The Perry County News is reporting that the Perry County Board of Commissioners has enacted a “Certificate of Need” program for construction of new medical facilities. This is not a new idea. Counties who want to prevent competition to hospitals funded in part by the county have adopted ordinances prohibiting construction of new medical facilities until they have jumped through bureaucratic hoops and gotten the blessing of the County which is presumably doing the will of the hospital receiving the county funds.
What is confusing to me is the fact that the Perry County Board of Commissioners is adopting the ordinance now when a similar ordinance adopted by Morgan County was struck down by the United States District Court for the Southern District of Indiana. Morgan County has not appealed the court’s decision and so the court’s ruling is good law in the Southern District of Indiana. Perry County is in the Southern District. In the case of Sisters of St. Francis v. The Board of Commissioners of Morgan County (pdf) Judge Hamilton struck down the ordinance stating that, under Indiana’s Home Rule statute, counties do not have the power to adopt such ordinances because the power to regulate medical facilities has been preempted by the State. A copy of the Perry County ordinance is here, though I seem to have lost the last page.
The Perry County News story mentions the legal challenges:
Perry County is the sixth to enact requirements for certificates of need. Other counties that have adopted similar rules are Harrison, Floyd, Clark, Hancock and Morgan.
A federal judge recently struck down Morgan County’s ordinance and Perry County Attorney Chris Goffinet said he believed another legal challenge to a second county’s ordinance is under way.
The ordinance adopted Monday, Goffinet said, is different from others and was crafted “more narrowly†to make it less vulnerable to legal challenges.
However, the way I read the ordinance, it does nothing to overcome the basic fact that, under the Home Rule counties do not have the authority to engage in this sort of regulation. Judge Hamilton cited Indiana’s Home Rule statute (IC 36-1-3). The Home Rule basically starts with the presumption that a local unit of government has the authority to do something. However, it states that “Counties may not exercise powers that are expressly denied by a state statute or that are expressly granted to another entity.” It goes on to specifically withhold from counties the power to “regulate any conduct that is
regulated by a state agency, except that which is expressly granted by statute.â€
The Court goes on to explicitly grant to the Indiana State Department of Health the right to license and regulate hospitals. The Court also indicated that there was no support for an inference that the General Assembly had given a county the power to hinder a county hospital’s competition. The Court went on to say:
Morgan County’s Ordinance in this case does not meet the standards of these Indiana decisions. The Ordinance serves a purpose of restricting competition, a purpose that is not merely different from the state regulations and policy, but is flatly contrary to the express state policy of promoting competition.
Among other things, the Perry County ordinance specifically attempts to regulate construction of new hospitals. As the Court in the Morgan County case noted, regulation of hospitals has already been specifically granted to the Indiana State Department of Health and, because of that, counties have no authority to engage in similar regulation. When I first heard about this issue, I thought maybe the Perry County Commissioners were simply ignorant of the existence of the Morgan County decision. But, from the news report, I see that they were aware of the decision but thought that the ordinance had been “narrowly drafted” to avoid the issues in the Morgan County case. After reading the Morgan County decision and the Perry County ordinance, that assertion is simply baffling. I propose that Perry County simply take the legal fees they will incur trying (and failing) to defend this ordinance and give them directly to the county hospital. Meanwhile, they can try allowing some competition in the health care industry in the county which will hopefully allow its citizens to get a better deal on their health care.
A couple of charming side notes to this story:
Monday’s meeting was the first time the ordinance was publicly discussed by commissioners or hospital officials in an open meeting, but [County Hospital CEO] Stuber confirmed that he recently met privately with commissioners to discuss the ordinance.
Also, with respect to the Morgan County case, the County was represented by attorney and state representative Ralph Foley. While attorney Foley was representing the County to defend the ordinance, Representative Foley was pushing HB 1494 which would have granted counties the right to adopt such an ordinance. As a run of the mill attorney, I just can’t compete with service like that. However, the bill did not pass the General Assembly.
Perry County is doing it because they’re doing what most governmental entities do–look out for themselves instead of the people they’re governing. In this case, looking after their hospitals/medical facilities.
We have the same problem in the city I work in. The city decided to build a hotel and convention center–yes a city building and owning a hotel. So now all the other hotels that are privately funded compete with the city’s hotel that is partially funded by tax dollars. Not only that, but the city runs the convention and visitor’s bureau which funnels leads to hotels. Guess which hotel they favor?