THE BLOG
10/29/2014 02:09 pm ET Updated Dec 29, 2014

Judicial Abdication in Virginia: Judge Rubber-Stamps Health Care Cartel

Most Americans would probably agree that the government should not protect politically powerful business interests from competition simply because they are politically powerful. Such protectionism offends a very basic sense of fairness that Americans share.

But economic protectionism is not only unfair. It is unconstitutional. And yet, last week, in a particularly glaring example of judicial abdication, a federal judge rubber-stamped Virginia's certificate-of-need (CON) program while ignoring evidence that it serves only to enrich established health care providers.

A CON is not a license to practice medicine -- it is a permission slip to compete. Virginia's CON scheme mandates that providers of medical services first prove that the new service or equipment is "necessary" before they are permitted to open up new offices or purchase new equipment. The CON process can take years to complete and a hundred thousand dollars or more. The state even invites existing hospitals and providers to jump in and oppose would-be competitors' applications to purchase new equipment or provide new services.

In this case, Institute for Justice client Colon Health Centers seeks to fill an unmet need in Virginia for "virtual" colonscopies, which use non-invasive imaging technology. IJ client Progressive Radiology wants to use an MRI to diagnose injuries to the joints, bones, brain and spine, serving an expected 400 patients per month. In blocking those plans, the state did not argue that the plaintiffs were unqualified or unsafe -- just that their services were not "necessary."

Given that there are no concerns with either the plaintiffs' services or qualifications, we must ask: What was the government really up to? As is so often the case, the only plausible answer is naked economic protectionism. The government has no objection to doctors offering their services or operating new equipment in principle, but it does have an objection to them competing with already-established businesses.

Creating health care cartels is not merely bad policy -- it is unconstitutional. The Supreme Court has held that legislation designed to further the interests of entrenched local businesses violates the Constitution. That's because protectionism is not a legitimate end of government.

But last week, a federal judge ignored evidence of protectionism and upheld Virginia's medical CON scheme. Applying the so-called "dormant Commerce Clause" doctrine, which prohibits states from favoring their own residents at the expense of nonresidents, the judge concluded that the local benefits of Virginia's CON program outweighed any incidental burden on interstate commerce--even though there was no evidence that the scheme provides any such benefits at all. The judge also failed to mention undisputed evidence that Virginia's CON program has kept nearly $100 million in imaging equipment out of the state. Finally, the judge refused to consider the impact of the scheme on entities that considered applying but were deterred by the grueling nature of the approval process, referring to this inquiry as a "fool's errand."

How is that a "fool's errand?" Did the judge really believe that a process that costs would-be entrepreneurs thousands of dollars and requires that they navigate a bureaucratic obstacle course for years would not deter them from applying? No one who has any idea about what it takes to get a business up and running could think so.

Simply put, the judge in this case did not actually judge -- he went through the motions of judging. He did not make a genuine, neutral inquiry into the truth concerning the government's ends. He acted as an advocate for one party, rationalizing his way to a predetermined, government-favoring outcome. Such abdication of judicial responsibility makes a mockery of due process of law.

Judges are charged with the duty of ensuring that the government does not restrict people's liberty for no constitutionally legitimate reason. They cannot perform that duty if they do not carefully scrutinize evidence. In 2012, the district court dismissed the plaintiffs' challenge in this case and was reversed by an engaged 4th U.S. Circuit Court of Appeals. "The district court gave a serious claim the back of its hand," wrote Circuit Judge J. Harvie Wilkinson III. Once again, the Fourth Circuit must right a judicial wrong.