Home / What We Fight For / Equality and Opportunity / Certificate of Need Laws—The Competitor’s Veto

Donate

Home / What We Fight For / Equality and Opportunity / Certificate of Need Laws—The Competitor’s Veto

Certificate of Need Laws—The “Competitor’s Veto”

Usually, if you want to start a new business, you need only invest your time and resources and meet the relevant safety criteria. But for some services, you must prove to the government that your business is “needed.”

And who gets to weigh in? Your competitors.

This means that aspiring entrepreneurs must beg the government—and their competition—for a permission slip to offer their products and services to the public. That’s harmful under any circumstances, but it’s especially dangerous when it comes to life-saving services.

Watch the Video

What is a Certificate of Need?

In some industries, new businesses must apply for a license or “certificate” to prove that their service is “needed.” This is a long, tedious process that is unrelated to health and safety concerns.

Existing businesses that hold a certificate are invited to testify about whether they think new competition is desirable. That’s an obvious conflict of interest. And certificate holders enjoy a “competitor’s veto” power over new competition because the government often defers to their objections to new businesses.

“Competitor’s veto” laws limit the supply of services, mostly in the healthcare industry, including hospitals, birthing centers, home healthcare providers, MRI machines, nursing homes, and ambulances. These laws are also common in the transportation industry—over half of states require moving companies to obtain a Certificate of Need.

In courts and legislatures, Pacific Legal Foundation fights to liberate entrepreneurs and roll back Certificate of Need laws.

In courts and legislatures, Pacific Legal Foundation fights to liberate entrepreneurs and roll back Certificate of Need laws.

Of Note

LEGACY MEDICAL TRANSPORT, LLC AND PHILLIP TRUESDELL V. ADAM MEIER, ET AL.

Family wins victory against crony “Competitor’s Veto” law

Phillip Truesdell and his family launched Legacy Medical Transport in 2017 with one ambulance and high hopes of thriving in the wake of job losses. Their hard work paid off—today, their medical transportation company in Aberdeen, Ohio, has grown to seven vehicles. Located just miles from the Kentucky border, the company often transports people from Ohio to Kentucky. Kentucky law, however, prohibits Legacy from returning those clients to Ohio without first obtaining a Certificate of Need. The Truesdells’ application was denied after certificate-holders successfully exercised their veto power. Represented by PLF, Phillip is fighting for the right to earn a living and provide a vital service for his community. In 2023, the Sixth Circuit ruled for Phillip and his family, holding that Kentucky law violated the Commerce Clause.

PLF has been successfully challenging CON laws in the moving industry for over a decade.

The moving industry can provide a quick route to entrepreneurship and employment. A person needs only grit, insurance, and a truck to get started.
But many states’ licensing laws have made this endeavor impossible, preventing would-be entrepreneurs from starting businesses. By stopping new business enterprises from starting, the government deprives people of jobs.
PLF has pursued cases leading to legislative or executive repeals in four states and a federal court opinion striking down a Kentucky competitor’s veto law as a violation of the constitutional right to earn an honest living.

Competitor’s veto laws are also prevalent in the medical industry, where the consequences are the most severe.

CON laws limit the number of providers and keep prices artificially high. A 2017 study from the Mercatus Center found that Certificate of Need states have 30% fewer hospitals per 100,000 residents than states without such restrictions.
Competition among providers is vital to containing cost and ensuring that there is enough supply for people to get the care they need.
PLF has expanded its litigation to challenging CON laws in healthcare. We now represent a non-emergency ambulance service in Kentucky and a social worker in Louisiana who wants to provide respite care to families with special needs children.
During the coronavirus pandemic, PLF has asked state governors and legislators to suspend or repeal CON laws, which are especially problematic when medical providers must respond quickly to changing circumstances.

Thirty-nine states and the District of Columbia have CON laws for at least one medical service.

Competitor’s Veto: A Roadblock to New Businesses, a review of CON laws in the moving industry.

Read the Report

PLF Attorneys and Staff

March 22, 2024

Economic opportunity matters, too

PLF fights against laws that keep entrepreneurs from providing their much-needed services. For example, we represent Katie Chubb in challenging Georgia’s certificate-of-need law, which prevents her …

September 14, 2023 | By LARRY SALZMAN

The Dispatch: The Supreme Court Can Fix Its Oldest Mistake This Year

Ursula Newell-Davis has been a social worker in New Orleans for more than 20 years with a particular passion for special needs children (including her own), so she knows special needs families are oft…

November 30, 2022 | By ERIC SHEAR

Choosing the Gatekeepers

One out of every four workers is not allowed to do their job without an official state-issued license. Licensing boards, using government power, control the marketplace for services in their industrie…

September 1, 2022 | By ANASTASIA BODEN

In a recent lawsuit, the Louisiana Department of Health admitted what every parent of a special needs child knows: There is always a need for more care for this population. Parents need time away from the rigors of child-rearing, whether it be to work, run errands, or simply have time to themselves.

August 23, 2021 | By ANASTASIA BODEN

The Hill: Biden’s economic reform ought to consider certificate of need, too

President Biden recently called on the federal government to increase competition in the U.S. economy as a way of boosting wages, increasing employment, and allowing people to move between jobs. One o…

December 20, 2023 | By BRITTANY HUNTER

Pacific Legal Foundation's 2023 highlights

2023 was a particularly big year for Pacific Legal Foundation. We celebrated our 50th birthday, which gave us the opportunity to reflect on moments that made PLF what we are today. Since 1973, we have had the privilege of changing lives: We’ve helped our clients challenge unjust government actions in the court of law and …

December 19, 2023 | By BRITTANY HUNTER

When government gets between a mother and a midwife

This article first appeared in the winter 2023 edition of Sword&Scales. The birth of a child is a sacred experience in a mother’s life. How and where she chooses to bring her baby into the world is a deeply personal decision that should be free from government interference. Yet in some states, certificate-of-need (CON) laws …

October 11, 2023 | By BRITTANY HUNTER

Why won’t SCOTUS protect economic liberty?

The Supreme Court declined to hear a case that could have affirmed everyone’s right to economic liberty—an unfortunate decision that highlights a problem much larger than one case. New Orleans social worker Ursula Newell-Davis would like nothing more than to help families with special needs children. Raising an autistic son, along with 25 years …

September 20, 2023 | By BRITTANY HUNTER

USA Today: New Orleans social worker asks Supreme Court to protect freedom to work

Pacific Legal Foundation recently petitioned the Supreme Court the case of New Orleans social worker Ursula Newell-Davis, who argues that Louisiana’s certificate-of-need laws violate the right to earn a living. Writing for USA Today, former Pacific Legal Foundation attorney Anastasia Boden, who is still working with PLF on this case, explains the …

September 07, 2023 | By JOSHUA POLK

Victory for Ohio family! Sixth Circuit rolls back certificate-of-need laws

The Sixth Circuit Court of Appeals just delivered a blow to economic protectionism in a case Pacific Legal Foundation has been litigating for four years. Phillip Truesdell and his children run Legacy Medical Transport, a small, non-emergency ambulance service in Aberdeen, Ohio, a stone’s throw from the Kentucky border. The company is fully licens …

July 11, 2023 | By BRITTANY HUNTER

South Carolina ends certificate of need laws in healthcare industry

Certificate of Need (CON) laws have long been a ball-and-chain around the ankle of South Carolina’s healthcare industry. But thanks to the passing of new legislation, these regulatory shackles have been removed and competition will soon return to the healthcare market across the state. CON laws are essentially permission slips that prevent new play …

September 01, 2022 | By NICOLE W.C. YEATMAN

Government blocks much-needed birth center in Georgia

A great test of any society is whether it takes good care of pregnant women and babies. The State of Georgia is currently failing that test. Georgia has the worst maternal mortality rate in the country—that is to say, more women die in childbirth in Georgia than in any other state. The financial website …

May 19, 2022 | By BRITTANY HUNTER

Reforming CON laws is a matter of life and death

The South Carolina House Ways & Means Committee failed to move forward on a bill that would have abolished the state’s antiquated Certificate of Need (CON) laws, which give existing businesses a competitor’s veto to block new businesses. In January, the bill passed the Senate with overwhelming support (35-6 vote) from both political parties, …

August 19, 2020 | By NATHANIEL HAMILTON

States that suspended Certificate of Need laws saved lives

During the global pandemic, healthcare providers have expanded their ability to care for additional patients by adding beds and ventilators and expanding facilities. But laws in some states prevent providers from taking steps needed to expand care options. Now we have a clear accounting of the costs of these laws: A new working paper by …

Support PLF

Liberating America’s healthcare services has never been more important. Support PLF’s efforts to throw out these absurd and unconstitutional laws for good.

Help Con-Law Initiative

Certificate of Need Laws—The “Competitor’s Veto”

What is a Certificate of Need?

Of Note

LEGACY MEDICAL TRANSPORT, LLC AND PHILLIP TRUESDELL V. ADAM MEIER, ET AL.

Family wins victory against crony “Competitor’s Veto” law

PLF has been successfully challenging CON laws in the moving industry for over a decade.

Competitor’s veto laws are also prevalent in the medical industry, where the consequences are the most severe.

Thirty-nine states and the District of Columbia have CON laws for at least one medical service.

PLF Attorneys and Staff

Joshua P. Thompson

Joshua Polk

Jack Brown

Glenn E. Roper

Wilson Freeman

Jim Manley

Stephen Slivinski

Kileen Lindgren

Cases

Aspiring junk hauling entrepreneur fights crony “competitor’s veto” law

Parker Noland v. MT Public Service Commission

Georgia birth center director fights crony protectionism to help expectant mothers

Katie Chubb and Augusta Birth Center v. Boyd

New Orleans social worker challenges Louisiana law that stopped her from helping special needs children and their families

Ursula Newell-Davis & Sivad Home and Community Services, LLC v. Courtney N. Phillips, et al.

Family defeats crony “Competitor’s Veto” law

Legacy Medical Transport, LLC and Phillip Truesdell v. Adam Meier, et al.