Appeals court upholds key Virginia health regulation

In a unanimous decision issued Thursday, the Fourth U.S. Circuit Court of Appeals upheld the constitutionality of Virginia's certificate of public need (COPN) program, rejecting a lawsuit that had challenged the rules on interstate commerce grounds.

In 2012, a group of physicians with Colon Health Centers of America and Progressive Radiology sued in Federal District Court, arguing that the state's COPN rules violated the U.S. Constitution's commerce clause. The District Court dismissed the suit, saying it was a matter for the General Assembly, not the courts, to address.

Writing for the Appeals Court, Judge J. Harvie Wilkinson III noted: “While we cannot say whether Virginia’s program is ultimately wise, it most certainly is constitutional."

Under Virginia's COPN program, health care providers must obtain a certificate from the State Board of Health before building new, or expanding existing, facilities, or providing new services. The aim of the rules is to contain health care costs.

Virginia enacted its COPN program in 1973 and it has been reviewed several times since its creation.

A working group established by the General Assembly last year looked at a number of possible reform measures, which became the basis for legislation this year.

But a group of Republicans is pushing for a more sweeping version of reform.

In dueling press conferences Wednesday at the Capitol, Virginia health care providers said that wholesale changes to the COPN program would drive up health care costs and harm rural hospitals.

Mary Mannix, president and CEO of Augusta Health and vice-chair of the powerful Virginia Hospital and Healthcare Association, said full COPN repeal would allow competitors to “cherry pick and provide only the most profitable types of care, making the remainder of services a community needs – services that often operate at a loss – the full burden of the community hospital."

The association points out that health care is not a free market system, and that layers of federal and state mandates require them to provide free or reduced-cost care.  The association also says Virginia's per capita health care costs are 63 percent lower than those of other states with COPN programs.

At their own press conference, Republicans charged that COPN is an important factor behind rising health care costs and tied the issue to Medicaid expansion. They contend the program should either be reformed much more than currently proposed, or scrapped entirely.

Delegate John O'Bannon (R-Henrico), and a practicing physician, reiterated the House's opposition to Medicaid expansion. "Our focus should be on true reforms that improve access and keep costs under control," he said. 

"COPN laws limit competition, which means fewer choices and higher costs for Virginia families.

"Reforming COPN is the best way to improve access for patients, expand healthcare services and keep costs under control.”