts on the program's discrimination against interstate commerce in purpose and effect, recognizing that this fact investigation would also spill over into the lower-level balancing test under the dormant Commerce Clause for state laws that create an undue burden on interstate commerce.