PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 14-2283

COLON HEALTH CENTERS OF AMERICA, LLC; WASHINGTON IMAGING

ASSOCIATES-MARYLAND, LLC, d/b/a Progressive Radiology,
Plaintiffs - Appellants,
v.
BILL HAZEL, in his official capacity as Secretary of Health
and Human Resources; BRUCE EDWARDS, in his official capacity
as Chair of the Virginia State Board of Health; JAMES E.
EDMONDSON, JR., in his official capacity as member of the
Virginia State Board of Health; STEVEN R. ESCOBAR, in his
official capacity as member of the Virginia State Board of
Health; M. CATHERINE SLUSHER, in her official capacity as
member of the Virginia State Board of Health; AMY VEST, in
her official capacity as member of the Virginia State Board
of Health; ERIC O. BODIN, in his official capacity as
Director of the Office of Licensure and Certification; JOHN
W. SEEDS, in his official capacity as member of the Virginia
State Board of Health; MARISSA LEVINE, in her official
capacity as the State Health Commissioner; BRADLEY BEALL, in
his official capacity as member of the Virginia State Board
of Health; THERESA MIDDLETON BROSCHE, in her official
capacity as member of the Virginia State Board of Health;
MEGAN C. GETTER, in her official capacity as member of the
Virginia State Board of Health; HENRY N. KUHLMAN, in his
official capacity as member of the Virginia State Board of
Health; HONORABLE FAYE PRICHARD, in her official capacity as
member of the Virginia State Board of Health; BENITA MILLER,
in her official capacity as member of the Virginia State
Board of Health; PETER BOSWELL, in his official capacity as
Director of the Division of Certificate of Public Need; TOM
EAST, in his official capacity as member of the Virginia
State Board of Health; LINDA HINES, in her official capacity
as member of the Virginia State Board of Health; HONORABLE

MARY MARGARET WHIPPLE, in her official capacity as member of

the Virginia State Board of Health,
Defendants - Appellees.
------------------------------------------SHENANDOAH
INDEPENDENT
PRACTICE
ASSOCIATION,
INC.;
SHENANDOAH
SURGEONS
LLC;
CHRISTOPER
KOOPMAN,
Research
Fellow, The Mercatus Center at George Mason University;
MATTHEW MITCHEL, Senior Research Fellow, The Mercatus Center
at George Mason University; THOMAS STRATMANN, University
Professor of Economics and Law, Department of Economics,
George Mason University; ROBERT GRABOYES, Senior Research
Fellow, Mercatus Center at George Mason University; JAKE
RUSS, Graduate Fellow, Mercatus Center at George Mason
University; JAMES BAILEY, Assistant Professor of Economics,
Department of Economics and Finance, Creighton University,
Amici Supporting Appellants,
THE VIRGINIA HOSPITAL & HEALTHCARE ASSOCIATION; THE VIRGINIA
HEALTH CARE ASSOCIATION; THE STATE OF WASHINGTON; THE STATE
OF ARIZONA; THE STATE OF HAWAII; THE STATE OF MISSISSIPPI;
THE STATE OF VERMONT,
Amici Supporting Appellees.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria.
Claude M. Hilton, Senior
District Judge. (1:12-cv-00615-CMH-TCB)

Argued:

December 10, 2015

Decided:

January 21, 2016

Before WILKINSON, KING, and WYNN, Circuit Judges.

Affirmed by published opinion.

Judge Wilkinson
opinion, in which Judge King and Judge Wynn joined.

wrote

the

ARGUED:
Darpana
Sheth,
INSTITUTE
FOR
JUSTICE,
Arlington,
Virginia, for Appellants. Stuart Alan Raphael, OFFICE OF THE
2

ATTORNEY GENERAL OF VIRGINIA, Richmond, Virginia, for Appellees.

ON BRIEF: Robert J. McNamara, William H. Mellor, Mahesha P.
Subbaraman, INSTITUTE FOR JUSTICE, Arlington, Virginia, for
Appellants.
Mark R. Herring, Attorney General, Cynthia V.
Bailey, Deputy Attorney General, Christy W. Monolo, Assistant
Attorney General, Carly L. Rush, Assistant Attorney General,
Farnaz F. Thompson, Assistant Attorney General, Trevor S. Cox,
Deputy Solicitor General, OFFICE OF THE ATTORNEY GENERAL OF
VIRGINIA, Richmond, Virginia, for Appellees. Milad Emam, WILEY
REIN LLP, Washington, D.C., for Amici Shenandoah Independent
Practice Association and Shenandoah Surgeons LLC.
Jared M.
Bona, Aaron R. Gott, BONA LAW P.C., La Jolla, California, for
Amici Scholars of Economics and Scholars of Law and Economics.
Robert W. Ferguson, Attorney General, Alan D. Copsey, Deputy
Solicitor General, Richard A. McCartan, Senior Counsel, OFFICE
OF THE ATTORNEY GENERAL OF WASHINGTON, Olympia, Washington; Mark
Brnovich, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF
ARIZONA, Phoenix, Arizona; Douglas S. Chin, Attorney General,
OFFICE OF THE ATTORNEY GENERAL OF HAWAII, Honolulu, Hawaii; Jim
Hood, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF
MISSISSIPPI, Jackson, Mississippi; William H. Sorrell, Attorney
General, OFFICE OF THE ATTORNEY GENERAL OF VERMONT, Montpelier,
Vermont, for Amici States of Washington, Arizona, Hawaii,
Mississippi and Vermont. James J. OKeeffe, IV, JOHNSON, ROSEN &
OKEEFFE, LLC, Roanoke, Virginia; Jamie Baskerville Martin,
Jeremy A. Ball, Jennifer L. Ligon, MCCANDLISH HOLTON, Richmond,
Virginia, for Amici Virginia Hospital & Healthcare Association
and Virginia Health Care Association.

WILKINSON, Circuit Judge:

Virginias certificate of need (CON) program governs the
establishment and expansion of certain medical facilities inside
the

state.

services,

In

this

Colon

case

Health

two

providers

Centers

of

of

America

medical
and

imaging

Progressive

Radiology, argue that the CON law unconstitutionally violates

the dormant aspect of the Commerce Clause. The district court
held

that

the

certificate

requirement

neither

discriminated

against nor placed an undue burden on interstate commerce, and

granted summary judgment to the Commonwealth. For the reasons
that follow, we affirm.
I.
A.
Much of the background and many of the claims in this case
have

been

set

forth

in

our

prior

opinion.

See

Colon

Health

Centers of Am., LLC v. Hazel, 733 F.3d 535 (4th Cir. 2013).
Virginia

is

one

of

thirty-six

states

that

requires

medical

service providers to obtain a certificate of public need in

order to establish or expand operations within its borders.

Va.

Code Ann. 32.1102.1 et seq.; 12 Va. Admin. Code 522010

et

seq.

capital

Virginias

CON

expenditures,

tomographic
facilities.

(CT)
See

including

and
Va.

program

applies

investments

magnetic

Code

Ann.
4

to

most
in

resonance

32.1-102.2.

health
new

computed

imaging
It

care

does

(MRI)
not,

however, cover the [r]eplacement of existing equipment. Id. at

32.1102.1.

The

program

requires

that

an

applicant

show

sufficient public need for its proposed venture in the relevant

geographic

area.

mechanism

helps

facilities,

Virginia
prevent

protect

providers,

promote

asserts

the

that

redundant

the

economic

indigent

care,

this

preapproval

accretion

viability
and

assist

of
of

medical
existing

cost-effective

health care spending.

Firms that seek to obtain a certificate of need must file
their completed applications with the Department of Health and
the appropriate regional health planning agency. Id. at 32.1
102.6. Applicants pay a fee of one percent of the projects
expected capital cost, but no less than $1,000 and no more than
$20,000. 12 Va. Admin. Code 5-220-180(B). The submissions are
grouped into subcategories based on project type and evaluated
in

process

called

batching.

The

code

mandates

that

the

review process be completed within 190 days of the start of the

applicable batch cycle. Va. Code Ann. 32.1102.6.
Five regional health planning agencies across the state are
charged with conducting, within 60 days, initial investigations
into their respective regions applications. During this stage
of

review

vicinity

the
of

agencies

the

must

proposed

hold

investment

public
site,

hearing
where

in

the

interested

individuals and local governing bodies may submit comments to

5

assist the agencies in their evaluations. After examining the

data and reviewing the testimony before them, the agencies are
directed

to

provide

the

Department

of

Health

with

their

recommendations to approve or deny each application. Id.

The

Department,

concurrently

with

the

regional

health

planning agencies, reviews the completed applications upon the

commencement of the appropriate batch cycle. The Department is
required to assess whether an informal fact-finding conference
is warranted. Such a proceeding will be held if the Department
independently

determines

that

it

is

necessary

or

if

an

intervening party demonstrates that good cause exists to conduct

it. Va. Code Ann. 32.1-102.6(E). The date on which the record
closes

on

the

application

varies

depending

on

whether

an

informal fact-finding conference is conducted.

The code instructs that a certificate may not be issued
unless

the

State

Health

Commissioner

has

determined

that

public need for the project has been demonstrated. Id. at

32.1102.3(A).

The

Commissioners

decision

is

due

forty-five

days after the record closes, but that period may be extended by
an

additional

twenty-five

days.

Id.

at

32.1-102.6(E).

In

making his assessment, the Commissioner must consider a number

of factors, although no single factor is dispositive.
32.1102.3(B)(1)(8).

For

example,

the

Commissioner

Id. at
evaluates

[t]he extent to which the proposed service or facility will

6

provide or increase access to needed services for residents of

the area to be served, and [t]he relationship of the project
to the existing health care system of the area to be served,
including the utilization and efficiency of existing services or
facilities. Id. at 32.1102.3(B)(1),(5). An application is
considered

approved

and

certificate

is

granted

if

the

Commissioner fails to issue a decision within seventy days after

the closing of the record.
Constructing
operations

new

facilities

certificate

without

or
of

augmenting
need

is

existing

Class

misdemeanor, punishable by fines of up to $1,000 for each day a

service provider is in violation of the statute. Id. at 32.1
27.1. Applicants and other interested persons dissatisfied with
the Commissioners decision may seek judicial review under the
Virginia Administrative Procedure Act. See id. at 32.124.
B.
Appellants Colon Health Centers and Progressive Radiology
are

out-of-state

through

the

services

use
in

medical
of

providers

private

Virginia.

funds,

who

wish

to

specialized

Appellants

establish,
MRI

and

challenged

CT
the

constitutionality of the CON program, claiming that it violates

the

dormant

Amendments
Immunities

Commerce
Equal

Clause

Protection,

Clauses.

The

as
Due

district
7

well

as

Process,
court

the

and

Fourteenth

Privileges

dismissed

or

appellants

suit under Federal Rule of Civil Procedure 12(b)(6) for failure

to state a claim upon which relief may be granted. Colon Health
Centers of Am., LLC v. Hazel, No. 1:12CV615, 2012 WL 4105063, at
*11 (E.D. Va. Sept. 14, 2012).
On

appeal,

Fourteenth

we

Amendment

affirmed
claims,

the

dismissal

reversed

the

of

appellants

dismissal

of

the

dormant Commerce Clause claim, and remanded the case for further
factual development on the Commerce Clause issue. Colon Health,
733 F.3d at 539. After careful consideration of the parties
arguments, we made clear that this case is one of heightened
importance, and emphasized the fact-intensive quality of the
dormant Commerce Clause analysis. Id. at 545.
The district court conducted an extensive discovery process
on remand, and ultimately granted summary judgment in favor of
the

Commonwealth.

J.A.

1509-27.

Colon

Health

and

Progressive

Radiology now urge us to reverse that decision on two grounds.

First, appellants argue that Virginias CON requirement violates
the dormant Commerce Clause by discriminating against interstate
commerce in both purpose and effect. Second, appellants contend
that

even

discriminate,

if
it

the

program

does

nevertheless

not

violates

the

unconstitutionally
dormant

Commerce

Clause because it places an undue burden on interstate commerce.

We address each of these arguments in turn.

II.
A.
The
settled.

general
The

framework

Commerce

of

the

Clause

gives

law

in

this

Congress

area

the

is

power

well
[t]o

regulate Commerce . . . among the several States. U.S. Const.

art. I, 8, cl. 3. Although by its terms the clause speaks only
of

congressional

authority,

the

[Supreme]

Court

long

has

recognized that it also limits the power of the States to erect

barriers against interstate trade. Dennis v. Higgins, 498 U.S.
439, 446 (1991) (quoting Lewis v. BT Inv. Managers, Inc., 447
U.S. 27, 35 (1980)). This implicit or dormant constraint is
driven
that

primarily
is,

by

concerns

regulatory

over

measures

economic

designed

protectionism --

to

benefit

in-state

economic interests by burdening out-of-state competitors. New

Energy Co. of Ind. v. Limbach, 486 U.S. 269, 273-74 (1988).
To that end, the Supreme Court has instructed that [t]he
principal
statutes

objects
that

of

dormant

discriminate

Commerce

against

Clause

interstate

scrutiny

are

commerce.

CTS

Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 87 (1987) (emphasis

added).

[W]hen

interstate

Jims

state

commerce,

discrimination
unrelated

to

is

will

demonstrably

economic

Motorcycle,

it

statute
be

[]

struck

justified

protectionism.

Inc.,

401

discriminates

F.3d
9

down
by

Yamaha

560,

567

against

unless
valid

Motor
(4th

the

factor

Corp.

Cir.

v.

2005)

(quoting Wyoming v. Oklahoma, 502 U.S. 437, 454 (1992)). While

discrimination simply means differential treatment of in-state
and out-of-state economic interests that benefits the former and
burdens the latter, Or. Waste Sys., Inc. v. Dept of Envtl.
Quality

of

economic

State

harms

or

of

Or.,

511

U.S.

anticompetitive

93,

choices

99

(1994),

can

or

not

should

all
be

remedied through application of the dormant Commerce Clause. See

Brown v. Hovatter, 561 F.3d 357, 363 (4th Cir. 2009). Under the
prevailing framework courts must chart a narrow course between
rebuff[ing] attempts of states to advance their own commercial
interests

by

curtailing

the

movement

of

articles

of

commerce . . . [and] generally supporting their right to impose

even burdensome regulations in the interest of local health and
safety. H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 535
(1949).
Recognizing this difficulty, the Supreme Court has advised
courts in this context to eschew[] formalism for a sensitive,
case-by-case analysis. W. Lynn Creamery, Inc. v. Healy, 512
U.S. 186, 201 (1994). In other words, courts are not bound by
[t]he name, description or characterization given [the law] by
the legislature or the courts of the State. Colon Health, 733
F.3d

at

546

(quoting

Hughes

v.

Oklahoma,

441

U.S.

322,

336

(1979)). The principal focus of inquiry must be the practical

operation of the statute, since the validity of state laws must
10

be judged chiefly in terms of their probable effects. Lewis,

447

U.S.

at

37;

see

also

Yamaha,

401

F.3d

at

568.

The

discrimination test can thus be described as both flexible and

finite:

Courts

are

afforded

some

latitude

to

determine

for

themselves the practical impact of a state law, but in doing so

they must not cripple the States authority under their general
police powers to regulate matters of legitimate local concern.
Maine v. Taylor, 477 U.S. 131, 138 (1986) (internal quotation
marks omitted).
B.
A

state

commerce

in

statute
one

of

may

three

discriminate
ways:

against

facially,

in

its

interstate
practical

effect, or in its purpose. Envtl. Tech. Council v. Sierra Club,

98 F.3d 774, 785 (4th Cir. 1996). A discriminatory measure is
virtually per se invalid, and will survive strict scrutiny
only if it advances a legitimate local purpose that cannot be
adequately served by reasonable nondiscriminatory alternatives.
Or.

Waste

Sys.,

511

U.S.

at

99

(internal

quotation

marks

omitted).
Here, the parties are in agreement that Virginias CON law
is not facially discriminatory. The program applies to all firms
establishing or expanding covered health care operations within
the state, and makes no distinction between in-state and out-ofstate service providers. See, e.g., Va. Code Ann. 32.1-102.6
11

([t]o obtain a certificate for a project, every applicant,

regardless

of

geographic

location,

shall

file

completed

application).
Appellants
discriminates

do,
in

however,

both

maintain

purpose

and

that

the

effect.

CON

With

program

regard

to

purpose, they note that the law is intended to protect the

economic viability of existing [service] providers by impeding
the development of new medical facilities. Appellants Br. at 41
(citing

12

Va.

Admin.

Code

5-230-30

([t]he

[CON]

program

discourages the proliferation of services that would undermine

the ability of essential community providers to maintain their
financial viability)). Because current health care firms are
categorically in-state entities, the argument goes, the primary
goal

of

providers

the

certificate

from

requirement

competition

at

the

is

to

expense

shelter
of

those

out-of-state

businesses seeking entry into the market.

That

argument

misses

the

main

point.

Certificate-of-need

regimes -- in place in many states across this country -- are

designed in the most general sense to prevent overinvestment in
and maldistribution of health care facilities. See Lauretta H.
Wolfson,

State

Regulation

of

Health

Facility

Planning:

The

Economic Theory and Political Realities of Certificates of Need,

4

DePaul

J.

Health

Care

L.

261,

262

(2001).

Indeed,

as

we

discuss in greater detail below, Virginias program serves an

12

array

of

quality

legitimate
by

facilities,
access

public

discouraging
enabling

necessary

purposes:

the

proliferation

underserved

medical

improving

and

of

indigent

services,

and

health

care

underutilized
populations

encouraging

to

cost-

effective consumer spending. See infra part III.B. Appellants

may be dissatisfied with the Virginia General Assemblys policy
choices in this complex field, but we cannot discern a sinister
protectionist purpose in this straightforward effort to bring
medical care to all the citizens of the Commonwealth in the most
efficient and professional manner. We thus turn our attention to
the issue of discriminatory effect.
Appellants allege that in practice Virginias CON program
systematically advantages established in-state providers at the
expense of new, primarily out-of-state firms. Appellants Br.
at

13-14.

Specifically,

appellants

claim

that

the

CON

application process impermissibly grants current Virginia firms

the

authority

providers

in

to

thwart

three

the

ways.

market

First,

entrance

the

code

of

out-of-state

allows

interested

parties to request an informal fact-finding conference so that

the

merits

of

particular

application

can

be

further

scrutinized. See Va. Code Ann. 32.1-102.6. This authorization,

according

to

administrative
uncertainty

appellants,
review

borne

by

can

period

significantly
and

applicants.
13

increase
Second,

lengthen
the

the

costs

the
and

intervention

proviso also grants local firms, who may be in competition with

an

applicant,

the

power

to

stymie

the

process

through

an

adversarial presentation at conference. Appellants assert that

despite

the

resemble
retain

informal

full-blown

counsel.

label,

fact-finding

litigation

Appellants

Br.

and
at

conferences

[a]pplicants
10.

Finally,

often

regularly
appellants

argue that the process gives a structural edge to established

interests:
batches,

Because

applications

Virginia-based

are

entities

grouped
[can]

and

reviewed

submit

in

competing

applications [within the appropriate batch cycle] in order to

block applications they want to see denied. Id. at 13.
We are unconvinced by appellants arguments. In order to
prove

discriminatory

Virginias

CON

law,

interstate

commerce

effect,
if
to

appellants

enforced,
a

greater

must

would
degree

demonstrate
negatively
than

that

impact

intrastate

commerce. Colon Health, 733 F.3d at 543 (quoting Waste Mgmt.

Holdings, Inc. v. Gilmore, 252 F.3d 316, 335 (4th Cir. 2001)).
The fulcrum of this inquiry will be whether the certificate
requirement erects a special barrier to market entry by nondomestic entities. Id. at 546. Here, the Commonwealths expert,
Dr. John Mayo, revealed that over a fourteen-year period ending
in January 2014, approval rates for applications submitted by
in-state and by out-of-state firms considered by the Virginia
Department of Health [were] virtually identical at just under
14

eighty-five

percent.

J.A.

142-43.

The

States

expert

also

reported that obtaining a certificate took the same length of

time for both in-state and out-of-state applicants -- 154 to 167
days. Id. at 143. In short, both the application process and its
end result in Virginia showed no appreciable difference in the
treatment

of

in-state

and

out-of-state

entities.

This

in

contrast to programs that revealed marked disparities in the

handling of in-state and out-of-state applications. See, e.g.,
Walgreen Co. v. Rullan, 405 F.3d 50, 56 (1st Cir. 2005) (in
which

[o]ver

[were]

forced

fifty
to

percent

undergo

of

the

out-of-Commonwealth
entire

entities

administrative

process

compared to less than twenty-five percent of local applicants).

Appellants,

for

their

part,

condemn

the

state

experts

approach. They argue that the district court erred by crediting

the

Commonwealths

experts

decision

to

base

his

analysis

entirely on whether a particular entity was legally incorporated

in Virginia or elsewhere. Appellants Br. at 51. According to
appellants,

the

inquiry

should

be

practical,

rather

than

formal, and established service providers in Virginia should be

counted

as

in-state

regardless

of

their

state

of

legal

incorporation. Id. at 52.

We find no error in the approach taken by the district
court.

It

was

plainly

reasonable

for

the

States

expert

to

consider an entitys state of incorporation in demarcating the

15

boundary

between

district

court

relevant

to

in-state

noted

whether

and

simply
an

out-of-state

that

entity

state
is

an

applicants.

of

incorporation

out-of-state

The
is

business

discriminated against by Virginias regulatory scheme. J.A. 62.

And

indeed

it

incorporation

is

an

relevant.

easily

Not

applied

only

is

criterion.

the
By

state

of

choosing

to

incorporate within a particular state, a corporation opts to

identify itself with both state law and state process in a way
that an out-of-state corporation does not. James D. Cox & Thomas
Lee Hazen, 1 TREATISE

ON THE

LAW

OF

(In

state

of

incorporation,

selecting

the

CORPORATIONS 3:2 (3d ed. 2015)

the

[corporation]

makes a decision not only as to the relevant statutory law but

also

as

to

the

case

law

that

will

govern

all

corporate

questions, including the duties of the corporations officers

and directors and the rights of its stockholders).
Appellants further contest the district courts decision on
the ground that the court improperly credited the testimony of
[the

Commonwealths]

expert

over

[their

experts

analysis].

Appellants Br. at 56. They argue that their expert established

that

the

granting

Virginia
CONs

to

law

undisputedly

entities

that

have

and

expressly

previously

favors

completed

projects in the state. Appellants Br. at 55 (citing 12 Va.

Admin.

Code

concluded

5-230-60).

that

the

In

other

certificate
16

words,

requirement

appellants

expert

discriminates

in

favor of incumbent health care providers at the expense of new,

predominantly out-of-state firms.
We

reject

incumbency

appellants

bias

negative[]

in

impact

argument

this

context

[on]

interstate

as

is

not

matter
a

of

law,

for

for

the

which

the

surrogate

commerce

with

dormant Commerce Clause is concerned. Colon Health, 733 F.3d at

543.

The

dormant

Commerce

Clause

is

exclusively

designed

to

address the differential treatment of in-state and out-of-state

economic

interests

that

benefits

the

former

and

burdens

the

latter. Granholm v. Heald, 544 U.S. 460, 472 (2005) (internal

quotation

marks

omitted).

Thus,

what

appellants

label

as

an

impermissible foray into a battle of the experts is a simple

recognition of the fact that incumbency is not the focus of the
dormant Commerce Clause.
Allowing

incumbency

to

serve

as

the

proxy

for

in-state

status would be a risky proposition. One can be, for example, an

incumbent recipient of some state contractual benefit without
necessarily being an in-state resident. In fact, the vitality of
interstate commerce relies upon the ability of one state to have
some allegedly incumbent companies of another state provide its
citizens with needed goods and services. As the district court
explained, [u]nder [appellants] view, the success rate of new
out-of-state applicants should be measured against the success
rate of new in-state applicants combined with every previously17

successful entity currently operating in Virginia. This approach

tips the scales in favor of new out-of-state applicants; it does
not

provide

an

accurate

depiction

of

whether

Virginia's

[]

program discriminates against interstate commerce. J.A. 1523.

Finally, appellants specify that one-hundred percent of CT
scanner and MRI machine manufacturers are located outside the
state

of

Virginia.

Appellants

Br.

at

31.

Because

medical

imaging manufacturers are by definition out-of-state entities,

appellants

assert

that

the

burdens

of

Virginias

CON

requirement are anything but evenhanded. Id. at 32. But that

point is easily turned around. We think it axiomatic that there
can be no discrimination in favor of in-state manufacturers when
there are no manufacturers in the state. How are we to properly
assess, for example, whether the certificate requirement erects
a special barrier to market entry by non-domestic entities,
Colon

Health,

733

F.3d

at

546,

when

there

is

no

domestic

business with which to compare those non-domestic entities?

We do not doubt that appellants are frustrated by the state
legislatures decision to impose a certificate requirement in
this area. However, we will not take the potentially limitless
step of striking down every state regulatory program that has
some alleged adverse effect on market competition. We live in
such

an

interconnected

economy

that

for

any

regulation

some

effects are almost bound to be felt out of state. To accept

18

appellants

arguments

would

broaden

the

negative

Commerce

Clause beyond its existing scope, United Haulers Ass'n, Inc. v.

Oneida-Herkimer

Solid

Waste

Mgmt.

Auth.,

550

U.S.

330,

348

(2007) (Scalia, J., concurring), such that the States power to

engage in economic regulation would be effectively destroyed.
See Am. Motors Sales Corp. v. Div. of Motor Vehicles, 592 F.2d
219, 224 (4th Cir. 1979).
III.
A.
Even

where

law

does

not

facially,

in

effect,

or

purposefully discriminate against interstate commerce, we have

in

past

whether

cases
any

of

undertaken
the

laws

second

analytical

incidental

burdens

step,
on

asking

interstate

commerce might still be clearly excessive in relation to [its]

putative local benefits. Sandlands C & D LLC v. Cty. of Horry,
737 F.3d 45, 53 (4th Cir. 2013) (quoting Pike v. Bruce Church,
Inc., 397 U.S. 137, 142 (1970)). Our previous opinion in this
case was skeptical of Pikes balancing test. We noted that the
discriminatory effects test represents [a] superior framework
of analysis and that the Pike approach is often too soggy to
properly cabin the judicial inquiry or effectively prevent the
district court from assuming a super-legislative role. Colon
Health, 733 F.3d at 546. Because it so often casts judges into
disputes involving subjective or technically difficult decisions
19

properly committed to the discretion of state legislatures, Pike

balancing

risks

an

unwarranted

expansion

of

the

judicial

function.
Pike balancing frequently requires judges to make highly
subjective calls. [W]eighing or quantifying a laws benefits
and burdens may be a very subtle exercise. Dept of Revenue of
Ky.

v.

Davis,

553

U.S.

328,

354

(2008).

The

exercise

is

complicated by the difficulty of determining by what criteria

benefits and burdens ought to be assessed. Sometimes [i]t is a
matter not of weighing apples against apples, but of deciding
whether three apples are better than six tangerines. Id. at 360
(Scalia, J., concurring). Making that decision often in turn
requires one to decid[e] which interest is more important a
policy call of the kind ordinarily entrusted to representative
government. Id.
Judges are, for better or worse, not often economists or
statisticians.
empirical

We

are

judgments

of

ill-equipped
lawmakers

to

second-guess

concerning

the

utility

the
of

legislation. CTS Corp., 481 U.S. at 92. Simply put, there are
cases

in

which

the

Judicial

Branch

is

not

institutionally

suited to draw reliable conclusions of the kind that would be

necessary . . . to satisfy a Pike burden. Davis, 553 U.S. at
353. The Supreme Court still generally leave[s] the courtroom
door open to plaintiffs invoking the rule in Pike, Davis, 553
20

U.S. at 353, and so we proceed to the merits of appellants

argument. We do so only after recognizing our own institutional
limitations, however, and only after giving due deference to the
body whose primary responsibility it is to judge the benefits
and burdens of Virginia legislation: the Virginia legislature.
B.
While the Supreme Court applies a virtual per se rule of
invalidity to enforce the dormant Commerce Clause against plain
attempts

at

local

discriminate

face

protectionism,
only

less

laws

strict

which

do

scrutiny.

not

so

Wyoming

v.

Oklahoma, 502 U.S. 437, 454-55 & n.12 (1992). In identifying the
putative
burdens

local

on

therefore

benefits

interstate
apply

to

be

commerce,

rational

basis

weighed
Pike,

against

397

standard

U.S.
of

incidental
at

142,

review.

we

Colon

Health, 733 F.3d at 535.

Virginia
support
program

of

advances

its

boosts

CON

number

program.

healthcare

of

First,
quality.

legitimate
it

argues
The

interests
that

Virginia

the

in
CON

Health

Departments designee Erik Bodin noted in deposition testimony

that by reducing excess medical capacity, the CON program may
increase the quality of the care thats being provided because
the expertise of the people using the equipment and interpreting
the results is higher. J.A. 639. A subcommittee of the Virginia
General Assembly similarly found that studies provide strong
21

evidence

that

quantity

and

quality

are

closely

related

and

experience and practice with complex procedures are assumed to

increase skill and improve expertise. J.A. 210. In other words,
practice

makes

sophisticated

perfect,

medical

or

at

devices

is

least
to

be

familiarity
preferred

with

to

only

infrequent use of them. In this regard, the CON program helps

ensure that new entrants do not overly dilute the market and
thereby prevent medical personnel from practicing and performing
procedures on a regular basis.
Second, the CON program may help underserved and indigent
populations access needed medical care. Certificates of need may
be

granted

on

the

condition

that

the

recipients

provide

certain level of indigent care each year. Va. Code Ann. 32.1102.4(F);

Va.

Code

Ann.

32.1-102.2(C).

And

applicants

for

certificates of need have at least on occasion use[d] their

performance of charity care [] at a rate higher than the average
as a factor in why they should be approved in the first place.
J.A.

640-41

(Bodin

Dep.).

The

impact

of

all

this

may

be

substantial possibly in excess of several hundred million

dollars of care for needy patients each year. Id. at 634-35.
Such additional care would be impressive in any state, but it
may

be

all

the

more

so

in

Virginia,

which

has

few

public

hospitals, principally the University of Virginia and Virginia

Commonwealth University Medical Centers. Without the assistance
22

of

private

least

in

caregivers

part

serving

motivated

by

indigent

the

CON

patients,

program,

service

those

at

hospitals

might be even more burdened than they already are.

A related purpose of the CON program is geographical in
nature. For reasons not difficult to discern, medical services
tend

to

gravitate

toward

more

affluent

communities.

The

CON

program aims to mitigate that trend by incentivizing healthcare

providers willing to set up shop in underserved or disadvantaged
areas such as Virginias Eastern Shore and far Southwest. In
determining

whether

to

issue

certificate,

for

example,

Virginia considers the effects that the proposed service or

facility will have on access to needed services in areas having
distinct

and

unique

geographic,

socioeconomic,

cultural,

transportation, or other barriers to access to care. Va. Code

Ann. 32.1-102.3(B)(1).
The CON program may also aid underserved consumers in a
more

indirect

profitable

fashion.

operations,

hospitals

with

the

indigents

with

care,

nonetheless

By

reducing

the

program

revenue

important

but

they

competition
may

also

need

operations

to

not

support
like

in

provide
only

to

highly
existing
provide

money-losing

trauma

centers

but
and

neonatal intensive care units. Appellants expert agreed in his

deposition that full-service hospitals have long been in the
practice

of

cross-subsidizing

unprofitable
23

services

with

the

profits from those that are profitable. J.A. 392. It is perhaps

no accident that the CON applicants in this case sought to open
standalone
community

gastroenterology
health

centers.

and

radiology

Concerns

facilities,

that

such

not

practices

new

could

drain needed revenue from more comprehensive general hospitals

providing

necessary

though

unprofitable

services

are

not

irrational.
Finally, Virginia argues that the CON program furthers its
legitimate interest in reducing capital costs and the costs to
consumers of medical services. By preventing untoward increases
in

excess

capacity,

Virginia

contends,

the

CON

program

can

reduce the healthcare systems overall costs. Excess capacity

means

that

those

extra

hospital

beds

and

additional

medical

equipment must pay for themselves, thereby generating pressure

for hospital stays and diagnostic tests that patients really do
not need. See Brief for Va. Hospital & Healthcare Assn & Va
Health

Care

Assn

(Hospitals

Brief)

at

21.

And

former

Virginia Secretary of Health and Human Resources has observed

that Virginia experienced a significant increase in expenditures
for equipment and new services when it partially deregulated its
health care sector between 1989 and 1992. J.A. 211. It again is
not irrational for Virginia or any other state to credit its own
prior experience with deregulation.

24

C.
Appellants bear[] the burden of proving that the burdens
placed on interstate commerce outweigh the aforementioned local
benefits. LensCrafters, Inc. v. Robinson, 403 F.3d 798, 805 (6th
Cir. 2005). While they advance a number of arguments, we find
none persuasive. Several in particular warrant discussion.
First, appellants attack the wisdom of the CON program.
They argue that it is a relic of a failed federal policy that
once encouraged these sorts of programs, Appellants Br. at 7,
and

that

the

application

process

imposes

[e]xtraordinary

costs . . . in terms of time and money. Id. at 9. Appellants

also refer to a report of the Federal Trade Commission and the
U.S.

Department

of

Justice,

which

found

in

2004

that

CON

programs are not successful in containing healthcare costs and

pose serious anticompetitive risks that usually outweigh their
purported economic benefits. J.A. 1153.
At the heart of appellants argument is the basic economic
maxim

that

competition
market

barriers
and

power

to

entry

thereby

allow

and

charge

like

CON

entrenched

programs

may

incumbents

inefficiently

high

reduce

to

exert

prices.

Like

Virginias legitimate state interest arguments, we do not find

appellants

countervailing

argument

to

be

unreasonable.

The

points noted above, however, might be more persuasively made

before the Virginia General Assembly, not a panel of unelected
25

federal

judges.

The

battle

between

laissez

fairists

and

regulators is as old as the hills. The fighting, however, is

more

often

over

economics

and

politics

than

over

law.

Legislators, not jurists, are best able to compare competing

economic theories and sets of data and then weigh the result
against their own political valuations of the public interests
at stake.
Appellants free market arguments also overlook the fact
that

the

health

care

market

has

its

own

idiosyncrasies.

Consumers, i.e. patients, often do not know the price of the

medical service they receive until after it has been provided.
Hospitals Br. at 8. For many reasons, patients, some of whom
are

under

intense

time

pressures

and

physical

stress,

face

difficulties in assessing the quality of medical services as

well. In this market, patients at all income levels often choose
a provider with private insurance or the government footing the
lions share of the bill; they thus lack the normal incentives
to

shop

Squeezed

for
by

price.
insurers,

Providers

are

regulation,

not

and

free

agents

obligations

to

either.
provide

indigent care at a financial loss, providers lack the customary

freedom of a seller of services to set its price. Unprofitable
but

vital

medical

services

do

not

reap

providers

the

usual

market rewards. Id. at 10. Many of the classic features of a

free market are simply absent in the health care context, and
26

that fact counsels caution when courts are urged to dismantle

regulatory efforts to counter perceived gaps and inefficiencies
in the healthcare market.
There was a time when courts rigorously scrutinize[d]
economic

legislation

and

presumed

to

make

such

binding

judgments for society. United Haulers, 550 U.S. at 347 (citing

Lochner v. New York, 198 U.S. 45 (1907)). But this is no longer
that time, and under rational basis review, reasonable debates
such as this one are resolved in favor of upholding state laws.
The

states

do,

constitutional

after

scheme.

all,
To

play

override

crucial

their

role

judgments

in

our

casually

would be to undermine a cornerstone of our federal system: the

state police power. Courts enforcing the dormant Commerce Clause
were never intended to cut the States off from legislating on
[] subjects relating to the health, life, and safety of their
citizens. Sherlock v. Alling, 93 U.S. 99, 103 (1876). That is
their lifeblood, and we shall not constrict it here.
Appellants, to their credit, are not done. They charge that
the entirety of Virginias evidence in support of its purported
interests amounts to mere hearsay and speculation, unsupported
by any fact or expert testimony. Appellants Br. at 40. They
also contrast Virginias lack of expert testimony on the general
effectiveness of CON programs with their experts declaration

27

that CON laws produce little or no real benefits even as they

impose costs on taxpayers and patients. J.A. 828.
Appellants empirical arguments are, again, more suited to
a legislature than a court. While we have held that the state
interests considered in Pike balancing must not be entirely
speculative, Medigen of Ky., Inc. v. Pub. Serv. Comm'n of W.
Va., 985 F.2d 164, 167 (4th Cir. 1993), Virginias are not so
here.

The

Commonwealth

has

supported

them

with

reasonable

argument and the record testimony of individuals well versed in

the CON programs aims. To require Virginia to submit expert
testimony or provide bullet-proof empirical backing for every
legislative judgment is a requirement bereft of any limiting
principle. Most legislation, after all, relies on assumptions
that can be empirically challenged. Were we to engage in an
exhaustive
Commerce

empirical
Clause

interference

battle

case,

with

in,

there

for

would

legislation

starters,
be

no

touching

no

every

dormant

to

judicial

end
end

of

subject

matters. Our federal system would end up as the loser.

The

same

reasoning

explains

why

we

reject

appellants

argument that Virginia should have to prove that benefits flow

from

the

CON

programs

requirements

for

medical-imaging

devices in particular, and not just from the CON program in

general. Appellants Br. at 39. That argument draws us deep into
the weeds. Were we to allow device-by-device litigation over
28

what medical equipment the CON program might constitutionally

cover and what it might not, litigation would become the main
arena and the undermining of legislation would have no end.
In Department of Revenue of Kentucky v. Davis, the Supreme
Court rejected arguments similar to those made here. That case
involved a challenge to a state method of taxing income earned
from state and local bonds. Kentucky, along with forty other
states,
income

used

derived

differential
from

bonds

tax

scheme

issued

by

in

the

which
state

interest
and

its

subdivisions was not subject to a state income tax, even though

interest

income

earned

taxable.

Davis,

553

from

U.S.

the

at

bonds

332-35.

of

The

other
Court

states

was

rejected

the

challenge to the law under Pike.

It noted both the challengers

argument

other

that

the

law

blocks

states

from

access

to

investment and harms the national municipal bond market . . .

by distorting and impeding the free flow of capital, and the
countervailing

possibility

that

the

law

might

pose

an

advantage . . . for bonds issued by [] smaller municipalities,

who

without

it

might

lack

ready

access

to

any

other

bond

market. Id. at 353-55. Under such circumstances, Pike balancing

lay beyond the judicial ken. Id. at 355. As in the case before
us,

the

most

significant

aspect

of

these

cost-benefit

questions [was] not even the difficulty of answering them . . .

but the unsuitability of the judicial process for reaching
29

whatever

answers

legislature
economic

are

is

the

risks

of

possible

preferable
any

at

all.

Id.

institution

alteration

in

[A]n

for

the

elected

incurring

the

things

have

way

traditionally been done. Id. at 356. So too here.

D.
The Framers wisely aimed to avoid the tendencies toward
economic

Balkanization

that

had

plagued

relations

among

the

Colonies. Hughes, 441 U.S. at 325-26. Our jurisprudence has

respected that fact. But every regulatory response to a complex
economic problem is not ripe for a Pike balancing challenge. The
healthcare

market

is

infamously

complicated,

with

patients,

providers, insurers, government, and many others all attempting

to come to terms over a particular service touching physical
wellbeing

and

sometimes

even

life

itself.

Here

thirty-six

states, some of whom appeared before us as amici, have some

variety

of

laboratories

CON
for

program.

Their

combined

experimentation

in

ability

such

to

act

complex

as

field

warrants our respect. See United States v. Lopez, 514 U.S. 549,
581

(1995)

(Kennedy,

J.,

concurring).

Here

Virginia

has

experimented not only by creating a CON program, but by tweaking

and modifying it over decades. None of the foregoing discussion
proves that the Commonwealths approach is the very best way to
deliver its citizens quality healthcare. It may or may not be.
It is anything but clear, however, that courts can lead the way
30

in

providing

Virginias

better

program

is

path.

While

ultimately

we

wise,

cannot
it

most

say

whether

certainly

is

constitutional. The judgment is affirmed.

AFFIRMED

31