How this case is decided could redefine the balance between government regulation and economic freedom in North Carolina’s healthcare system. Singleton is not just a dispute between a doctor and the State. It represents an issue with broad consequences on North Carolina’s economy and healthcare system.
Introduction
In North Carolina, an unassuming legal battle threatens to reshape the State’s healthcare landscape. North Carolina’s Certificate of Need law (CON), long justified by supporters as a tool to control healthcare costs, is now facing mounting opposition from practitioners, who argue it infringes on their economic liberty and violates the North Carolina Constitution. This is demonstrated in the ongoing case Singleton v. NC DHHS. Dr. Jay Singleton, a New Bern ophthalmologist, has sued the NC Department of Health and Human Services (NCDHHS). Singleton argued that North Carolina’s CON law violates the state’s constitution. This lawsuit raises fundamental constitutional questions about exclusive privileges, monopolies, and the rights of North Carolinians to earn a living.
Background and History
North Carolina’s CON law prohibits healthcare providers from acquiring certain medical equipment, developing new healthcare services or facilities without the prior approval from the state’s Department of Health and Human Services (DHHS). Regulated by statute, NCGS § 131E-78 states that “no person shall offer, develop, or acquire a new health service without obtaining a CON” from NC-DHHS. This limitation includes capital expenditures for new health services, meaning that practitioners would be unable to spend money on developing new services, such as psychiatric services, without approval. The CON law covers around twenty-five devices and services, ranging from hospital beds and MRI scanners to psychiatric services. This means that if a healthcare provider wants to acquire a new device or provide an additional service covered by the CON law, it will first need to receive a CON from the State before moving forward.
The CON law was first passed in 1971 by the General Assembly to control the increasing cost of healthcare. Less than two years later, the North Carolina Supreme Court struck down the law for violating the North Carolina Constitution. Particularly, the Court pointed to Article 1, Sections 32 and 34: forbidding the grant of exclusive privileges and establishment of monopolies. Under these Sections, the State is barred from granting exclusive emoluments or monopolies unless “in consideration of public services.” The court has construed this to mean that the State must show a rational relation between the law and public health, safety, or welfare. If the State cannot, the law violates the Constitution. The court reasoned that the CON law did not have a “rational, real, or substantial relation to the public health, morals, order, or safety of the general welfare.” In response, the General Assembly passed another CON law, this time supplemented with findings of fact to clarify the law’s relationship to public health, morals, order, safety, and the general welfare.
North Carolina’s CON law was a part of a broader trend during the late 1960s and early 1970s. CON laws were implemented by states to deal with rising healthcare costs. In 1974, the federal government passed a law that granted states federal funds if they adopted certificate of need laws. Nearly every state adopted certificate of need laws within 10 years of the federal law; North Carolina was one of them.
However, the federal government soured on these laws in the late 1980s and repealed the program. Members of Congress who supported the repeal argued that the CON laws had failed to control health care costs. As a result, 19 states have chosen to abandon their CON laws as of 2025. North Carolina, however, has maintained its CON law and continues to be one of the most restrictive grantors of certificates of need.
Each year, the North Carolina Department of Health and Human Services, under the direction of the North Carolina State Health Coordinating Council, prepares the State Medical Facilities Plan.[1] This plan provides individuals, organizations, and state and local government agencies with projections of need to guide local planning for specific health care facilities and services. Throughout the development of the plan, the agency holds public hearings and allows for public comment.
After the Department considers these comments, a final plan is presented to the Governor for approval. If the Governor approves, the Plan then details the facilities and health services for which CONs are available for the year. Applications to obtain a CON are submitted to the Department for approval. To be approved, an application must be consistent with fifteen statutory criteria. One criterion requires that the proposed project is consistent with the State Medical Facilities Plan. If a proposed project passes the statutory criteria, it will be included in the State Medical Facilities Plan that is submitted to the Governor for approval.
Singleton’s Arguments
Dr. Jay Singleton is an eye doctor in New Bern who wanted to conduct surgeries at his clinic but was repeatedly unable to secure a CON. Dr. Singleton sued the Department of Health and Human Services (DHHS), hoping that the CON law would be held unconstitutional. If successful, Singleton would be able to expand and develop his practice unimpeded.
Dr. Singleton argues that Article I, Sections 1, 19, 32, and 34 of the State Constitution are violated by the Certificate of Need law. Article I, Section 1 discusses the rights of citizens to enjoy the fruits of their own labor without fear of government interference. Article I, Section 19, the “law of the land clause,” operates as the State’s due process clause. The other two constitutional provisions, Article I, Sections 32 and 34, prohibit the grant of exclusive rights or emoluments and the establishment of monopolies.
Singleton’s argument centers around Article I, Sections 32 and 24. These Sections forbid the government from granting exclusive rights to provide private services. However, a monopoly or exclusive right may be permitted if it is in consideration of public services. Singleton is arguing that the CON law grants a monopoly and exclusive right—and further, that the public service exception does not apply here. Singleton focuses his argument on CarolinaEast.
CarolinaEast is another medical provider and the current holder of the CON for the region. Singleton argues that CarolinaEast operates as a monopoly through the CON that was granted by the State. He reasons that, by granting this CON to CarolinaEast and denying it to him, the State has created a monopoly for medical services in his community. Singleton also contends that the public service exception does not apply because the government is not providing a public service but instead blocking private services from being offered.
Singleton relies heavily on In re Certificate of Need for Aston Park Hospital, where the North Carolina Supreme Court struck down the State’s first CON law as unconstitutional. The Court held that the State cannot forbid the creation of new hospitals, even if existing ones were deemed “sufficient,” without creating a monopoly in violation of Article I, Sections 32 and 34. Singleton argues that today’s law is analogous to the original CON law.
State’s Argument
The State contends that the CON law is a valid exercise of its police powers, and thus the emoluments and the monopoly clauses have not been violated by the CON law. Regarding emoluments, the State points out that classifications favoring certain providers are permissible if they promote the general welfare. Regarding the monopoly clause, the state insists that the law does not create permanent monopolies because a CON may be granted in the future if the state determines a need, meaning no healthcare provider has an absolute right to exclusivity.
The State also cites precedent case law. In Hope–A Women’s Cancer Center v. State, the North Carolina Court of Appeals upheld the constitutionality of the CON law, ruling that it fell within the legislature’s police powers to protect public health. The State argues that the court should adopt the Court of Appeals ruling and apply it to Singleton.
Broader Implications
Singleton’s case raises the possibility that the CON law is ruled unconstitutional by the North Carolina Supreme Court. The outcome of Singleton could have sweeping consequences for healthcare systems in North Carolina. Supporters and opponents differ as to the effect that the CON law has on the State. Supporters largely argue that the law allows vulnerable populations to access healthcare and boosts the economy of North Carolina. More specifically, they argue that healthcare is not just another economic sector, but a public good, made available to the less fortunate through the CON law. Whereas the opponents of the law argue that the CON law discourages competition in the healthcare market, thus allowing elevated healthcare prices to persist. They believe this is primarily an economic issue concerning market access and overbearing government regulations.
Invalidating the Law–Positive Implications
Invalidating the CON law could positively impact North Carolina. For instance, Singleton argues that healthcare costs might decline due to increased competition. Singleton explains that he could perform the same surgery for $1,800 instead of the $6,000 he alleges that CarolinaEast, the current CON holder in the area, offers it for. Additionally, others argue that access to care could expand in urban areas where new providers would be able to enter the market to serve the higher need present there.
The Americans For Prosperity Foundation has released a study showing that North Carolina’s CON law has stifled investment in the healthcare industry by up to $4.2 billion in denied applications over the past 13 years. The study cites cost barriers to entry for health care entrepreneurs in North Carolina, with estimated applicants paying an average fee of $13,000 per CON application. This does not include the cost of hiring legal representation to prepare applications and defend the application from opponents, which can increase costs. Americans for Prosperity uses these statistics to imply that CON laws create a stagnant and prohibitive healthcare market that decreases investment and increases costs for the consumer. Presumably, if this law were to be invalidated, more economic investment and economic growth would occur in North Carolina’s healthcare market.
Invalidating the Law–Negative Implications
In contrast, repealing the CON law could have significant negative consequences for North Carolina. Supporters of the law warn that rural communities could suffer if providers begin to flock to the more profitable urban areas, leaving rural areas underserved. Further, the American Hospital Association argues that CON law protects community hospitals from being undercut by specialty clinics that could pop up to prioritize profitable procedures. The fear is that these specialty clinics cut into reliable sources of revenue, leaving hospitals unable to compete effectively in the market.
The American Hospital Association points to Texas as an example of what happens when CON laws are repealed. After repeal, the number of rural hospital closures in Texas spiked, rising from three in 1985 to twenty-three between 1987 and 1989. At the same time, Texas has increased its number of healthcare providers to one of the highest in the country. These providers have not improved access to emergency services in underserved parts of the state but are instead concentrated in urban and wealthier communities. The Association emphasizes that North Carolina has the second largest rural population in the country behind Texas, thus the repeal of the CON law would be felt most harshly in rural communities where access to care would be the least profitable.
Supporters of the CON law emphasize that a strong CON program attracts and keeps the healthcare industry in the state, which creates countless jobs for North Carolina workers. The healthcare system contributes around $40 billion in State GDP and supports nearly 500,000 jobs, either directly through the hospitals themselves or indirectly through the other related industries. In addition to this economic contribution, the CON system also provides over $1 billion in charity care, which ensures that people with less resources can receive care even when they cannot afford it.
Finally, supporters make the argument that repealing the CON law will increase healthcare costs instead of lowering them. Supporters point to other states such as Georgia, Ohio, and Pennsylvania, which showed that, after removing CON programs, all three states had faster growth in expenditures for hospital and physician services than the average state. The concern over increased costs seems to stem from the fear that doctors and physicians will recommend unnecessary services that are more profitable but ultimately don’t contribute to patient outcomes.
Where Do We Go From Here?
Singleton is far from over. After recent arguments at Campbell Law School, the Superior Court ruled in favor of the State. The case is now winding its way back up the appellate process. Regardless of the outcome in the lower courts, the matter is expected to be returned to the North Carolina Supreme Court for a final determination. How this case is decided could redefine the balance between government regulation and economic freedom in North Carolina’s healthcare system.
Singleton is not just a dispute between a doctor and the State. It represents an issue with broad consequences on North Carolina’s economy and healthcare system. If the law stands, the state will retain its broad authority to manage healthcare markets. If it is ruled unconstitutional, the decision could usher in a new era of competition with potential consequences for rural and poorer communities in North Carolina. Either way, the ruling will mark a turning point in the state’s ongoing struggle to balance consumer costs, access to health care, and constitutional rights.
