Treasurer ‘Applauds’ NC Supreme Act Action In CON Challenge

By Carolina Journal Staff

• State Treasurer Dale Folwell “applauds” the state Supreme Court’s decision to throw out lower court rulings against the New Bern eye surgeon challenging North Carolina’s certificate-of-need healthcare restrictions.
• Folwell labeled the CON program a “con” in a news release Monday.
• The high court ruling Friday paved the way for Dr. Jay Singleton to proceed with his legal argument that CON restrictions violate his state constitutional rights.

State Treasurer Dale Folwell supports the North Carolina Supreme Court’s decision to throw out lower court rulings against the New Bern eye surgeon who is challenging state certificate-of-need restrictions for healthcare providers.

North Carolina law requires providers to secure a state CON before building new medical facilities, adding beds to existing hospitals, or purchasing some medical equipment.

“As ‘keeper of the public purse’ and having responsibility for nearly 750,000 members of the State Health Plan, I am very pleased with the Court’s decision,” Folwell said in a news release Monday. The release’s headline said Folwell “applauds” the state Supreme Court’s decision.

“We spend $4 billion a year of taxpayers’ money providing medical and pharmaceutical coverage for those that teach, protect, and otherwise serve the people of this state. CON laws are exactly what they sound like – a con. Every year the hospital cartel, through the North Carolina Healthcare Association, prevents any meaningful change to CON laws. Now, we have an opportunity for the courts to finally recognize that these laws are unconstitutional,” Folwell said. 

The treasurer filed a friend-of-the-court brief in August 2022 supporting Dr. Jay Singleton’s case. The brief argued that “CON laws create an uneven playing field that protects existing large health care providers, which decreases the accessibility, quality, and affordability of health care while these large hospitals’ profits dramatically increase, to the detriment of North Carolinians,” according to Monday’s news release.

The state Supreme Court threw out lower court rulings against Singleton on Friday. The decision revived Singleton’s complaint that state government violated his constitutional rights by blocking him from performing most eye surgeries at his business.

In an unsigned unanimous four-page opinion, the court directed the case back to a trial judge.

At the trial level, the judge must take into account two recent unanimous state Supreme Court decisions. One dealt with claims that Kinston engaged in racial discrimination when choosing which city properties to condemn. The other involved Ace Speedway’s claim that state officials violated the Alamance County racetrack owners’ rights when targeting the track for a shutdown during the COVID-19 pandemic.

“This decision clears the way for the trial court to resolve the central issue in this case: Does the CON law violate the North Carolina Constitution’s law of the land, anti-monopoly, and exclusive-privilege clauses?” wrote Joshua Windham of the Institute for Justice in an email to Carolina Journal. Windham represents Singleton.

“The lower courts dismissed this case on two mistaken premises: (1) that the state Supreme Court’s 1973 decision in Aston Park — which struck down the state’s prior CON law under the same three provisions we’re citing here — was ‘moot,’ and (2) that Dr. Singleton was required to apply for a (nonexistent) CON before he could challenge the constitutionality of the CON law,” Windham added.

“Today’s decision rejects both of those premises, and we’re excited to head back down to the trial court where we can finally vindicate Dr. Singleton’s right to provide more affordable care for his patients,” Windham wrote.

Singleton argues that North Carolina’s CON regime forces him to direct his patients to a nearby hospital, CarolinaEast, for most surgeries. The hospital holds the region’s only CON. Singleton says that arrangement proves more expensive and less convenient for patients.

“Plaintiffs brought claims alleging that the Certificate of Need law violates their rights under the Monopolies Clause, Exclusive Emoluments Clause, and Law of the Land Clause of the North Carolina Constitution,” according to the state Supreme Court opinion. “Plaintiffs described their constitutional claims as ‘as-applied’ challenges in the complaint. Both the trial court and the Court of Appeals accepted plaintiffs’ characterization of these claims and evaluated the claims as as-applied challenges.”

“[W]e conclude that plaintiffs’ complaint asserts both facial and as-applied challenges,” Supreme Court justices wrote.

A facial constitutional challenge targets a law in its entirety. The plaintiff asserts that there is no circumstance in which a court could uphold the law as constitutional. An as-applied challenge asserts only that the targeted law is unconstitutional when considering the facts of a particular plaintiff’s complaint.

“Here, plaintiffs’ complaint alleges facts that could undermine the Certificate of Need law’s constitutionality far beyond the particular circumstances of these plaintiffs,” according to the Supreme Court opinion. “Indeed, in their supplemental briefing, plaintiffs acknowledge that, should they prevail, the ‘need for relief that extends beyond [plaintiffs] will likely arise here’ and ‘will likely entail facial relief.’”

“We agree. The complaint contains allegations that, if proven, could render the Certificate of Need law unconstitutional in all its applications,” Supreme Court justices wrote.

Labeling the case both a facial and as-applied challenge is a “crucial determination,” justices wrote. State law requires facial challenges to go before a three-judge Superior Court panel. Singleton has argued his case before a single trial judge.

“Because the trial court and the Court of Appeals mistakenly treated plaintiffs’ claims exclusively as as-applied challenges, we vacate the decision of the Court of Appeals and remand this matter to the Court of Appeals with instructions to vacate the trial court’s judgment and remand for further proceedings,” Supreme Court justices ordered.

The trial court must follow the three-judge panel rules spelled out in NC Gen. Stat. § 1-267.1, along with Rule 42(b)(4) of the Rules of Civil Procedure.

“Because we vacate the decision of the Court of Appeals on this basis, we need not address plaintiffs’ challenges to that decision asserted in the briefing before this Court,” Supreme Court justices added. “However, for the benefit of the trial court on remand, we disavow the Court of Appeals’ jurisdictional analysis concerning the exhaustion of administrative remedies and direct the trial court to this Court’s recent decisions in Askew v. City of Kinston … and Kinsley v. Ace Speedway Racing, Ltd.”

The John Locke Foundation, which oversees Carolina Journal, supports Singleton’s legal fight against state regulations that block him from performing procedures in his own building.

Locke and constitutional law scholar John Orth filed a joint friend-of-the court brief in the case in November 2023.