Bona Law Files Supreme Court Amicus Brief Showing Certificate of Need Laws Do More Harm than Good
August 18, 2022
Aaron Gott and Luke Hasskamp of Bona Law filed an amicus curiae brief supporting a petition for certiorari on behalf of law and economics scholars who study certificate of need laws with the U.S. Supreme Court on August 15. The case challenges the constitutionality of a state certificate of need law that prevents home health care workers from entering the market and asks the Court to reconsider the test that courts most often apply in constitutional cases. The scholars reviewed the studies on certificate-of-need laws in the brief, concluding the empirical evidence shows such laws raise costs and reduce access to care—the precise opposite of their original aims.
The case, Tiwari v. Friedlander, involves two Nepali-speaking immigrants who formed a home health care agency to provide Nepali-language home health care services in the Louisville, Kentucky area, where a large community of Nepali refugees and immigrants reside. But even though there was no other Nepali-language home health care agency in Kentucky, Kentucky’s certificate-of-need law prohibited the petitioners from opening their agency because the state’s mathematical formula determined there was no “need” for any new home health services in Kentucky. The petitioners sued for violations of their right to earn a living under the Fourteenth Amendment to the U.S. Constitution. They lost in both the district court and in the Court of Appeals for the Sixth Circuit, but with the lead judge questioning the propriety of the rational basis test they are bound to apply under Supreme Court precedent.
Thus, the case could have broad implications in constitutional law. But it also has implications for the laws of 35 states that have a certificate-of-need law in place that prevents free entry into health care markets.
The brief, signed by six scholars of law and/or economics affiliated with a number of prominent university economics departments or law schools, asserts that CON laws work in neither theory or in practice: standard economic theory holds that CONs are unlikely to achieve their stated goals—controlling costs, increasing access, and improving quality of care—because they introduce rather than attempt to control for market imperfections through anticompetitive means. They then review 71 studies that test whether CONs meet their stated goals and conclude that those studies overwhelmingly show that they do not meet those goals.
The scholars who signed the brief include Matthew D. Mitchell, Christopher J. Conover, Thomas P. Miller, Michael A. Morrisey, Thomas Stratmann, and James Bailey.