Monday, September 05, 2011

Hospital’s Antitrust Challenge to Washington Certificate-of-Need Regulation Fails

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Washington state regulations requiring hospitals to obtain a certificate of need from the Washington State Department of Health in order to perform certain procedures, such as stent implantation and laser angioplasty, were not preempted by Sherman Act, Section 1,
the U.S. Court of Appeals in San Francisco has ruled.

A complaining hospital contended that the regulations prevented it from providing the procedures, known as elective percutaneous coronary interventions (PCI), on a nonemergency basis.

Judgment in favor of the Washington State Department of Health on the hospital’s antitrust claim (2010-2 Trade Cases ¶77,294) was upheld.

Federal Preemption

The PCI regulations were a unilateral restraint of trade not subject to preemption, the court held. The regulations were complete upon enactment, and did not delegate any regulatory power to incumbent licensees.

The court rejected the hospital’s argument that the PCI regulations granted regulatory power to incumbent licensees by calculating the need for a new certificate based in part on the number of PCI procedures they perform, thereby allowing the incumbent licensees to manipulate the number of PCIs they perform so as to exclude competing hospitals from the elective PCI market.

Nothing about the PCI regulations involved private discretion to engage in per se anticompetitive
conduct. Absent a hybrid restraint or other per se violation of the antitrust laws, there was no preemption.

The decision in Yakima Valley Memorial Hosp. v. Washington State Dept. of Health will appear in CCH Trade Regulation Reporter.

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