Constitutional Challenges to Virginia’s CON Law Fall Short

October 15, 2012

The U.S. District Court for the Eastern District of Virginia recently dismissed a case that challenged the constitutionality of the certificate of need (CON) law in Virginia. Colon Health v. Hazel, Civil Action No. 1:12CV615 (E.D. Va. Sept. 14, 2012). The plaintiffs, Colon Health Centers of America, LLC, and Progressive Radiology, brought a lawsuit based on their inability to operate a CT scanner and an MRI scanner in Virginia without first obtaining a CON. As a result, they argued that the CON law violated the U.S. Constitution’s privileges and immunities, due process, and equal protection clauses, all of which are protected from state encroachment by the 14th Amendment. Additionally, the plaintiffs argued that the CON law impinges on the commerce clause power of the U.S. Congress.

The court reviewed the privileges and immunities, due process and equal protection claims under a rational basis review standard, which affords a high degree of deference to reasonable legislative judgments. In fact, the courts have held that it is an extremely difficult burden for a plaintiff to overcome to demonstrate that economic legislation fails rational basis review. See, e.g., Star Scientific, Inc. v. Beales, 278 F.3d 339, 348–49 (4th Cir. 2002) (quoting Holland v. Keenan Trucking Co., 102 F.3d 736, 740 (4th Cir. 1996)).

Under a rational basis review, the court rejected the plaintiffs’ claims, holding that the CON law is a reasonable exercise of the Virginia General Assembly’s power to make legislative choices in the areas of economic and social policy.

As for the commerce clause claim, the plaintiffs argued that Virginia’s CON law violated the dormant commerce clause by impinging on the province of the U.S. Congress under its commerce clause powers. The court analyzed the commerce clause claim under two prongs. First, the court held that because the CON law does not discriminate, either by its plain language or in its practical effect, Virginia’s CON law is valid because it does not give preference to in-state economic interests over out-of-state economic interests. Second, the court concluded that the CON law does not unjustifiably burden interstate commerce.

Despite the ongoing political debate and the legal challenges to the constitutionality of CON laws, 36 states and the District of Columbia continue to operate under some form of CON regulation.

A notice of appeal was filed for this case on Oct. 11, 2012. We will continue to monitor the case as it moves forward.

For assistance with CON issues, please contact the attorneys on this page.