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Blog > Issues > Economic Liberty > Why competitor’s veto laws need to be ended for good

Why competitor’s veto laws need to be ended for good

February 01, 2021 I By ANGELA C. ERICKSON

What do the following three people have in common?

  • Raleigh Bruner is a Kentucky entrepreneur with an MBA who started advertising moving services on Craigslist, which led to him starting his own moving company.
  • Ursula Newell-Davis of New Orleans is a social worker who wants to provide respite services to families with special needs children.
  • Phillip Truesdell of Ohio launched a non-emergency ambulance company to transport individuals who need additional help to doctors’ appointments or between facilities.

One thing Raleigh, Ursula, and Phillip share in common is that they all saw a need for a service they could provide by starting a business in their community.

They were also all told they couldn’t provide their service because they did not have a certificate of need.

Certificate of need (CON) laws require entrepreneurs to seek permission in the form of a government-issued certificate before they can start providing services to the public. Many traditional CON regimes also allow existing businesses to protest new certificate applications and force applicants to prove that a new business is necessary. Because the government usually sides with the protesting competitors, this amounts to a “competitors’ veto.”

PLF’s fight against CON laws began in 2008 with Adam Sweet, a college student in Portland, Oregon, who made extra cash by helping people move. But when his truck was towed in a police sting operation against moving companies, Adam was shocked to learn he was fined $2,100 because he didn’t have a certificate of need.

Adam would have had to prove that his business was “needed” during a hearing process (akin to a court hearing), at which his existing competitors could protest and explain why there was no need for another moving company in Portland. Unsurprisingly, certificate protests almost always result in a denial of the certificate.

The deck was stacked against the Adam Sweets of the world—until PLF sued Oregon on Sweet’s behalf. The suit convinced the state legislature to repeal Oregon’s CON law and set the stage for further victories against CON laws in other states. In the years that followed, we cleared the way for transportation-based companies to operate in Kentucky, Missouri, West Virginia, Pennsylvania, and Montana.

It’s a fight we’ve extended to the healthcare industry, where CON laws restrict access to care for those who need it most. This month we filed a case in New Orleans on behalf of Ursula Newell-Davis. Ursula’s business was rejected after undergoing a Facility Need Review (Louisiana’s version of a CON law) because the state claimed there were already enough businesses providing respite services. We’re confident our expertise fighting transportation CON laws has given us the tools to help remove healthcare CON laws, and we expect more victories to follow.

PLF’s latest report, Competitor’s Veto: A Roadblock to New Businesses, details how these CON laws threaten entrepreneurs, consumers, and the public good. More importantly, the report details how we’re fighting back to end these anti-competitive laws with strategic litigation.

The report focuses primarily on the moving industry and Raleigh Bruner’s fight against the Kentucky law but also provides a historical overview of how and why CON laws came to be—and makes a strong case for why they need to go. Since Raleigh and PLF won in 2014, he’s opened 25 moving businesses around the country by turning movers into managers and managers into business partners. Raleigh’s relentless desire to elevate others is why PLF fights for individual liberty.

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