Home Local News Lawsuit challenging medical regulation encounters setback

Lawsuit challenging medical regulation encounters setback

RALEIGH — A surgeon fighting state restrictions on medical equipment lost a court battle Friday, Jan. 9, when Superior Court Judge Gregory McGuire dismissed his specific complaints and sent his broader constitutional challenge before a three-judge panel.

Dr. Gajendra Singh can’t give his patients affordable MRI scans because Certificate of Need laws allow the state to decide who gets to provide medical services, and who doesn’t.

Singh is trying to strike down the state’s CON law as monopolistic and unconstitutional. McGuire’s decision will set his case back at least half a year, but his lawyers hope to turn the setback to their advantage.

Singh’s case has the potential to radically transform state laws. Overthrowing the CON regime would break open the supply of medical treatments — shattering state caps on medical equipment, hospital beds, and facilities. Even loosening the restrictions could unleash far-ranging effects.

The nature of those consequences depends on who’s talking. Singh’s Institute for Justice attorney Josh Windham calls CON laws “flat bans on competition.” Along with the Federal Trade Commission and the John Locke Foundation, he says CON laws hurt patients by creating crony monopolies and driving up costs. Hospitals contend CON laws control costs by preventing over-treatment.

“Not only is it unconstitutional and violates the rights of North Carolinians like Dr. Singh, it directly harms patients and taxpayers by making health care more expensive and less accessible,” said Jon Guze, John Locke Foundation director of legal studies.

CON laws are obscure, but their power showed itself in the courtroom. Some eight lawyers filled the room for the first hearing, cracking jokes about the presence of thousands of dollars’ worth of attorneys.

Windham was outnumbered three to one. The hospitals’ lawyers sat at the table with the state’s attorney and huddled to discuss strategy.

Windham’s client faces similar odds.

To get an MRI scanner, Singh would have to poach a CON from Novant Health or Wake Forest Baptist Medical Center — who boasted roughly $3 billion and $1.3 billion, respectively, in unrestricted reserves in 2019. They hold all the CONs for Forsyth County’s 17 MRI scanners, and are currently wrestling over the newest 2019 CON.

“I have no doubt that his odds of getting an MRI against those two companies, once they’ve decided to knock him out, is zero,” McGuire said in court.

Singh’s case became tangled in semantics. The legislature, in an attempt to protect their laws from unfriendly judges, required broad constitutional challenges to go before a specially appointed three-judge panel.


Singh’s lawyers tried to dodge that three-judge panel and its backlog of cases. Singh’s case has dragged on for more than a year already, and Windham expects the panel to add another year to the fight.

But McGuire worried making a decision would disable that safety measure, allowing judges to go on constitutional rampages. Ultimately, he decided to send them before the panel.

“The legislature, they don’t like a single judge,” McGuire said. “Three together is slightly better, because you don’t get one running in a single direction or a rogue judge changing our laws.”

The hospital attorneys argued CON reform belongs in the legislature, not in the courtroom. The legislature has tried, and failed, to reform CON laws for years.

The N.C. Supreme Court threw out CON laws once before, when the law was first created in the 1970s. But the legislature has since shielded CON laws with “findings of fact” arguing CON laws protect patients. Decades later, the hospital systems’ attorneys still used those arguments, saying CON laws spread health care to rural areas, combat over-treatment, and protect patient safety.

“With some of these types of high-end equipment, you need a certain level of expertise to operate them at a quality level,” attorney Ken Burgess, who represents the N.C. Healthcare Association, told Carolina Journal. “When you start spreading them all over the place, without any regulation, you don’t have the volume at each site of each piece of equipment to make the professionals operating the equipment as proficient as needed.”

Windham disagrees. He blames CON laws for sky-high medical costs. Unlike providers such as Singh, hospitals can charge patients facility fees, or charges that can force patients to pay thousands of dollars for a scan.

“There’s no difference relevant to the health or safety of the public between the provider who has a CON down the street and Dr. Singh — except that Dr. Singh has less money,” Windham said.

Windham plans to appeal the judge’s decision to dismiss Singh’s applied claims. This could push his specific complaints to the state Supreme Court without waiting for his broader constitutional challenge.

“The only issue the court has to worry about is the narrow question of whether Dr. Singh should have to get a CON to buy an MRI machine here,” Windham said. “It opens up a can of worms for the court if they have to figure out whether the CON law in its entirety should be struck down. …This works in our favor because it narrows the scope of the inquiry the court has to deal with.”

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