Court filing asks judges to declare NC’s CON law unconstitutional

The New Bern eye surgeon who has challenged North Carolina’s certificate-of-need law in court since 2020 now asks a three-judge panel to declare the law unconstitutional.

A unanimous state Supreme Court ruled in October 2024 that Dr. Jay Singleton could move forward with his lawsuit.

An Aug. 4 trial court order transferred the case to a three-judge panel. State law requires those panels when a plaintiff asserts a so-called facial constitutional challenge to a state law. A facial challenge asserts that the law is unconstitutional under all circumstances.

On Monday Singleton filed a motion for partial summary judgment in the case.

“The CON law violates Art. I, § 32 of the North Carolina Constitution on its face because it grants ‘exclusive or separate emoluments or privileges’ not ‘in consideration of public services,’” wrote Singleton’s lawyers, led by representatives of the Institute for Justice.

“The CON law violates Art. I, § 34 of the North Carolina Constitution on its face because it grants ‘monopolies,’ which ‘are contrary to the genius of a free state and shall not be allowed,’” the motion added.

Singleton’s “facial claims under Art. I, §§ 32 and 34 present purely legal questions about which there can be no material factual disputes,” his lawyers wrote. “Because the CON law violates Art. I, §§ 32 and 34 as a matter of law, summary judgment is proper.”

The court filing reserved Singleton’s right to argue at a future date that the CON law is unconstitutional “as applied” to the particular facts of his case. An as-applied challenge would proceed before a single trial judge.

The state Supreme Court’s October 2024 decision revived Singleton’s complaint that state government violates his constitutional rights by blocking him from performing most eye surgeries at his own facility.

In an unsigned unanimous four-page opinion, the court directed the case back to a trial judge.

At the trial level, justices said the judge must take into account two recent unanimous state Supreme Court decisions. One dealt with claims that Kinston engaged in racial discrimination when choosing which city properties to condemn. The other involved Ace Speedway’s claim that state officials violated the Alamance County racetrack owners’ rights when targeting the track for a shutdown during the COVID-19 pandemic.

“This decision clears the way for the trial court to resolve the central issue in this case: Does the CON law violate the North Carolina Constitution’s law of the land, anti-monopoly, and exclusive-privilege clauses?” wrote IJ’s Joshua Windham in an email to Carolina Journal when the Supreme Court issued its ruling.

“The lower courts dismissed this case on two mistaken premises: (1) that the state Supreme Court’s 1973 decision in Aston Park — which struck down the state’s prior CON law under the same three provisions we’re citing here — was ‘moot,’ and (2) that Dr. Singleton was required to apply for a (nonexistent) CON before he could challenge the constitutionality of the CON law,” Windham added.

“Today’s decision rejects both of those premises, and we’re excited to head back down to the trial court where we can finally vindicate Dr. Singleton’s right to provide more affordable care for his patients,” Windham wrote.

Health care providers must secure a CON from state government before building or expanding facilities or purchasing more expensive medical equipment.

Singleton argues that North Carolina’s CON regime forces him to direct his patients to a nearby hospital, CarolinaEast, for most surgeries. The hospital holds the region’s only CON. Singleton says that arrangement proves more expensive and less convenient for patients.

“Plaintiffs brought claims alleging that the Certificate of Need law violates their rights under the Monopolies Clause, Exclusive Emoluments Clause, and Law of the Land Clause of the North Carolina Constitution,” according to the state Supreme Court opinion. “Plaintiffs described their constitutional claims as ‘as-applied’ challenges in the complaint. Both the trial court and the Court of Appeals accepted plaintiffs’ characterization of these claims and evaluated the claims as as-applied challenges.”

“[W]e conclude that plaintiffs’ complaint asserts both facial and as-applied challenges,” Supreme Court justices wrote.

A facial constitutional challenge targets a law in its entirety. The plaintiff asserts that there is no circumstance in which a court could uphold the law as constitutional. An as-applied challenge asserts only that the targeted law is unconstitutional when considering the facts of a particular plaintiff’s complaint.

“Here, plaintiffs’ complaint alleges facts that could undermine the Certificate of Need law’s constitutionality far beyond the particular circumstances of these plaintiffs,” according to the Supreme Court opinion. “Indeed, in their supplemental briefing, plaintiffs acknowledge that, should they prevail, the ‘need for relief that extends beyond [plaintiffs] will likely arise here’ and ‘will likely entail facial relief.’”

“We agree. The complaint contains allegations that, if proven, could render the Certificate of Need law unconstitutional in all its applications,” Supreme Court justices wrote.

Labeling the case both a facial and as-applied challenge is a “crucial determination,” justices wrote. State law requires facial challenges to go before a three-judge Superior Court panel. Singleton has argued his case before a single trial judge.

“Because the trial court and the Court of Appeals mistakenly treated plaintiffs’ claims exclusively as as-applied challenges, we vacate the decision of the Court of Appeals and remand this matter to the Court of Appeals with instructions to vacate the trial court’s judgment and remand for further proceedings,” Supreme Court justices ordered.

The trial court must follow the three-judge panel rules spelled out in NC Gen. Stat. § 1-267.1, along with Rule 42(b)(4) of the Rules of Civil Procedure.

“Because we vacate the decision of the Court of Appeals on this basis, we need not address plaintiffs’ challenges to that decision asserted in the briefing before this Court,” Supreme Court justices added. “However, for the benefit of the trial court on remand, we disavow the Court of Appeals’ jurisdictional analysis concerning the exhaustion of administrative remedies and direct the trial court to this Court’s recent decisions in Askew v. City of Kinston … and Kinsley v. Ace Speedway Racing, Ltd.”

Singleton cited the Ace Speedway ruling in a Sept. 10 filing with the state Supreme Court. His lawyers wrote that the Ace Speedway ruling served as an “additional authority” supporting the surgeon’s legal arguments.

“The court’s decision in Kinsley reaffirms that in North Carolina, economic liberty matters,” Windham told CJ. “The court held that when the state restricts our right to earn a living, we can use evidence, under the fruits of their labor clause, to show the restriction is not ‘reasonably necessary’ to protect the public. That’s exactly the same test the court applied in 1973 when it struck down the state’s first certificate of need law under the law of the land clause.”

“Why does that matter? It means that courts can’t dismiss challenges to economic laws just because government lawyers utter the words ‘public health,’” Windham said. “It means that the state’s supposed reasons for destroying your business aren’t gospel; you can challenge them with facts and show that — in the real world — the law isn’t meaningfully serving the public.”

The John Locke Foundation, which oversees Carolina Journal, supports Singleton’s legal fight against state CON regulations that block him from performing procedures in his own building.

Locke and constitutional law scholar John Orth filed a joint friend-of-the court brief in the case in November 2023. The Goldwater Institute also submitted a friend-of-the-court brief supporting Singleton.

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