SC Supreme Court upholds state regulation of hospitals

04/14/2014 11:26 PM

04/14/2014 11:27 PM

South Carolina’s certificate-of-need law, which regulates the plans of hospitals and nursing homes to expand or build facilities, is permanent law that cannot be eradicated by Gov. Nikki Haley’s veto pen, the state Supreme Court ruled Monday.

The ruling means the S.C. Department of Health and Environmental Control, which oversees health-care facilities, must continue to enforce the certificate-of-need law, which Haley sought to eliminate by vetoing its money.

The 4-1 decision, written by Chief Justice Jean Toal, was one of the most-anticipated rulings expected from the court this year.

Last July, DHEC suspended its enforcement of the certificate-of-need law after Republican Haley vetoed a $1.7 million line item in the state budget that paid for the program and the GOP-controlled House of Representatives sustained her veto.

Haley said the free market, not government regulators, should decide whether a hospital expands, for instance.

DHEC’s suspension of the program drew a lawsuit by the S.C. Hospital Association, S.C. Healthcare Association, and 10 hospitals and nursing homes, which said the state was obligated to enforce the law — first passed by the General Assembly in 1971 — because it remained on the books. It was DHEC’s duty, the group argued, to shift money within its budget to pay for the program, intended to prevent the duplication of expensive health-care services.

The high court agreed, despite Haley’s veto of $1.7 million that the General Assembly appropriated for the program in its 2013-14 budget.

In her veto message, the governor said: “The CON program is an intensely political one through which bureaucratic policymakers deny healthcare providers from offering treatment. We should allow the market to work rather than politics.”

While the S.C. House sustained that veto, state Rep. Brian White, R-Anderson, chairman of the Ways and Means Committee, told House members that DHEC had other money and staffers it could shift to maintain the program, the court noted.

However, DHEC director Catherine Templeton, a Haley appointee, put out a letter telling health-care providers her agency would no longer operate the program. “The sustained veto shows the intention of both the executive and legislative branches to suspend the operation of the CON program,” Templeton wrote.

However, White and state Rep. Murrell Smith, R-Sumter, responded by issuing a joint statement, saying Haley’s and Templeton’s interpretation of the sustained veto was incorrect.

The court’s majority said Haley’s veto could not rescind a state law, which, the court’s majority said, only can be done by the Legislature. It added DHEC could charge fees or shift money to maintain the program, which health-care providers say is needed to prevent chaotic duplication of expensive services.

Associate Justice Costa Pleicones agreed with parts of the majority ruling. But, Pleicones said, the House veto suspended the certificate-of-need law until legislators restored its funding, leaving “all pending matters in limbo.”

Joining Toal in the ruling were Associate Justices Donald Beatty, John Kittredge and Kaye Hearn.

Haley’s office promised Monday to continue fighting the certificate-of-need law, which she opposed while working as a fundraiser for Lexington Medical Center, which was engaged in a decade-long fight to expand.

“The Certificate of Need program is outdated and bad public policy, which is why the governor vetoed it and the House voted to support her decision,” said Doug Mayer, Haley spokesman. “Governor Haley is determined and will continue working with like-minded legislators to reform a clearly politically driven process that puts additional bureaucracy between South Carolinians and their health care decisions.”

DHEC is “disappointed in the court’s decision,” a spokesman said. “We have reviewed the ruling, and intend to file a motion for reconsideration.”

Meanwhile, the S.C. Hospital Association applauded the decision. The association previously said hospitals had put projects worth $60 million on hold as a result of the law’s suspension, adding projects worth $96 million could be affected.

“We are pleased with the opinion,” said Allan Stalvey, the association’s executive vice president.

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