Federal judge says courts don’t have to buy ‘absurd explanations’ for bad regulations

A Mississippi federal judge will allow a major challenge to the state’s Certificate of Need (CON) healthcare regulations to proceed, over objections from state attorneys, after finding ‘plausible’ evidence “That these rules have increased costs and reduced access to health care.

It’s a small but significant victory in the ongoing battle against state-level CON laws, which act as barriers to entry into certain professions.

In Mississippi, as Raison previously reported, the problem is an artificial and arbitrary cap placed on the number of licenses for home health agencies, companies that arrange for nurses and other medical professionals to make home visits. The state has not issued a new CON license since 1981, when the state legislature imposed the cap. It’s a policy that never made much sense, but has become even more blatantly wrong during the COVID-19 pandemic.

“This moratorium, or some version of it, has been in place for 40 years. Four decades! And, since this moratorium was imposed, the number of patients at home has increased by at least 194%,” said writes Judge Carlton W. Reeves. in the order issued this week that will allow the case to proceed on the merits. “Now one can only enter the market if a current operator is willing to sell their CON.”

Reeves ruled that attorneys for the plaintiff in the case, Charles “Butch” Slaughter, a physical therapist who is seeking to open his own home health care service, presented enough evidence that state CON laws do not meet. not their original intention.

This is a bigger deal than it seems at first glance. regular readers of Raison are probably well aware of the practical and political problems created by CON laws, but from a legal perspective it can be difficult to challenge these regulations due to the rational basis test. In short, government prosecutors can usually get judges to dismiss these cases simply by presenting a “rational” rationale for why the regulations exist. It is a legal doctrine that overly respects state power, even in situations where the rationale for regulation is vastly different from the original intent.

Before a court even agrees to hear a challenge like this on its merits, plaintiffs must convince a judge that the government’s summary justifications are inadequate. That’s what the Mississippi Justice Institute, which represents Slaughter in this case, succeeded in doing.

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

Slaughter’s lawsuit, originally filed in December 2020, notes that only 16 other states have CON laws regulating home health care agencies. Mississippi is one of only two states to have an arbitrary cap on the number of CON licenses. If 48 states get by without this rule, it’s hard to believe it’s necessary. Lawyers for the Mississippi Justice Institute argue that the law is “absurd” and “serves absolutely no purpose other than to prevent legitimate competition and create an oligopoly for existing vendors.”

This week, Reeves admitted they had a good point.

“The plaintiff has presented allegations denying the purported state bases for the laws,” Reeves wrote. “The allegations reveal that the CON laws result in more expensive, less accessible and lower quality health care. Further, the plaintiff claims that the basis of the CON laws and moratoriums is pure economic protectionism – a illegitimate interest of the government.”

That doesn’t mean the courts will eventually strike down Mississippi’s absurd and anti-competitive ban on licensing home health care services. But that means the state will have to defend these absurd, anti-competitive rules in court, rather than simply dismissing the challenge on the grounds that regulators can do whatever they want.

And this should be fun to watch.

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