Virginia doctors filed a federal lawsuit Tuesday claiming the state’s restrictive regulations favor established health care providers and deter interstate competition. The doctors are challenging the state’s Certificate of Public Need rule, which requires doctors to prove there is a need for the services they intend to provide before they can get government approval.
The rule is intended to limit health care costs by preventing medical providers from creating duplicative services. Thirty-six states and the District have such requirements.
But Robert McNamara, an attorney with the Institute for Justice, which is working with the doctors on the lawsuit, said the Certificate of Public Need requirements make it difficult for doctors to expand their practices or buy equipment. One medical provider involved in the lawsuit, Progressive Radiology, said it spent five years and $175,000 trying to open an office in Virginia only to be rejected by the state.
“The only benefit the process has is a benefit for local private interests. It directs more money into the pockets of established businesses,” McNamara said. “The way we usually decide if a business is needed is we let the business open and we see if it attracts any customers. And if it isn’t needed, then it won’t attract customers and then it will close.”
A Virginia Department of Health spokeswoman said only that the department administers the program as required by law.
But McNamara said there is little evidence that the requirements achieve their stated goals of keeping down health care costs.
“In fact, they do the opposite of that,” he said. “We have decades of experience with certificate of need laws, and the evidence clearly shows that they don’t accomplish anything good for the public.”
The Institute for Justice, a libertarian public interest law firm, has sued over a variety of issues from property rights to school choice. The group is now asking the U.S. District Court in Alexandria to declare Virginia’s Certificate of Public Need requirements unconstitutional and ban the practice. And it doesn’t plan to stop with Virginia.
“Virginia is by far one of the worst offenders,” McNamara said. “We are starting with Virginia, but I think other states that have this kind of policy, other states considering imposing or expanding this kind of policy should take notice. … Virginia is a start.”
