Active: Federal lawsuit challenges Georgia’s anticompetitive Certificate of Need law

The ability to choose where and how to give birth is extremely important for Katie Chubb. She and her husband drove 2.5 hours during her own labor to get to the nearest birth center. Such centers are generally small businesses or nonprofits run by certified nurse midwives and supervising physicians. Katie is originally from the United Kingdom, where midwifery is a common practice. 

But in Augusta, Georgia, where Katie and her family now live, such options are sorely lacking. There is no birth center within a 130-mile radius, and only one of three local hospitals offers midwifery services. Worse, childbirth outcomes are abysmal across the state and in the Augusta area. The 90 pregnancy-related deaths in 2015 put the state’s mortality rate below that of Iraq; nearly 60% were preventable. The Augusta area’s five deaths in 2015 ranked lower than Cuba and Syria. 

As of 2020, Georgia’s infant mortality rate ranked 15th highest in the United States, with some rural locales ranking behind some third-world countries. According to Katie, local nurses tell stories of a lack of beds and women giving birth in hospital hallways. 

Inspired to improve childbirth outcomes in Georgia, Katie set out to establish Augusta Birth Center (ABC), a nonprofit, freestanding birth center. 

Katie did everything by the book. She formed a board of directors for ABC, chose a location, and secured funding. She and her board obtained hospital transfer agreements from an ambulance company and a licensed physician who has admitting privileges at two local hospitals. 

Despite her diligence and an outpouring of community support, the plans were ultimately derailed by Georgia’s Certificate of Need (CON) program. The CON regulations require any new childbirth services to prove they’re needed and to secure transfer agreements directly with hospitals (rather than individual physicians). Never mind that federal law already requires hospitals to accept all patients in an emergency. 

But there’s a big catch. While the hospitals’ actual function in the CON process is as emergency backup, hospitals are also a direct competitor: They make money delivering babies, too. Georgia’s CON process allows competing hospitals to veto new entrants to the childbirth market—including the critically needed services ABC would provide. 

That’s exactly what happened. All three hospitals in the area refused to enter into direct transfer agreements with ABC. They claimed ABC’s services were an unnecessary duplication of their own. 

In the end, the government took the hospitals’ side. Health department bureaucrats agreed that ABC’s application successfully demonstrated need for its services, and that the proposed project would indeed offer a low-cost, high-quality alternative for expectant mothers. But they denied ABC’s application for failure to secure hospital transfer agreements, despite the fact that their on-site physician has admitting privileges to hospitals. 

By granting hospitals “competitor’s veto” power over new birth center services, the state has prevented people like Katie from offering Georgia mothers a safe alternative to either hospital or home birth. It’s no surprise the state has neither considered nor approved a birth center CON application in more than 15 years. 

There are currently only three birth centers in Georgiaa state that sees over 120,000 births annually. There are none within a 2.5-hour drive of Augusta. If not for the burdensome CON regulations, ABC would be fully qualified and licensed to become the fourth. 

This protectionist “competitor’s veto” violates Katie Chubb’s right to provide critical childbirth care, as well as the right of Georgia mothers to decide the manner and place of giving birth. Represented free of charge by PLF, Katie and the Augusta Birth Center are fighting back with a federal challenge to Georgia’s CON law. A win would alleviate the burden on Georgia’s childbirth system and provide a safe, new choice for expecting mothers. 

What’s At Stake?

  • The government shouldn’t be in the business of picking winners and losers. Protecting industry insiders stops entrepreneurs from pursuing their calling and reduces access and choices for underserved consumers.

Case Timeline

August 17, 2022