Comment
0
Tweet
0
Print
RSS Feeds

Suit challenges state health services regulation

Tuesday - 6/5/2012, 4:13pm  ET

By MATTHEW BARAKAT
Associated Press

ALEXANDRIA, Va. - Physician Mark Monteferrante wants to open up a radiology clinic in northern Virginia, but he's worried that the state of Virginia won't let him.

On Tuesday, Monteferrante, with the help of a prominent libertarian public interest law firm, filed a federal lawsuit challenging the laws that Virginia and many other states use to regulate what medical services can or cannot be provided in a particular area.

Virginia is one of 36 states that require certain health care providers to obtain a "certificate of need" before establishing operations. Such laws require an applicant first prove that there is a public need for the particular service in the area where a doctor or hospital wants to set up shop.

In reality, the laws inhibit competition and grant virtual monopolies to existing providers, according to the Arlington-based Institute for Justice, which filed the suit in U.S. District Court in Alexandria on Monteferrante's behalf.

"Their only purpose is to protect existing businesses from competition," institute lawyer Robert McNamara said of certificate-of-need laws like the one in Virginia.

At a time when the nation is arguing over how to provide better access to health care, McNamara said it's especially galling that laws such as Virginia's remain on the books. While such laws are justified on the notion that they help control costs by ensuring that facilities remain financially viable, McNamara said that argument defies basic economics: limiting the supply of any service increases the costs.

Maribeth Brewster, a spokeswoman for the Virginia Department of Health, declined to comment on the lawsuit, which was only filed Tuesday. According to annual reports produced by the health department, 80 to 85 percent of applications submitted have been approved in the past two years.

But Monteferrante said the onerous process of submitting an application scares off many from even seeking to apply. He said the deck is stacked in northern Virginia in favor of the dominant provider, Inova Health Systems. Monteferrante estimates it took him five years and cost $175,000 simply to obtain permission to add a second MRI machine to his practice.

His first clinic in Virginia, which he did not directly own, was bought out by a division of Inova, according to the suit. Now, Monteferrante is looking to establish his own facility, but he has no confidence that he can successfully navigate the certificate-of-need process.

It used to be that federal law required all states to have certificate-of-need laws, but that requirement was removed in 1986. Thirty-six states still have the laws, but some only regulate the placement of hospitals, according to the institute.

Virginia's law is particularly onerous, the lawsuit alleges, in both the breadth of medical services that are regulated, such as radiology clinics, and in the scrutiny applied to new applicants.

Darpana Sheth, another lawyer with the institute, said that certificate-of-need laws are rarely challenged in the courts. More often, applicants appeal denials through the administrative process. But she said some recent case law suggests a constitutional challenge can be successful. In recent years a federal appeals court struck down portions of a certificate-of-need law as it applied to pharmacies.

The institute argues that the laws are an unconstitutional restriction on interstate commerce. The group has filed a variety of lawsuits challenging regulatory barriers to employment. Recent challenges have attacked state laws requiring tour guides and yoga instructors to be certified.


(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)