ATLANTA– The state’s attorney is calling for the dismissal of a lawsuit filed by two doctors challenging Georgia’s long standing and controversial Certificate of Need (CON) law.
The two Georgia gynecological surgeons from Cartersville who co-own the Georgia Advanced Surgery Center for Women (GASC) claim that the current CON law hampers free market competition and violates the state’s constitutional provisions which prohibits the state from protecting monopolies.
Georgia’s CON laws are complex and are accompanied by cumbersome regulation set by the state’s Department of Community Health (DCH) that determine if a need exists for a given medical service in communities across the state
Dr. Hugo Ribot and Dr. Malcolm Barfield of Cartersville have a very busy OB/GYN practice where they deliver hundreds of babies annually and perform non-emergent minimally invasive laproscopic procedures at their ambulatory surgical center along with hysterectomies, cystoscopies as well as surgery for pregnancy complications that once required multi-day hospital admissions, but now are done in same-day time. As a result of the physician’s hectic schedules, simultaneous deliveries often makes their single operating room available for use by other surgeons.
Making the operating room at GASC available to other surgeons to assist with covering overhead cost. Also, adding on a new operating room would have increased profitability and access to patient care in a timely manner without much wait. Also, the surgery center has a “Center of Excellence”quality rating from the American Association of Gynecological Laparoscopists’s certification division for advanced surgical techniques and rigorous safety standards. In addition, they have competitive pricing with area hospitals that provide similar services.
However, the two doctors are the only surgeons allowed to operate in their own operating room and are prevented from allowing other surgeons to utilize it because GASC is operating under a CON exemption known as a “Letter of Non-reviewability” or “LNR.” The LNR mandates that no other surgeons are allowed to use the center or join the practice without approval from the state.
Drs. Ribot and Malcolm had to apply for a Single Specialty CON, which cost $1000 and 200 hours of time in addition to tens of thousands of dollars in consultant fees to properly fill out applications just for the DCH to consider allowing an additional operating room, which would increase efficiency. However, after local hospitals complained that allowing an additional operating suite at the facility would introduce competition and that duplicative services would be harmful, the Department of Community Health denied their application for a Single Specialty CON.
According to the Goldwater Institute, the state’s denial of a Specialty CON encourages a cartelized and monopolized healthcare system in Georgia:
The rationale for this decision was that GASC was not already being used at capacity; therefore there was no need for additional surgeons to use the facility, or to add a second operating room to provide more scheduling flexibility. According to the bureaucrats in charge of enforcing the CON laws, allowing more doctors and patients to use GASC “would not have a positive impact on the health care delivery system in the service area.”
The denial prompted the lawsuit to challenge Georgia’s CON law claiming that the General Assembly is violating its own “Monopoly Clause” of the state’s constitution. The suit further claims that the state has a long tradition of protecting it citizens from state created monopolies. Specifically, the constitution’s “Monopoly Clause” provides 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, which is hereby declared to be unlawful and void. [Article III, Section VI, Paragraph V(c)(1)].
The lawsuit also challenges that the CON law violates additional clauses in the Georgia’s Constitution as well as the U.S. Constitution to include “the Privileges and Immunities Clause of the Georgia Constitution; the Due Process Clause of the Georgia Constitution; the Fourteenth Amendment Due Process Clause of the United States Constitution; and the Fourteenth Amendment Privileges or Immunities Clause of the United States Constitution” according the Goldwater Institute.
The Response for Dismissal
According to the Atlanta Business Chronicle, Olens defends the state law by asking Fulton County Superior Court to throw out the claim because the plaintiff’s had not exhausted the appeals process set forth by the Department of Community Health. The Attorney General asserts in defense of the CON law by quoting the expressed intent of the General Assembly is to “promote public health, safety and welfare” by exercising its “police powers” to accomplish this legislative intent.
Further defending arguments of the CON law from Olens include:
“Health care services and facilities should be provided in a manner that avoids unnecessary duplication of services, that is cost effective, that provides quality health care services, and this is compatible with the health care needs of the various areas and populations of the state. A system of mandatory review of new or expanded health services or facilities is a reasonable way to achieve the express purpose of the CON program.”
The CON law has had numerous opponents over the years, and it has been well defended by the powerful hospital lobby in Georgia. The Georgia Hospital Association has been a long standing supporter of the state’s CON law and is watching the suit closely.
A renewed battle to scrap Georgia’s CON law was triggered again this year with the introduction of new legislation for its repeal. State Representative David Stover (R- Newnan) introduced a bill during the 2015 legislative session to repeal the CON after the Department of Community Health denied Vest Newnan its CON to build a psychiatric and substance abuse hospital. But Vest Newnan challenged the denial and was granted a CON after Superior Court Judge Emory Palmer ruled the denial was “inextricably tied to the Department’s unconstitutional need analysis.”
Rep. David Stover (R-Newnan) said that the state attorney’s reasoning to uphold Georgia’s CON law was based on the erroneous assumption that it promoted the general welfare of Georgians.
Stover remarked, “It is interesting to me that the same AG that stated ‘the states have no rights under the 10th Amendment, as proven by the Civil War,’ would quote the 10th Amendment’s Rights of the States in this situation. CON does not promote ‘public health, safety and general welfare,’ instead it creates a direct correlation between the increase in cost of health care and the lack of access to care.”
“The United States implemented the CON laws to increase access to rural healthcare, then ruled the laws to be against the Anti-Trust laws of the country when they discovered that it did not, in fact, increase care but rather decreased access and created a cartel type of situation. One hospital can enter a region and control every single aspect of the access to care for the region while blocking out all competitors. CON is unconstitutional and has been ruled as such in Vest Newnan v. Georgia Department of Community Health,” concluded Stover.
- AJC. Doctors sue to topple law regulating Georgia health industry growth. June 30, 2015
- Goldwater Institute. Women’s Surgical Center v. Reese. June 30, 2015.
- Mercatus Center. Certificate-of-Need Laws: Implications for Georgia. March 31, 2015
- Atlanta Business Chronicle. Olens Seeks to Dismiss CON Law Challenge. Aug. 21, 2015
- Times-Herald. Certificate of Need Ordered for Newnan Behavioral Hospital. May 21, 2015