Certificate of Need Laws Suffer Another Broadside
Commissioners Christine S. Wilson and Noah Joshua Phillips of the Federal Trade Commission (“FTC”) used a recent FTC enforcement action challenging a hospital acquisition as an opportunity to issue a statement (“Statement”) broadly condemning the existence of Certificate of Need (“CON”) laws. Despite acknowledging that the CON process incorporates an “extensive application” requiring applicants to “justify the need” for the increase (or decrease in many cases) of the provision of services, and that “state regulators rightly weigh a variety of interests, including public health, safety, and security,” the Statement labels CON laws as categorically harmful “because they prevent health care providers from responding quickly to meet market demand.” In addition, the Statement condemns efforts by health care providers to lobby against a competitor’s CON application, and justifies relatively recent additions to FTC orders that prohibit such conduct.
Advocating for the inclusion of a review of potential competitive effects in the CON process has merit, but arguing that CON laws should be abolished because they impede providers from responding quickly to market demands, particularly in the context of a challenge to a hospital transaction, does not. Most states with CON laws generally have the ability to expedite consideration of a CON application, particularly in the presence of exigent circumstances, such as the recent pandemic.
Finally, forcing providers to relinquish their rights under the First Amendment to petition the government (including the immunity from antitrust actions judicially affirmed under the Noerr-Pennington doctrine) is a sanction often disconnected from the conduct under investigation, and provides fodder to critics who rail against the federal intrusion into the state regulatory process.