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 licensed in Ohio and transports patients to and from nursing homes, doctors’ offices, and hospitals.
But despite receiving numerous calls for service from Kentucky, the Truesdells were barred from transporting Kentuckian patients without a certificate of need (CON), which Kentucky refused to grant.
Kentucky’s refusal wasn’t about health or safety; it was about protectionism. Certificate-of-need laws force new businesses to prove to state regulators that there’s a need for their business before they can operate. Existing businesses are allowed to weigh in and can effectively issue a “Competitor’s Veto,” preventing would-be competitors from entering the market.
That’s what happened in the Truesdells’ case.
After the Truesdells applied for a certificate of need with the Kentucky Cabinet for Health and Family Services, four Kentucky ambulance companies protested. They claimed there was no need for Legacy’s ambulances in Kentucky.
But the Truesdells regularly received calls from Kentucky patients and estimated Kentucky’s law prevented them from taking about 300 jobs per year.
When Pacific Legal Foundation first met Phillip Truesdell, his story struck such a chord with PLF staff that we produced a short documentary about his fight for his business.
“Kentucky’s got a great need for ambulance services,” Phillip said in interviews for the documentary. He’s a plain-spoken man, quick to smile but also blunt. “I’m not no rich man, but I don’t consider myself a poor man either. I consider myself a working man,” he said. “Nobody gave me nothing. I’ve never asked anyone for a handout.” All he wanted was the opportunity to run his business—to answer calls his company was already receiving.
With PLF’s help, the Truesdells sued the Kentucky Cabinet for Health and Family Services in 2019. A district court ruled against them in 2020. But last week, in a victory for Phillip and his family, the Sixth Circuit ruled that Kentucky can’t use certificate-of-need requirements to restrict ambulance trips between Kentucky and other states just because a state agency determines new competition is “undesirable.”
The Commerce Clause of the Constitution gives Congress—not Kentucky regulators—the exclusive power to regulate interstate commerce. “[T]he Commerce Clause was designed to stop the economic protectionism that had spread among the States at the time of the founding,” the court noted in its decision. By preventing Legacy Medical Transport from transporting Kentucky patients to Ohio hospitals, the court ruled, state regulators violated the Commerce Clause.
Unfortunately, the Sixth Circuit’s decision doesn’t overturn Kentucky’s certificate-of-need law entirely. State regulators can continue to require a certificate of need for intrastate ambulance trips—that is, Legacy Medical Transport still won’t be able to transport Kentuckians from one location to another within Kentucky without first securing a CON. The Sixth Circuit acknowledged that Kentucky’s certificate-of-need law “may well be folly,” but for trips within Kentucky’s borders, the costs of the law “are costs that Kentucky’s legislature has inflicted on its own people.”
Not so for interstate trips: Kentucky can’t burden out-of-state businesses by restricting interstate commerce, the court held.
For Phillip Truesdell, the decision is a relief that opens up new possibilities for his growing business. When PLF interviewed Phillip for our documentary, we asked him who should have the right to start a business.
“Anybody that’s got breath in them,” Phillip said.