North Carolina’s Health Care Regulatory Law Faces Major Challenge

North Carolina’s Certificate of Need (CON) law, which requires state approval before new health care services can be offered, is facing a crucial legal battle. This lawsuit, originally filed in 2020 by New Bern ophthalmologist Jay Singleton, could potentially strike down the law entirely.

Singleton’s case stems from his desire to perform outpatient eye surgeries at his clinic. However, the North Carolina Department of Health and Human Services (NCDHHS) determined that there was no need for additional surgical facilities in his area, denying his CON application. Singleton is now challenging the constitutionality of the entire CON law.

In October, the North Carolina Supreme Court sent the case back to a lower court for a "facial" constitutional challenge. This means a ruling in Singleton’s favor could overturn the CON law statewide, rather than just impacting his specific situation. UNC Law Professor Richard Saver emphasized the potential impact, stating, “What’s significant about the Supreme Court case…is if plaintiffs are successful, instead of just an incremental change and scaling back of the law, it would throw out the law altogether. That would be monumental.”

Data on the effects of repealing CON laws in other states is often inconclusive, according to Saver. He suggests that areas with numerous competing healthcare facilities would likely see continued competition if the CON law were abolished in North Carolina. This could lead to lower prices and encourage potential new providers to carefully evaluate market conditions before entering. However, communities with only one or two providers might experience increased competition.

Professor Saver highlights another concern, arguing that repealing the CON may negatively impact rural communities.

"Certainly, we’ve seen some interesting battles in Orange County and the Triangle,” Saver said. “I like to joke with my students that if you think Duke-UNC basketball games are tough, you should see when the Duke Health System and UNC Health System battle over a certificate application.”

Currently, the CON system incentivizes healthcare providers to establish facilities in underserved rural areas.

The outcome of Singleton’s case will have significant repercussions for the North Carolina healthcare landscape. It remains to be seen whether the CON law will stand or be overturned, ushering in a new era for healthcare access and competition in the state.