Court upholds certificate of need program

By Chuck Crumbo
Published April 15, 2014

The S.C. Supreme Court has throttled the power of Gov. Nikki Haley’s veto pen by upholding the certificate-of-need law that gives the state authority to approve plans of hospitals and nursing homes to add beds or build new additions.

In a 4-1 ruling issued Monday, the high court said the S.C. Department of Health and Environmental Control must continue to enforce the law, even if Haley vetoed money appropriated by the General Assembly to fund the program.

Last year, Haley used her line item veto power to chop $1.7 million from the 2013-14 state budget to pay for the program, saying the certificate-of-need law was bad public policy and the free market, not government, should determine whether hospitals and nursing homes can expand facilities.

However, House Ways and Means chairman Brian White, R-Anderson, said the House didn’t intend for the program to be shut down even though it agreed to uphold Haley’s veto. Money for the program, White said, could be shifted from other DHEC funds.

DHEC Executive Director Catherine Templeton said she understood the governor’s veto and the Legislature’s vote to uphold it meant they didn’t want the certificate of need program to be enforced.

“Suspending the program has the practical effect of allowing new and expanding health care facilities to move forward without the certificate-of-need process,” Templeton said last June after the General Assembly adjourned.

But a number of health care operations opted to put their projects on hold pending a review of the veto. The S.C. Hospital Association estimated that about $96 million worth of hospital projects may have been affected by Templeton’s decision.

On Monday the Supreme Court ruled that the law is permanent and only the Legislature can repeal it.

“We have held that the permanent law mandating the CON program was not affected by the House of Representatives’ decision to sustain” the veto, the court said. “DHEC’s responsibility to administer the CON Act is not discretionary.”

The court also noted that Haley’s veto only affected funding and not the program even if the governor said in her veto message that she intended to scuttle it.

"However, the governor is not empowered to exercise her veto pen in a manner that so broadly affects public policy and attempts to alter legislative intent by reaching back to repeal a permanent law," the court said.

Using the line item veto to abolish the program, which was enacted in 1971, would “certainly alter and amend legislative intent,” the court said. “Moreover, expanding the line item veto power to allow it to reach a permanent law enacted years earlier by vetoing a line item in an appropriations act would violate the separation of powers doctrine.”

The decision was written by Chief Justice Jean Toal, with Associate Justices Donald Beatty, John Kittredge and Kaye Hearn concurring.

Although he cast the dissenting vote, Associate Justice Costa Pleicones wrote that he agreed with the other four justices ruling that the veto didn’t dissolve the program. But Pleicones said he didn’t think the program could be rebooted without an appropriation from the General Assembly.

Haley administration spokesman Doug Mayer said the governor still believes the program should be shut down and will work to end it.

“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,” Mayer said. “Gov. 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.”

Thornton Kirby, president and CEO of the state hospital association, said he was pleased with the ruling and called on DHEC to begin working with hospitals and health care providers on CON issues.

“We have felt all along that the South Carolina Department of Health and Environmental Control is obligated” to enforce and fund the certificate-of-need law, Kirby said. “In the last 10 months, there has been a great deal of uncertainty in the marketplace. We encourage DHEC to resolve those issues with individual hospitals and other health care providers in a way that upholds the integrity of the CON Act.”

Greenville attorney Billy Wilkins of Nexsen Pruet, who argued the case before the Supreme Court on behalf of the hospital association and other petitioners, hailed the decision as “a victory for good government” in South Carolina.

“No state agency will be allowed to pick and choose the programs it will administer and those it will not,” Wilkins said. “All state agencies must now follow the rule of law and administer all programs enacted into law by our elected officials who make up the General Assembly.”

Meanwhile, a spokesman for DHEC said the agency is considering further action.

"We have reviewed the ruling, and intend to file a motion for reconsideration," said Mark Plowden, DHEC communications director.

Reach Chuck Crumbo at 803-726-7542.

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