Federal Court Considers Challenge to Iowa’s Certificate Of Need Laws

Published October 24, 2018

CON laws require health care providers to obtain government permission to open new facilities or expand services. Iowa’s CON laws allow existing medical practices to oppose the creation of new facilities by other providers. The state’s laws also allow existing medical practices to expand facilities without obtaining a new CON, ultimately giving existing facilities freedom denied to new entrants.

A decision in the case is expected later this year or in early 2019.

Twenty-Year Battle

The Iowa case was brought by Dr. Lee Birchansky, an ophthalmologist who wants to open a cataract surgery outpatient center in Cedar Rapids. For more than 20 years, the state has refused to approve Birchansky’s request for a CON. As a result, Birchansky has been forced to perform cataract surgeries at his competitors’ facilities for more than two decades.

The plaintiff, represented by the Institute for Justice (IJ), argues CON laws are unconstitutional. The IJ case summary states, “The U.S. Constitution protects the right to earn an honest living free from unreasonable government interference, and it protects a patient’s right to seek routine, safe, and effective medical treatment from a qualified doctor. The Iowa CON program infringes on those rights, and that is why a federal court should strike it down.”

‘We Are Optimistic’

Joshua House, IJ’s lead attorney on the case, says he is confident Dr. Birchansky’s suit will succeed.

“Following the hearing, we are optimistic that there will be a decision in our favor,” House said. “Earlier this year, when denying the government’s motion to dismiss, the judge agreed with us that protectionism—the arbitrary favoritism of existing businesses over new businesses—is not a legitimate end of government.”

House says the court should declare Iowa’s CON laws unconstitutional because the onerous regulations specifically violate the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution.

“At the latest hearing, we argued that the undisputed facts showed exactly that sort of favoritism,” House said. “Iowa’s CON scheme arbitrarily permits existing businesses to open new centers, while forcing entrepreneurs through a costly, burdensome application process. The CON requirement therefore violates the Fourteenth Amendment’s guarantees of equal protection and due process.”

House says the belief that Iowa’s CON laws protect safety or health standards is a myth.

“Iowa’s CON requirement has nothing to do with health or safety,” House said. “Other statutes regulate that. It is simply a government permission slip that lets already established businesses decide what new businesses can open or not. But patients and doctors—not the government—are in the best position to decide what medical services and businesses are needed.”

Setting an Example

Charlie Katebi, a state government relations manager at The Heartland Institute, which publishes Health Care News, says CON laws reduce health care access and increase costs.

“This lawsuit showcases how established hospitals use CON rules to squash entrepreneurial providers from offering patients affordable health care,” Katebi said.

A ruling in favor of Dr. Birchansky and dismissing Iowa’s CON laws could cause other states’ restrictions to fall as well, Katebi says. “Striking down Iowa’s CON law will provide important precedent for patients and doctors in other states who are harmed by these onerous regulations,” Katebi said.


Chris Talgo ([email protected]) is an assistant editor at The Heartland Institute. Emma Kaden is an intern at The Heartland Institute.


“Iowa Certificate of Need: Ending Iowa’s CON Laws That Limit Medical Options and Enrich Established Businesses,” Institute for Justice, 2017: https://ij.org/case/iowa- certificate-need.