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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.

foreclosure

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.

Home equity theft

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.

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

Map

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

Read the Report

PLF Attorneys and Staff

Angela C. Erickson

Strategic Research Director

Cases

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 WEB TEAM

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.

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…

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…

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 …

June 16, 2023 | By JACK BROWN

Reason: Companies Shouldn't Have the Right To Veto Their Competition

Katie Chubb had an idea for a business. She noticed that hospitals in Augusta, Georgia, weren’t meeting the demand for birthing services. So she founded Augusta Birthing Center, a nonprofit, freestanding birth center that could offer a better experience at a lower price. But when she applied for a license to operate, the existing hospitals …

September 06, 2022 | By ANASTASIA BODEN

The Hill: A Louisiana law keeps special needs kids from getting care — one woman wants to change it

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. …

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, …

February 14, 2022 | By DANIEL DEW

State legislatures should hold their occupational licensing boards accountable

Occupational licenses, which impact a wide variety of professions, require workers to obtain state-issued “permission slips” before working in their desired fields. Often, if not always, the state licensing boards with the authority to accept and deny license applications as they please are stacked with individuals representing special interest gro …

November 18, 2021 | By NATHANIEL HAMILTON

State regulators are preventing a New Orleans social worker from helping families with special needs children

When Ursula Newell-Davis of New Orleans sees someone with a problem, she looks for a way to help—it’s in her nature. That’s what led her to her calling as a social worker, where Ursula has worked the past two decades with special needs children and their families. But Ursula has her own problem: the Louisiana …

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 …

April 08, 2020 | By NATHANIEL HAMILTON

Certificate of Need laws limited healthcare capacities in the years leading up to COVID-19

Temporary hospitals are popping up all over New York in anticipation of a growing number of coronavirus patients and an undersupply of hospital beds. The U.S. has just 2.8 hospital beds per 1,000 Americans⸺even fewer than Italy (3.2) and drastically lower than South Korea (12.3). But those so-called “field” hospitals, hidden beneath makeshift ten …

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