The following is an opinion summary on WOMEN’S SURGICAL CENTER, LLC ET AL. V. BERRY ET AL. (S17A1317) and BERRY ET AL. V. WOMEN’S SURGICAL CENTER, LLC ET AL. (S17X1318).
The Supreme Court of Georgia has upheld as constitutional Georgia’s statutes and regulations that require healthcare services to obtain a “certificate of need” from the State before building a medical facility or expanding one.
In today’s opinion, written by Presiding Justice Harold D. Melton, owners of a women’s surgical center have lost their appeal of a Fulton County court ruling that rejected their constitutional challenges of the laws requiring them to obtain a certificate of need before making an addition to their facility.
According to the facts of the case, Drs. Hugo D. Ribot, Jr., and Malcolm Barfield are the co-owners of Women’s Surgical Center, LLC, which is known as The Georgia Advanced Surgery Center for Women. The Center provides outpatient surgical services in Cartersville, GA. In 2014, the owners decided to add a second operating room to its premises to create opportunities for contracting with other surgeons who could use the Center in connection with their medical practices. Under Georgia’s certificate of need statutes and regulations, to add to its facility, the Center first had to apply for, and be granted, a certificate of need by the Georgia Department of Community Health. The Georgia General Assembly enacted the statute in 1979 to “ensure that health care services and facilities are developed in an orderly and economical manner and are made available to all citizens” and that they “be provided in a manner that avoids unnecessary duplication of services, that is cost effective, that provides quality health care services, and that is compatible with the health care needs of the various areas and populations of the state.” The Center’s owners, however, believed the Center should not be subject to the certificate of need requirements. (They had previously been denied a certificate of need, although that denial is not at issue in the current appeal.) On June 30, 2015, the Center and its owners sued the Commissioner of the Department of Community Health (today Frank Berry) and the Department’s Health Planning Director, Rachel King. In their lawsuit, they sought “declaratory” relief – asking that the trial court declare as unconstitutional the state’s statutes and regulations that govern the certificate of need program because they restrain competition, economic liberty, and consumer choice. They also sought “injunctive” relief to prevent the State from requiring the Center to get a certificate of need before expanding its facility.
In August 2015, the Department filed a motion to dismiss the Center’s complaint, arguing among other things that the Center had failed to exhaust administrative remedies before filing a lawsuit in court and therefore it lacked standing to bring its declaratory action. The trial court denied the Department’s motion. In September 2016, the Center and the Department each filed motions requesting that the court grant “summary judgment” to them. (A court grants summary judgment when it determines there is no need for a jury trial because the facts are undisputed and the law falls squarely on the side of one of the parties.) In an October 2016 order, the trial court rejected all of the Center’s constitutional challenges and granted summary judgment to the Department. The Center and its owners then appealed to the state Supreme Court. In a cross-appeal, the Department appealed the trial court’s denial of its motion asking the court to dismiss the Center’s suit.
In today’s opinion, the high court addresses the cross-appeal first, finding that a party has standing to pursue a declaratory action where the threat of an injury is “actual and imminent, not conjectural or hypothetical.” Here, “we find that the Center is confronted with an injury in fact that is ‘actual and imminent, not conjectural or hypothetical,’ such that it has standing to pursue its declaratory action here,” the opinion says. Because the Center has standing to pursue a constitutional challenge of the statute, it was not required to exhaust its administrative remedies before filing its declaratory action.
As to the constitutional challenges, the Center claims that Georgia Code § 31-6-40 (a) (7) (C) violates the Anti-Competitive Contracts Clause of the Georgia Constitution because the Center cannot compete in the healthcare market through the expansion of its facilities without first getting a certificate of need. However, the Center’s argument shows a “fundamental misunderstanding” of the clause, which states: “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.”
“By its plain terms, § 31-6-40 (a) (7) (C) does not authorize monopolistic ‘contracts’ relating to providers of new institutional health services,” the opinion says. “It only requires that all such providers obtain a certificate of need before adding new services.”
“Because the Anti-Competitive Contracts Clause simply does not apply here, the Center’s constitutional claim on this ground must fail.”
Similarly, the Center’s claim that the statute violates due process under the Georgia and U.S. constitutions also fails. If the challenged laws have a reasonable relation to a proper legislative purpose, and are neither arbitrary nor discriminatory, the requirements of due process are satisfied, under previous Georgia Supreme Court rulings, which have found that promoting quality health care services is a legitimate legislative purpose. “Accordingly, the Center’s due process challenges to § 31-6-40 (a) (7) (C) are without merit,” the opinion says.
In a footnote, the high court emphasizes that “this is a case about the General Assembly’s ability to regulate healthcare,” and that there are few other private sector markets so dominated by government regulation – particularly federal regulation – as healthcare. “Nothing in today’s opinion should be understood to support sweeping economic regulation of this sort beyond this unique context,” the footnote says.
Attorneys for Appellants (Center): James Manley, Veronica Thorson, Glenn Delk
Attorneys for Appellees (State): Christopher Carr, Attorney General, Isaac Byrd, Dep. A.G., Daniel Walsh, Sr. Asst. A.G., Monica Sullivan, Asst. A.G., Forrest Pearce, Asst. A.G.
The full opinion is available on gasupreme.us.