Georgia Supreme Court to hear arguments today in case involving two Cartersville physicians’ challenge of state’s Certificate of Need laws

Georgia Supreme Court to hear arguments today in case involving two Cartersville physicians’ challenge of state’s Certificate of Need laws

Dr. Hugo Ribot, Jr. (left) and Dr. Malcolm Barfield (right) are challenging the state’s Certificate of Need laws. (website photo)

 

A case involving Cartersville gynecologists, Dr. Hugo Ribot, Jr. and Dr. Malcolm Barfield and their Georgia Advanced Surgery Center for Women comes before the Georgia Supreme Court today. According to court documents in the case of Women’s Surgical Center, LLC vs. Berry, the doctors are appealing a Fulton County court ruling that rejects their constitutional challenges of Georgia laws that require them to obtain a Certificate of Need (CON) from the state before making and addition to their facility.

The Center has specific plans to contract with other doctors to use its facilities and to add an operating room, but the state’s CON law prevents the Center from doing so. They argue the state’s statutes and regulations that govern the certificate of need program are unconstitutional because they restrain competition, economic liberty, and consumer choice. In a previous ruling in October 2016, the trial court rejected all of the Center’s constitutional challenges and granted summary judgment to the Department of Community Health.

See entire court documents below:

WOMEN’S SURGICAL CENTER, LLC ET AL. V. BERRY ET AL. (S17A1317)

BERRY ET AL. V. WOMEN’S SURGICAL CENTER, LLC ET AL. (S17X1318)

FACTS: Drs. Hugo D. Ribot, Jr., and Malcolm Barfield are the co-owners of Women’s Surgical Center, LLC, which is known as The Georgia Advanced Surgery Center for Women. The Center provides outpatient surgical services in Cartersville, GA. In 2014, the owners decided to add a second operating room to its premises and contract with other surgeons who could then use the Women’s Surgical Center in connection with their medical practices. Under Georgia’s certificate of need statutes and regulations, to add to its facility, the Center first had to apply for, and be granted, a certificate of need by the Georgia Department of Community Health. The Georgia General Assembly enacted the statute in 1979 to “ensure that health care services and facilities are developed in an orderly and economical manner and are made available to all citizens” and that they “be provided in a manner that avoids unnecessary duplication of services, that is cost effective, that provides quality health care services, and that is compatible with the health care needs of the various areas and populations of the state.” The Center’s owners, however, believed the Center should not be subject to the certificate of need requirements. (They had previously been denied a certificate of need, although that denial is not at issue in the current appeal.) On June 30, 2015, the Center and its owners sued the Commissioner of the Department of Community Health (today Frank Berry) and the Department’s Health Planning Director, Rachel King. In their lawsuit, they sought “declaratory” relief – asking that the trial court declare as unconstitutional the state’s statutes and regulations that govern the certificate of need program because they restrain competition, economic liberty, and consumer choice. They also sought “injunctive” relief to prevent the State from requiring the Center to get a certificate of need before expanding its facility.

In August 2015, the Department filed a motion to dismiss the Center’s complaint, arguing among other things that the Center had failed to exhaust administrative remedies before filing a lawsuit in court. The trial court denied the Department’s motion. In September 2016, the Center and the Department each filed motions requesting that the court grant “summary judgment” to them. (A court grants summary judgment when it determines there is no need for a jury trial because the facts are undisputed and the law falls squarely on the side of one of the parties.) In an October 2016 order, the trial court rejected all of the Center’s constitutional challenges and granted summary judgment to the Department. The Center and its owners now appeal to the state Supreme Court. And in a cross-appeal, the Department appeals the trial court’s denial of its motion asking the court to dismiss the Center’s suit.

ARGUMENTS (S17A1317): The Center’s attorneys argue that the certificate of need laws violate the Georgia Constitution’s Anti-Monopoly Clause because they “forbid Plaintiffs from contracting with qualified doctors to allow them to use Plaintiffs’ state-of-the-art surgery center and to serve more patients, unless Plaintiffs effectively get permission from their own competitors.” This is the very definition of a monopoly, and it is forbidden by the Georgia Constitution. The state Supreme Court has struck down laws that impose anti-competitive contract terms similar to the certificate of need laws, the attorneys argue. The State’s enforcement of these laws “has caused a life-saving medical facility to sit idle, and has deprived patients of access to medical services, for no reason other than to protect existing medical providers from economic competition. That is a moral travesty, and it is unconstitutional.” The laws forbid them from adding a second operating room or from contracting with other doctors to use their facility. Doing either without a certificate of need “is punishable by ruinous fines of $5,000-$25,000 per day, based on the duration of the violation,” the Center’s attorneys argue. “Defendants enforce those penalties through offensive legal action.” The trial court erred, the attorneys contend, (1) in granting summary judgment to the Department and denying the Center’s motion for summary judgment; (2) in ruling that the certificate of need laws do not authorize any contracts or agreements and that the Georgia Constitution is limited to contracts and agreements; (3) in ruling that the Constitution’s Privileges and Immunities Clause is not intended to protect citizens from state-granted monopolies; (4) in ruling that the Center’s claims under the Constitution are subject to “the traditional rational basis test,” and that the “affected with a public interest” test is inapplicable, that “there is no evidence that the laws engage in price fixing or controls,” and that the laws survive scrutiny under the Georgia Constitution; and (5) that the laws survive rational basis review based on the Due Process Clause of the Fourteenth Amendment.

The State argues the certificate of need laws do not authorize anti-competitive contracts or agreements, and the superior court correctly granted the Department summary judgment on the Center’s claim on this issue. The Anti-Competitive Contracts Clause (which the Center erroneously refers to as the Anti-Monopoly Clause) states that the “General Assembly shall not have the power to authorize any contract or agreement which may have the effect of or which is intended to have the effect of encouraging a monopoly . . . [or] defeating or lessening competition.” This language is clear and unambiguous: It only prohibits the General Assembly from authorizing any anti-competitive contract or agreement. The Center’s erroneous reading of the Anti-Competitive Contracts Clause would transform a restriction on the authorization of anti-competitive contracts into a broad limitation of the General Assembly’s power to regulate commerce within the state. The certificate of need program is not an unreasonable restraint of trade because the General Assembly could reasonably conclude that a review-and approval process for new institutional health services helps to ensure access to quality health care services and control health care costs, the State argues. Also, the laws do not violate due process as they are rationally related to the legitimate purpose of making health care affordable and accessible. The principles of competition do not apply to the provision of health care services in the same manner as they do in other markets because there is limited competition between providers over price and quality. This lack of competition, combined with the presence of supplier-induced demand, leads to unnecessary duplication of services and rising health care costs. Certificate of need programs like Georgia’s address these concerns by requiring new providers to demonstrate, among other things, a genuine need for the services they intend to offer. Contrary to the Center’s claims, the due process arguments that it has advanced about these laws have been consistently rejected by the 11th Circuit and other courts across the country.

ARGUMENTS (S17X1318): In this cross-appeal, the State challenges the trial court’s failure to dismiss the case based on procedural grounds. The Center may not seek a declaratory judgment because there is no “actual controversy” between the parties and “the ends of justice” do not require a declaratory judgment. The Center does not have standing to challenge the constitutionality of the certificate of need laws because it has not shown it has suffered any injury. Also, because the Center is attempting to challenge an entire chapter of the Georgia Code and all of the regulations promulgated under that Chapter, it would have to have standing for each of the statutes and regulations challenged, which it cannot show. Indeed, many of the statutes and regulations involved in the certificate of need process do not even apply to the Center, e.g. specific review considerations for open heart services or psychiatric inpatient programs. Finally, to the extent that the Center is in fact challenging the denial of its own certificate of need application, under the Georgia Code, a person is not entitled to judicial review unless he has “exhausted all administrative remedies available within the agency and . . . is aggrieved by a final decision in a contested case.” “The fact that one basis, or even the sole basis, of a respondent’s complaint . . . is a constitutional attack, does not eliminate the necessity for agency review as a prerequisite to judicial review,” the State argues. The Center and its owners had 30 days to appeal the Department’s decision to deny their application, and they could have raised any constitutional objections they had in an administrative appeal hearing. They did not.

The Center’s attorneys argue that the Department’s ongoing enforcement of the certificate of need laws creates a controversy that is eligible for judicial review. “In order to challenge a statute or an administrative action taken pursuant to a statute, the plaintiff must normally show that it has interests or rights which are or will be affected by the statute or the action.” Here, the Center has specific plans to contract with other doctors to use its facilities and to add an operating room, but the Department’s enforcement of the certificate of need laws prevents the Center from doing this. The Center has standing to bring its claims because it is suffering an injury each day that these laws are enforced. Finally, the Center was not required to exhaust its administrative remedies because it is not challenging the denial of its own certificate of need application.

Attorneys for Appellants (Center): James Manley, Veronica Thorson, Glenn Delk

Attorneys for Appellees (State): Christopher Carr, Attorney General, Isaac Byrd, Dep. A.G., Daniel Walsh, Sr. Asst. A.G., Monica Sullivan, Asst. A.G., Forrest Pearce, Asst. A.G.

 

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