Supremes asked to kill state rules that prevent people from earning a living

A judge on an appeals court said a state health-care law was outrageous, but he still was bound by it, until and unless the Supreme Court changes things around.

That’s why officials with the Institute for Justice have appealed to the high court a dispute over a state certificate of need law.

Those are rules set up in states that provide for the protection of existing businesses against newcomers.

They are established in a variety of areas, for example preventing investors from opening a new hospital if existing hospitals say they are adequate for the needs of the community and don’t want competition.

A report from the organization explained this fight is over a CON law regarding health care in Louisville, Kentucky.

The report commented that the problem with CON laws is they “let large health care companies effectively monopolize certain health services and prevent people from exercising their right to earn an honest living.”

This fight is over home health care providers who speak Nepalese.

“Dipendra Tiwari saw an urgent need for Nepali speakers to receive home health care from providers who understood their language and culture. With thousands of Nepali immigrants living in the Louisville area, he hoped to open a modest business that would employ nurses and health aides qualified to offer services to both the Nepali community and anyone else needing quality care in their homes,” the IJ reported.

The Kentucky CON law, however, killed the plans.

Specifically, the report said, “Dipendra’s CON application was formally opposed by the $2 billion Baptist Health conglomerate, which operates its own home health agency. After Dipendra, his business partner Kishor Sapkota and the Institute for Justice (IJ) sued, the Kentucky Hospital Association intervened to defend the law and protect its members from new competition.”

The law was affirmed at the 6th U.S. Circuit Court of Appeals – providing protections for existing corporations against newcomers, but the ruling did include a comment about whether the Supreme Court should rethink the problem.

“Many thoughtful commentators, scholars, and judges have shown that the current deferential approach to economic regulations may amount to an overcorrection,” the ruling said.

So the IJ has appealed to the Supreme Court for a review.

“Everyone has the right to earn an honest living, and your competitors should not get to stop you from opening a new business,” IJ Attorney Andrew Ward explained in the report. “One appellate judge called the law outrageous at oral argument but ruled he couldn’t do anything under the current legal standard. The Supreme Court has the power to change that.”

The IJ said Dipendra came to the U.S. in 2008, got his MBA and works as a CPA.

“The CON application process does not consider whether existing providers are doing a good job or whether a new entrant might offer innovative or niche services. And existing home health agencies, many of which are attached to large hospital companies, can shut out competitors from the market. Providers that have a CON are more easily allowed to expand their services, ensuring that the state’s calculations never show that a new home health agency is needed,” the IJ reported.

The CON laws stem from a 1970s movement to try to control costs.

“However, after a decade of experience, it became apparent that the laws were not working as policymakers intended. The federal government dropped the requirement. But with the encouragement of existing health care providers, many states kept their CON laws on the books. Currently, 18 states require a CON to open a home health agency,” said the IJ.

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