Georgia certificate of need law upheld by Supreme Court

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Justice Harold D. Melton listens during oral arguments at The Georgia Supreme Court. (DAVID BARNES / DAVID.BARNES@AJC.COM)

The Georgia Supreme Court upheld the state’s “Certificate of Need” law in an opinion issued Monday that said a surgical center could not expand without state approval.

Two doctors who own The Georgia Advanced Surgery Center for Women in Cartersville had challenged the state law that governs health care facilities. Dr. Hugo D. Ribot, Jr. and Dr. Malcolm Barfield argued that they did not need state approval to add a second operating room to their outpatient surgery center.

Presiding Justice Harold D. Melton listens during oral arguments at The Georgia Supreme Court. Photo credit: DAVID BARNES / AJC

The state’s 1979 law limits competition in the healthcare marketplace, with the idea that the public will be better served if health care providers do not duplicate expensive services. That means that before hospitals or other health care facilities can be constructed or expanded, the state has to determine that there is an actual need for the service. In theory, if expensive health care facilities are fully utilized, the overall cost of healthcare would decline.

Proponents of the free market, however, say that the opposite is true and that certificate of need laws stifle competition and drive up costs.

The doctors argued that the law violates a clause of the Georgia Constitution by blocking the surgery center’s ability to compete in the health care marketplace. That clause says the state can’t authorize a contract that encourages a monopoly.

In its opinion, written by Presiding Justice Harold D. Melton, the court said the doctors’ argument does not properly interpret the clause.

The Certificate of Need law “does not authorize monopolistic ‘contracts’ relating to providers of new institutional health services,” the opinion says. “It only requires that all such providers obtain a certificate of need before adding new services.”

The opinion noted that healthcare is unlike other businesses, in that it is an industry that is heavily regulated by both the state and federal government.

“Nothing in today’s opinion should be understood to support sweeping economic regulation of this sort beyond this unique context,” the court said in a footnote.

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