State Supreme Court set to weigh in on radiology certificate-of-need battle
The Supreme Court of North Carolina will soon weigh in on a certificate-of-need battle between two radiology providers in the Tarheel State.
As previously reported in April, Pinnacle Health Services and Duke are arguing in court over their ability to add additional MRI services in Wake County. The North Carolina Department of Health and Human Services first awarded a certificate of need to Duke in 2021 to add an MRI machine at its campus in Raleigh. But Cardinal Points Imaging of the Carolinas, part of Pinnacle, later appealed, with the decision advancing through multiple challenges to eventually reach the Supreme Court this year.
The Carolina Journal has a detailed accounting of the case, noting that an administrative law judge ruled in 2022 that healthcare regulators made legal errors when selecting Duke. This resulted in a reversal of the 2021 certificate, instead granting Pinnacle the right to add an MRI machine. An appeals panel affirmed the decision in September 2023, with Duke now arguing before North Carolina’s highest court.
Pinnacle criticized the academic institution and its legal strategy in a March court filing.
“Here, an executive agency told Pinnacle that it could not install a fixed MRI scanner in Wake Forest, even though that geographic area is currently served by zero such scanners and even though Pinnacle demonstrated that it could provide the service at lower cost than other providers,” Pinnacle’s attorneys wrote. “The agency instead let Duke add a fixed MRI scanner to its facility in the heart of Raleigh, where Duke and other providers already have a bevy of scanners available for the public.”
Administrative Law Judge Melissa Owens Lassiter in her July 2022 ruling noted that Pinnacle deserved to win the right to add an MRI machine.
“ALJ Lassiter concluded the [Department of Health and Human Service’s] decision was based on material errors in the geographic accessibility analysis that led to the erroneous decision that Duke’s application would be more effective,” Judge Julee Flood later wrote for the appeals court majority that upheld Lassiter’s decision. “ALJ Lassiter further concluded the agency erroneously failed to follow principles used to determine historical utilization, which would have revealed Pinnacle’s as the more effective application. Finally, ALJ Lassiter concluded Pinnacle met its burden of demonstrating the agency’s decision substantially prejudiced its rights.”
CON, or certificate of need, laws are state regulatory mechanisms for approving major capital expenditures for certain healthcare facilities, according to the National Conference of State Legislatures. Such regulations are meant to control costs and avoid unnecessary or duplicative expansion in a defined geography. However, critics have accused providers of wielding CON laws inappropriately to limit competition. About 35 states and Washington, D.C., operate CON programs, according to the National Conference of State Legislatures.
Read more about the case’s complicated history from the Carolina Journal:
Marty Stempniak has covered healthcare since 2012, with his byline appearing in the American Hospital Association's member magazine, Modern Healthcare and McKnight's. Prior to that, he wrote about village government and local business for his hometown newspaper in Oak Park, Illinois. He won a Peter Lisagor and Gold EXCEL awards in 2017 for his coverage of the opioid epidemic.