Treasurer Folwell Applauds N.C. Supreme Court Decision in Singleton, et al v. Department of Health and Human Services, et al

State Treasurer Dale R. Folwell, CPA, expressed support today for the N.C. Supreme Court's (Court) ruling in favor of New Bern eye surgeon Dr. Jay Singleton. The Court vacated a Court of Appeals' decision and ruled that Mr. Singleton's claims were both as-applied and facial constitutional challenges, so they directed the case to be heard by a three-judge panel (as provided in N.C. Gen. Stat. § 1-267.1).

In 2020, Dr. Singleton filed a lawsuit challenging the state's Certificate of Need (CON) laws that require him to secure a government-issued certificate of need before he can perform most eye surgeries at his vision center. The CON law forces Dr. Singleton to perform most surgeries at New Bern's Carolina East Medical Center at significantly higher costs to the patient. His lawsuit contends that the CON law violates three sections of the North Carolina Constitution.

North Carolina's CON law requires that health care providers that want to expand or open facilities in a particular area must first prove to the satisfaction of the North Carolina Department of Health and Human Services that the new or expanded service is needed by the community. Ostensibly, the purpose of CON regulation is to limit spending and cost by discouraging providers from acquiring unnecessary medical equipment. However, studies show CON laws protect incumbent providers from competition rather than protect patients and payers from unnecessary costs. The federal government has reached the same conclusion and repealed its CON laws.

In June of 2022, Dr. Singleton's lawsuit was dismissed by a unanimous decision of a N.C. Court of Appeals three-judge panel largely on technical grounds. Dr. Singleton then petitioned the court to rehear the case to address the actual issues, but that was denied. Dr. Singleton then filed with the Supreme Court of North Carolina to review his case. In a unanimous decision, the Court vacated the lower court's decision, sending the case back to the trial court. The decision will compel the lower court to address whether the CON law violates the North Carolina Constitution's law of the land, anti-monopoly, and exclusive-privilege clauses.

"As 'keeper of the public purse' and having responsibility for nearly 750,000 members of the State Health Plan, I am very pleased with the Court's decision," Treasurer Folwell said. "We spend $4 billion a year of taxpayers' money providing medical and pharmaceutical coverage for those that teach, protect and otherwise serve the people of this state. CON laws are exactly what they sound like - a con. Every year the hospital cartel, through the North Carolina Healthcare Association, prevents any meaningful change to CON laws. Now, we have an opportunity for the courts to finally recognize that these laws are unconstitutional."

In August 2022, Treasurer Folwell filed an amicus curiae, or "Friend of the Court," brief in support of Dr. Singleton's lawsuit. In that filing, Treasurer Folwell held the position that CON law violates Article I, Sections 19, 32, and 34 of the North Carolina Constitution. He also notes CON laws create an uneven playing field that protects existing large health care providers, which decreases the accessibility, quality and affordability of health care while these large hospitals' profits dramatically increase, to the detriment of North Carolinians.

The State Health Plan, a division of the N.C. Department of State Treasurer, provides health care coverage to nearly 750,000 teachers, current and former lawmakers, state university and community college personnel, active and retired state employees and their dependents. It is one of the largest purchasers of health care and prescription drugs in North Carolina. For more information, visit the SHP website.