Lee Birchansky v. Gerd Clabaugh
955 F.3d 751
| 8th Cir. | 2020Background
- Plaintiffs: two outpatient surgery providers (Birchansky/Fox Eye and Korver ENT) and two of their patients challenging Iowa’s Certificate of Need (CON) statute and a capital-expenditure exemption under the Fourteenth Amendment.
- Iowa CON law requires state approval to open/expand outpatient surgery centers; applications are time-consuming, costly, and adversarial, with hospitals often opposing new CONs.
- Two relevant exemptions: (1) capital-expenditure exemption — owners with an existing CON may open/expand facilities costing ≤ $1,500,000 annually and within the same or contiguous county without a new CON; (2) sale/transfer exemption permitting CON-holders to sell facilities to new owners who then operate without a new CON.
- Facts: Birchansky obtained a CON in 2017 after repeated denials and hospital opposition and seeks to open another noncontiguous outpatient eye center; Korver ENT wants to convert its office to an outpatient surgery center but lacks a CON and fears the application process; patients prefer lower-cost, personalized care at these proposed centers.
- Procedural posture: District court dismissed the Privileges and Immunities claim and granted summary judgment to the State on the remaining claims; appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Privileges and Immunities Clause | CON and exemption deny providers the right to earn a living protected by the Clause | Slaughter-House forecloses a national-rights reading; no relief | Dismissed — claim foreclosed by Slaughter-House Cases |
| Patients' substantive due process right | Patients claim a fundamental right to receive approved medical care from a particular provider at a particular facility | State says no fundamental right implicated; at most burden on choice of provider/location | Not fundamental; strict scrutiny rejected; rational-basis review applied |
| Providers' substantive due process right | Providers assert a liberty interest to provide approved medical services without undue CON interference | State argues regulation of entry/organization of health services is permissible regulation | No fundamental right; regulation upheld under rational basis |
| Equal protection challenge to capital-expenditure exemption | Exemption arbitrarily favors existing CON-holders (including non-hospital CON-holders) and disadvantages new entrants | Exemption rationally furthers legitimate state interest in protecting full-service hospital viability; some imprecision is permissible | Upheld under rational-basis review; exemption does not invalidate CON regime |
Key Cases Cited
- Slaughter-House Cases, 83 U.S. 36 (1873) (privileges and immunities claim foreclosed under precedent)
- Cruzan v. Director, Missouri Department of Health, 497 U.S. 261 (1990) (recognized liberty interests in refusing medical treatment but did not create a right to choose provider/location)
- Washington v. Glucksberg, 521 U.S. 702 (1997) (framework for identifying fundamental rights under substantive due process)
- Planned Parenthood of Greater Iowa, Inc. v. Atchison, 126 F.3d 1042 (8th Cir. 1997) (CON regime subjected to strict scrutiny in context of restricting access to abortion services)
- F.C.C. v. Beach Communications, Inc., 508 U.S. 307 (1993) (rational-basis review requires only conceivable legitimate purpose)
- Dandridge v. Williams, 397 U.S. 471 (1970) (some imprecision and inequality tolerated under rational-basis review)
- United Hosp. v. Thompson, 383 F.3d 728 (8th Cir. 2004) (rational-basis sufficiency where regulation incompletely addresses a problem)