Federal Judge Says Courts Don’t Have To Buy ‘Nonsensical Explanations’ for Bad Regulations

After finding that there is “plausible evidence” of increased health care costs, a federal judge in Mississippi has granted permission for a major challenge of Mississippi’s Certificate of Need (CON), health care regulations.

This is a modest, but significant win in the ongoing fight against CON laws at state level, which are barriers to certain professions.

As a Mississippi resident, There are reasonsAs previously reported by the author, this issue concerns an artificially imposed and arbitrarily limited number of home health agency licenses. These are businesses that provide housecall services for nurse and other professionals. Since 1981, when this cap was established by the state legislature it has not been granted a CON license. This policy was never very sensible, and it has been made even worse by the COVID-19 epidemic.

“This moratorium (or some variant thereof) has stood for forty years. Four decades! In the Order issued this week, Judge Carlton W. Reeves stated that the home health patient population has increased by at most 194 percent since the moratorium was imposed. This will allow the case on its merits to move forward. The only way to enter the market is if an existing operator will sell their CON.

Reeves decided that Charles Slaughter (a physical therapist who wants to establish his own home healthcare service) had shown enough evidence to show that CON laws in Connecticut were not being followed as intended.

It’s much more than what it seems at first glance. Subscribe to our newsletter There are reasons are probably well aware of the practical and policy problems created by CON laws—but as a legal matter, it can be difficult to challenge those regulations because of the rational basis test. When government lawyers present a “rational” reason for regulations, judges will usually dismiss the case. The legal doctrine of this kind is very deferential to state power even when it is not the original intention.

The plaintiffs must convince the judge that the government’s basic justifications are not sufficient before a court agrees to hear this challenge on its merits. The Mississippi Justice Institute representing Slaughter has done this.

Even the “great deference” due to regulators under the rational basis standard, Reeves wrote, “does not…require courts to accept nonsensical explanations for regulation.”

Slaughter filed his lawsuit in December 2020. It noted that 16 other states do not have laws which regulate home healthcare agencies. Mississippi is the only state with an arbitrarily set limit on how many CON licenses it can issue. It is difficult to believe that this regulation is needed when 48 states can get by with it. Mississippi Justice Institute lawyers argue that the law does not serve any purpose, and is an “absurd” statute.

Reeves made it clear this week that they did have a point.

Reeves stated that “Plaintiff made claims which discredit the state’s claimed bases for these laws.” CON laws can lead to higher costs, lower access, and worse quality in health care. What’s more, plaintiff claims that the basis for CON laws and the moratoria is pure economic protectionism—an illegitimate government interest.”

However, this doesn’t automatically mean Mississippi will have to repeal its anti-competitive home healthcare license ban. However, it means that the state will need to defend the nonsensical or anticompetitive rules in the courtroom rather than simply waving aside the challenge on grounds that regulators have the right to make whatever decisions they wish.

Und ThisIt should be entertaining to see.