Colon Health Centers of America, LLC v. Hazel

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 12-2272

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 Chairman of the Virginia State Board of Health; PAUL
CLEMENTS, in his official capacity as member of the Virginia
State Board of Health; KAY R. CURLING, in her official
capacity as member of the Virginia State Board of Health;
ERIC DEATON, in his official capacity as member of the
Virginia State Board of Health; JOHN DETRIQUET, in his
official capacity as member 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; H. ANNA JENG, in her official
capacity as member of the Virginia State Board of Health;
CHARLES K. JOHNSON, in his official capacity as member of
the Virginia State Board of Health; BENNIE MARSHALL, in his
official capacity as member of the Virginia State Board of
Health; MARY MCCLUSKEY, in her 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; GAIL TAYLOR, 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 Acting
Director of the Office of Licensure and Certification and
Director of the Division of Certificate of Public Need;
MAUREEN DEMPSEY, in her official capacity as State Health
Commissioner; JOHN W. SEEDS, in his official capacity as
member of the Virginia State Board of Health,

Defendants - Appellees.
------------------------------

PACIFIC LEGAL FOUNDATION; CURVEBEAM, LLC,

Amici Supporting Appellants.

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: September 19, 2013 Decided: October 23, 2013

Before WILKINSON and KING, Circuit Judges, and Samuel G. WILSON,
United States District Judge for the Western District of
Virginia, sitting by designation.

Affirmed in part, reversed in part, and remanded by published
opinion. Judge Wilkinson wrote the opinion, in which Judge King
and Judge Wilson joined. Judge Wilson wrote a concurring
opinion.

ARGUED: Robert McNamara, INSTITUTE FOR JUSTICE, Arlington,
Virginia, for Appellants. Earle Duncan Getchell, Jr., OFFICE OF
THE ATTORNEY GENERAL OF VIRGINIA, Richmond, Virginia, for
Appellees. ON BRIEF: William H. Mellor, Lawrence Salzman,
Darpana M. Sheth, INSTITUTE FOR JUSTICE, Arlington, Virginia,
for Appellants. Kenneth T. Cuccinelli, II, Attorney General of
Virginia, Michael H. Brady, Assistant Solicitor General,
Patricia L. West, Chief Deputy Attorney General, Wesley G.
Russell, Jr., Deputy Attorney General, OFFICE OF THE ATTORNEY
GENERAL OF VIRGINIA, Richmond, Virginia, for Appellees. Timothy
Sandefur, PACIFIC LEGAL FOUNDATION, Sacramento, California, for
Amicus Pacific Legal Foundation. Lewis S. Wiener, David W.
Arrojo, SUTHERLAND ASBILL & BRENNAN LLP, Washington, D.C., for
Amicus Curvebeam, LLC.

2
WILKINSON, Circuit Judge:

Appellants are out-of-state medical providers who seek to

open facilities in Virginia similar to those they operate in

other states. They are hindered by Virginia’s certificate-of-

need requirement, which they challenged in the court below under

a variety of constitutional theories. That court dismissed the

suit for failure to state a claim upon which relief could be

granted. We reverse the dismissal of appellants’ Commerce Clause

claims, affirm the dismissal of their Fourteenth Amendment

claims, and remand for further proceedings in accordance with

this decision.

I.

A.

In order to launch a medical enterprise in the state of

Virginia, a firm is required to obtain a “certificate of public

need.” Va. Code Ann. §§ 32.1-102.1 et. seq.; 12 Va. Admin. Code

§§ 5-220-10 et seq. Virginia’s certificate-of-need program

governs most medical capital expenditures undertaken in the

state, including the construction of new facilities and the

addition of new equipment or services to an existing facility.

It does not, however, apply to the replacement of existing

equipment. At its core, the program mandates that an applicant

demonstrate, within the relevant region, a public need for the

3
service that it seeks to offer. Va. Code Ann. § 32.1-102.3(A).

The primary purposes of the requirement are to preclude the

development of excess capacity, to ensure proper geographical

distribution of medical facilities, to protect the economic

viability of existing providers, and to promote the provision of

cost-effective medical services. Appellees’ Br. at 2-3.

In determining whether a particular applicant has

demonstrated a sufficient public need for its proposed services,

the State Health Commissioner is required to consider a variety

of factors. Va. Code Ann. § 32.1-102.3(B)(1)-(8). No single

factor is dispositive. The Commissioner must consider, for

instance, “[t]he extent to which the proposed service or

facility fosters institutional competition that benefits the

area to be served,” in addition to “[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. § 32.1-102.3(B)(4)-(5).

Firms that desire to obtain a certificate of need are

required to navigate a potentially lengthy, costly, and

unpredictable application process. The cost of applying is

pegged at one percent of the proposed expenditure, with a cap of

$20,000. In the review scheme, different types of submissions

are grouped into subcategories for simultaneous review in a

process referred to as “batching.” The statute facially requires

4
the review process to be completed within 190 days of the start

of the relevant batching cycle.

Following the submission of an application, the appropriate

regional health planning agency must complete its initial

investigation within 60 days. This stage of review includes a

public hearing in proximity to the site of the proposed

expenditure. Affected persons are permitted to submit data to

assist the agency in its task. Subsequent to this preliminary

examination, the agency must provide the Department of Health

with its recommendation regarding the disposition of the

application.

The Department is then required to determine whether an

informal fact-finding conference is warranted. Such a conference

will be held if the Department independently determines that it

is necessary or if an intervening party demonstrates that good

cause exists to hold such a hearing. Good cause exists if “(i)

there is significant relevant information not previously

presented at and not available at the time of the public

hearing, (ii) there have been significant changes in factors or

circumstances relating to the application subsequent to the

public hearing, or (iii) there is a substantial material mistake

of fact or law in the Department staff’s report on the

application or in the report submitted by the health planning

5
agency.” Id. § 32.1-102.6(G); see also 12 Va. Admin. Code § 5-

220-230(A).

The date on which the record closes varies depending on

whether an informal fact-finding conference is conducted. An

application is deemed approved if the Commissioner fails to

issue a decision within 70 days of the closing of the record.

Appellants allege that “[w]ithout an informal fact-finding

conference, the entire application process and review can take

six to seven months to complete. If an informal fact-finding

conference is requested by any person, the certificate-of-need

process can take significantly longer.” Compl. ¶ 136. In their

brief before this court, appellants elaborate on this claim by

asserting that the process “can take literally years.”

Appellants’ Br. at 11.

B.

Appellants, Colon Health Centers and Progressive Radiology,

are medical providers who seek to avoid the purportedly onerous

burdens imposed by the certificate application process. Each

desires to offer potentially valuable services in the Virginia

market. Colon Health “combines the advantages of the two

prevailing colon-cancer screening methods in a ‘one-stop shop’

that screens, diagnoses, and treats colon cancer.” Compl. ¶ 47.

Traditional colon-cancer screening involves an invasive

procedure referred to as optical colonoscopy. The alternative,

6
virtual colonoscopy, relies on noninvasive computed tomography

(CT) scans but, unlike optical colonoscopy, does not permit the

treating physician to immediately remove any detected polyps.

Instead, a second visit is typically required.

Colon Health circumvents this problem by exporting the

images captured via virtual colonoscopy to a team of

radiologists, who immediately scan the images for polyps. They

report their conclusions within an hour to an on-site

gastroenterologist, who is able to perform the necessary surgery

without recalling the patient for a second visit. This

streamlined approach reduces the cost and inconvenience of

colonoscopy, thus encouraging a higher percentage of at-risk

individuals to undergo screening.

Colon Health currently provides joint virtual colonoscopy

and treatment services at offices in Delaware and New Jersey.

Its attempts to enter the Virginia market, however, were stymied

after potential competitors intervened to oppose its

certificate-of-need application. Id. ¶ 140. It alleges that, in

the absence of the certificate requirement (which covers CT

scanners), it would open Virginia facilities offering its unique

package of services.

Progressive Radiology specializes in using magnetic

resonance imaging (MRI) to diagnose neurological and orthopedic

injuries. Id. ¶¶ 75-76. Progressive currently maintains

7
radiology facilities in Maryland and the District of Columbia.

It formerly operated a radiology business in Virginia, but

ceased to do so when the facility which had contracted for its

services was purchased and the contract subsequently terminated.

Like Colon Health, Progressive alleges that the certificate

requirement, which covers MRI machines, deters it from providing

its specialized services in the Commonwealth. Progressive

estimates that it would serve approximately 400 patients per

month if it were permitted to reenter the market.

Notably, Virginia does not contend that either Colon Health

or Progressive is unqualified to render the services that each

seeks to offer in the state, nor does it deny that the firms’

respective facilities would be financed entirely by private

sources of funding. It also makes no attempt to contest

appellants’ assertion that the proffered services are medically

uncontroversial and would be performed by state-licensed

physicians. Id. ¶ 41.

Appellants challenged the certificate program in the

district court, alleging that it violates the dormant Commerce

Clause in addition to the Fourteenth Amendment’s Equal

Protection, Due Process, and Privileges or Immunities Clauses.

The court concluded, with respect to the dormant Commerce

Clause, that the certificate-of-need program was

nondiscriminatory, served legitimate local purposes, and imposed

8
negligible burdens on interstate commerce. J.A. 142-47. With

respect to appellants’ Fourteenth Amendment challenges, the

district court held that the statute was supported by a rational

basis. Id. at 131-42. In an opinion that reproduced, almost

verbatim, appellees’ memorandum in support of their motion to

dismiss, the court dismissed the entire suit under Federal Rule

of Civil Procedure 12(b)(6) for failure to state a claim. Id. at

147. This appeal followed.

II.

Appellants’ most serious challenge to the certificate-of-

need requirement is predicated on the dormant aspect of the

Constitution’s Commerce Clause. The Commerce Clause authorizes

Congress “[t]o regulate Commerce . . . among the several

States.” U.S. Const. art. I, § 8, cl. 3. By its terms, the

clause does not explicitly restrain the conduct of the states.

It is “well-established,” however, “that this affirmative grant

of authority implies a ‘negative’ or ‘dormant’ constraint on the

power of the States to enact legislation that interferes with or

burdens interstate commerce.” Brown v. Hovatter, 561 F.3d 357,

362 (4th Cir. 2009) (citing Dennis v. Higgins, 498 U.S. 439, 447

(1991)). As relevant here, “[t]he dormant Commerce Clause is

implicated by burdens placed on the flow of interstate commerce

9
-- the flow of goods, materials, and other articles of commerce

across state lines.” Id. at 364.

Modern dormant Commerce Clause jurisprudence is motivated

primarily by a desire to limit “economic protectionism -- that

is, regulatory measures designed to benefit in-state economic

interests by burdening out-of-state competitors.” Dep’t of

Revenue of Ky. v. Davis, 553 U.S. 328, 337-38 (2008) (internal

quotation marks omitted). By invalidating statutes that

unlawfully impede interstate commerce, courts effectuate the

Framers’ desire to prevent the “economic Balkanization” “‘that

had plagued relations among the Colonies and later among the

States under the Articles of Confederation.’” Id. at 338

(quoting Hughes v. Oklahoma, 441 U.S. 322, 325-26 (1979)).

A.

As the Court’s concern with economic protectionism

suggests, “[t]he principal objects of dormant Commerce Clause

scrutiny are statutes that discriminate against interstate

commerce.” CTS Corp. v. Dynamics Corp. of Am., 481 U.S. 69, 87

(1987) (emphasis added). “‘[D]iscrimination’ simply means

differential treatment of in-state and out-of-state economic

interests that benefits the former and burdens the latter.”

Oregon Waste Sys., Inc. v. Dep’t of Envtl. Quality, 511 U.S. 93,

99 (1994). A statute may discriminate “facially, in its

practical effect, or in its purpose.” Envtl. Tech. Council v.

10
Sierra Club, 98 F.3d 774, 785 (4th Cir. 1996) (citing Wyoming v.

Oklahoma, 502 U.S. 437, 454-55 (1992)).

The discrimination test thus has an empirical as well as a

formal dimension: merely noting a law’s facial neutrality is

insufficient under this analysis. “The principal focus of

inquiry must be the practical operation of the statute, since

the validity of state laws must be judged chiefly in terms of

their probable effects.” Lewis v. BT Inv. Managers, Inc., 447

U.S. 27, 37 (1980); see also Yamaha Motor Corp. v. Jim’s

Motorcycle, Inc., 401 F.3d 560, 568 (4th Cir. 2005). In order to

prove discriminatory effect, for instance, plaintiffs must

demonstrate that the challenged statute, “if enforced, would

negatively impact interstate commerce to a greater degree than

intrastate commerce.” Waste Mgmt. Holdings, Inc. v. Gilmore, 252

F.3d 316, 335 (4th Cir. 2001).

In conducting the discrimination inquiry, a court should

focus on discrimination against interstate commerce -- not

merely discrimination against the specific parties before it.

See Exxon Corp. v. Governor of Md., 437 U.S. 117, 127 (1978)

(noting that the Commerce Clause “protects the interstate

market, not particular interstate firms”). The district court

opinion here appeared to contravene this principle at various

points. See J.A. 145-46 (declining to find a substantial burden

on interstate commerce in part because appellants are “two

11
relatively small businesses”). Focusing exclusively on

discrimination against individual firms, however, improperly

narrows the scope of the judicial inquiry and has the baneful

effect of precluding certain meritorious claims. For while the

burden on a single firm may have but a negligible impact on

interstate commerce, the effect of the law as a whole and in the

aggregate may be substantial.

B.

State laws that discriminate against interstate commerce in

any of the three ways identified by this court -- facially, in

practical effect, or in purpose -- are subject to “a virtually

per se rule of invalidity.” Wyoming, 502 U.S. at 454-55

(internal quotation marks omitted). Under this variant of

“strict scrutiny analysis,” Waste Mgmt. Holdings, 252 F.3d at

334, a court must invalidate the challenged law “unless the

state demonstrates ‘both that the statute serves a legitimate

local purpose, and that this purpose could not be served as well

by available nondiscriminatory means.’” Yamaha, 401 F.3d at 567

(quoting Maine v. Taylor, 477 U.S. 131, 138 (1986) (internal

quotation marks omitted)).

Here, appellants concede that Virginia’s certificate-of-

need law is not facially discriminatory. Appellants’ Br. at 21

n.3. The statute applies to all firms that seek to engage in the

covered activities (e.g., expansion of an existing facility or

12
construction of a new one), regardless of their geographical

location.

Appellants do, however, allege discrimination in both

purpose and effect. Compl. ¶¶ 200-07. With respect to purpose,

they declare that “[t]he primary goal of Virginia’s certificate-

of-need program is to provide current healthcare providers with

a government-backed shield from competition.” Id. ¶ 103. More

concretely, they point to an implementing regulation which

states that the certificate requirement is intended, at least in

part, to “‘discourage[] the proliferation of services that would

undermine the ability of essential community providers to

maintain their financial viability.’” Id. ¶ 104 (quoting 12 Va.

Admin. Code § 5-230-30). Under this theory, since current

medical providers are by definition in-state entities, a major

purpose of the certificate requirement is to protect them at the

expense of new out-of-state entrants, such as Colon Health and

Progressive. Id. ¶¶ 43, 103, 200.

Appellants’ allegations of discriminatory effect are rooted

in the administrative process prescribed by the statutory text.

As noted, the relevant code sections include a proviso

authorizing individuals to request an informal fact-finding

conference to further examine the implications of a particular

application. Va. Code Ann. § 32.1-102.6; see also 12 Va. Admin.

Code § 5-220-230(A). Appellants assert that the default process

13
requires between six and seven months to complete, but that the

addition of an informal fact-finding conference can result in

the process taking “significantly longer.” Compl. ¶ 136. Such a

prolonged delay may occur in part because, “[d]espite the

‘informal’ label, [fact-finding conferences] can resemble full-

blown litigation, involving attorneys, adversarial parties, and

expert witnesses.” Id. ¶ 134. Appellants further allege that,

“[u]pon information and belief, fact-finding conferences are

almost exclusively requested by entities that would be in

economic competition with” the applicant. Id. ¶ 137.

According to this characterization, Virginia’s certificate-

of-need program grants established, in-state economic interests

the power to obstruct the market entrance of new, primarily out-

of-state competitors in two ways. First, by requesting fact-

finding conferences, established interests can dramatically

lengthen the application process, thus increasing the costs and

uncertainty borne by the applicant. Second, objecting firms may

influence the substantive outcome of the process through an

effective adversarial presentation at the conference. Apart from

these practical advantages, the intervention proviso also grants

a structural edge to local firms: if an established, in-state

facility desires to expand its operations, it will necessarily

face one fewer objector than would an out-of-state firm that

seeks to enter the market de novo -- itself.

14
 All these allegations raise practical questions of fact. It

is entirely possible that in-state interests frequently

commandeer the process to derail the applications of out-of-

state firms, but whether this outcome actually obtains cannot be

resolved without examining the functioning of the statute in

practice. Similarly, it may be that the Commissioner, although

charged with considering a variety of factors, focuses

exclusively on protecting existing businesses. See Walgreen Co.

v. Rullan, 405 F.3d 50, 55 (1st Cir. 2005) (“[T]he Act

discriminates against interstate commerce by permitting the

Secretary to block a new pharmacy from locating in its desired

location simply because of the adverse competitive effects that

the new pharmacy will have on existing pharmacies.”). Whether

this actually occurs, however, cannot be ascertained in the

absence of proper fact-finding.

Thus, determining whether Virginia’s certificate-of-need

law discriminates in either purpose or effect necessarily

requires looking behind the statutory text to the actual

operation of the law. This conclusion is confirmed by a host of

precedents which have repeatedly emphasized the factual nature

of the dormant Commerce Clause inquiry. The Supreme Court has

observed, for instance, that “when considering the purpose of a

challenged statute, [courts are] not bound by [t]he name,

description or characterization given it by the legislature or

15
the courts of the State, but will determine for [themselves] the

practical impact of the law.” Hughes, 441 U.S. at 336 (internal

quotation marks omitted). In this respect, the Court has

consciously “eschewed formalism for a sensitive, case-by-case

analysis of purposes and effects.” West Lynn Creamery, Inc. v.

Healy, 512 U.S. 186, 201 (1994).

The fact-intensive quality of the substantive inquiry

assumes heightened importance when considered in light of the

procedural posture of the instant dispute. “To survive a motion

to dismiss, a complaint must [merely] contain sufficient factual

matter, accepted as true, to ‘state a claim to relief that is

plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678

(2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,

570 (2007)). Rule 12(b)(6) “does not countenance . . .

dismissals based on a judge’s disbelief of a complaint’s factual

allegations.” Neitzke v. Williams, 490 U.S. 319, 327 (1989).

Here, appellants’ claims of discrimination are sufficient “to

raise [their] right to relief above the speculative level.”

Twombly, 550 U.S. at 555. They therefore satisfy the standard

articulated in the above precedents. The district court gave a

serious claim the back of its hand. This was error.

C.

Even if Virginia’s certificate-of-need requirement

discriminates neither in purpose nor in effect, it may still be

16
unconstitutional under Pike v. Bruce Church, Inc., 397 U.S. 137

(1970), if it places an “undue burden” on interstate commerce.

Yamaha, 401 F.3d at 567. “Where [a] statute regulates even-

handedly to effectuate a legitimate local public interest, and

its effects on interstate commerce are only incidental, it will

be upheld unless the burden imposed on such commerce is clearly

excessive in relation to the putative local benefits.” Pike, 397

U.S. at 142.

Unlike the more exacting standard of review employed in the

context of discriminatory statutes, “[a] ‘less strict scrutiny’

applies under the undue burden tier.” Yamaha, 401 F.3d at 567

(quoting Wyoming, 502 U.S. at 455 n.12). The putative benefits

of a challenged law are evaluated under the rational basis test,

id. at 569, though “speculative” benefits will not pass muster,

Medigen of Ky., Inc. v. Pub. Serv. Comm’n, 985 F.2d 164, 167

(4th Cir. 1993). “The Pike test requires closer examination,

however, when a court assesses a statute’s burdens, especially

when the burdens fall predominantly on out-of-state interests.”

Yamaha, 401 F.3d at 569. The test is therefore deferential but

not toothless. See Davis, 553 U.S. at 339.

Appellants contend that Virginia’s certificate-of-need

program “does not actually achieve any legitimate local

benefits.” Compl. ¶ 208. To substantiate this claim, appellants

cite a joint report issued by the Department of Justice and the

17
Federal Trade Commission concluding that certificate “programs

are not successful in containing health care costs, and . . .

pose serious anticompetitive risks that usually outweigh their

purported economic benefits.” Id. ¶ 99. Appellants also allege

that the Virginia program substantially burdens the interstate

market for both medical devices and services. Id. ¶¶ 194-99,

202.

Appellants’ contentions find some support in the case law.

For example, with regard to putative local benefits, the Medigen

court invalidated a certificate-of-need program because

“[r]estricting market entry” not only fails to expand service

availability, but also “does nothing to [e]nsure that services

are provided at reasonable prices.” 985 F.2d at 167.

Furthermore, with respect to burdens on interstate commerce,

Virginia’s certificate program may be “uniquely anti-competitive

even as [certificate-of-need] laws go.” Yamaha, 401 F.3d at 571.

Apart from Virginia, only Connecticut and Michigan are said to

have similarly onerous certificate requirements for low-value

devices like CT and MRI scanners. Br. for Curvebeam, LLC as

Amicus Curiae at 23. Finally, this court has recognized that

when the burdens of a challenged law fall primarily on out-of-

state economic interests -- as appellants allege is the case

with respect to Virginia’s statute -- the state’s political

18
process cannot be relied upon to rectify legislative abuse.

Yamaha, 401 F.3d at 573.

The Pike inquiry, like the discrimination test, is fact-

bound. “If a legitimate local purpose is found, then the

question becomes one of degree. And the extent of the burden

that will be tolerated will of course depend on the nature of

the local interest involved, and on whether it could be promoted

as well with a lesser impact on interstate activities.” Pike,

397 U.S. at 142. We shall not attempt to forecast what further

investigation may demonstrate. The fact-intensive character of

this inquiry, however, counsels against a premature dismissal.

As noted above, in order to survive a motion to dismiss,

plaintiffs’ “[f]actual allegations must be enough to raise a

right to relief above the speculative level, . . . on the

assumption that all the allegations in the complaint are true

(even if doubtful in fact).” Twombly, 550 U.S. at 555. In the

instant case, appellants have succeeded in “nudg[ing] their

claims across the line from conceivable to plausible.” Id. at

570. This particular challenge too presents issues of fact that

cannot be properly resolved on a motion to dismiss. The district

court therefore erred in dismissing appellants’ Pike claim.

D.

On remand, the factual development of the dormant Commerce

Clause claims should focus primarily on the discriminatory

19
effects test. In particular, the proceedings must investigate

the differential burdens imposed on out-of-state and in-state

firms subject to the certificate-of-need process. The fulcrum of

this inquiry will be whether the certificate requirement erects

a special barrier to market entry by non-domestic entities. As

noted, the district court should not confine its focus to the

effect on appellants alone, but should instead survey the burden

imposed on interstate commerce generally.

The discriminatory effects test represents the superior

framework of analysis for two reasons. First, this standard,

although fact-intensive, has the virtue of providing a clearer

measure by which to gauge the challenged statute’s validity. The

Pike test is often too soggy to properly cabin the judicial

inquiry or effectively prevent the district court from assuming

a super-legislative role. See, e.g., Davis, 553 U.S. at 353

(declining to apply Pike because “the Judicial Branch is not

institutionally suited to draw reliable conclusions of the kind

that would be necessary for [plaintiffs] to satisfy a Pike

burden in this particular case”). Second, the factual material

relevant to the Pike standard largely overlaps with evidence

germane to the discrimination test. In both inquiries, the

effect of the challenged statute on out-of-state firms

constitutes the principal focus. Discovery on the issue of

20
discrimination should therefore substantially suffice with

respect to Pike, as well.

Although the precise effects of the certificate program can

only be uncovered via fact-finding, further inquiry is likely to

confirm that the requirement produces one of three possible

outcomes. First, the district court may discover that the

certificate program has significant, deleterious effects on

interstate commerce. The bureaucratic red tape foisted upon

businesses by the program may well be so cumbersome that, as a

functional matter, it imposes a major burden on interstate

commerce and discourages out-of-state firms from offering

important medical services in Virginia.

Second, it seems less likely, though conceivable, that the

requirement produces the opposite effect and actually stimulates

interstate commerce. In this scenario, firms are encouraged to

enter the market because the certificate program ensures that

they will have time to build patient goodwill, establish the

necessary business and referral relationships, and generally

acquire a market foothold before being economically submerged.

In essence, the certificate requirement theoretically grants

out-of-state firms a limited safe harbor to recoup the sizeable

capital investment that the establishment of a medical facility

requires.

21
 Finally, the certificate program’s effect on interstate

commerce may be entirely neutral, or at least sufficiently

insubstantial to avoid implicating the dormant Commerce Clause.

The point is: we do not know. It is impossible to ascertain

which of these potential outcomes actually obtains without

examining the practical operation of the statute and the actual,

concrete effects it has on out-of-state firms seeking to enter

the Virginia market.

III.

Appellants also assert a battery of claims under the

Fourteenth Amendment. Specifically, they allege that Virginia’s

certificate-of-need requirement violates the Equal Protection,

Due Process, and Privileges or Immunities Clauses. Unlike the

Commerce Clause, the Fourteenth Amendment is not primarily

focused on commerce and economic discrimination against out-of-

state interests, and its general provisions provide

correspondingly less warrant for close judicial supervision. For

the reasons that follow, we affirm the district court’s

dismissal of each of these claims.

A.

First, appellants argue that the certificate requirement

violates the Equal Protection Clause of the Fourteenth

Amendment. This particular claim centers on the statute’s

22
treatment of nuclear cardiac imaging, which is exempted from the

certificate-of-need requirement. Compl. ¶ 110. Appellants

contend that nuclear cardiac imaging is “similarly situated to

other types . . . of medical imaging,” id. ¶ 111, and that the

differential treatment of the two is irrational and therefore

unconstitutional. See City of Cleburne v. Cleburne Living Ctr.,

473 U.S. 432, 439 (1985).

Non-suspect classifications -- such as the one at issue

here -- are “accorded a strong presumption of validity,” Heller

v. Doe, 509 U.S. 312, 319 (1993), and must be upheld “if there

is any reasonably conceivable state of facts that could provide

a rational basis” for the distinction, FCC v. Beach Commc’ns,

Inc., 508 U.S. 307, 313 (1993). This deferential standard is

informed by the principle that “equal protection is not a

license for courts to judge the wisdom, fairness, or logic of

legislative choices.” Id.

Here, Virginia has articulated sufficient justifications

for the nuclear cardiac imaging exemption to survive rational

basis scrutiny. State legislators could reasonably have

concluded, for instance, that nuclear cardiac imaging services

are provided in a different market than other imaging services,

and thus less susceptible to the dangers of excess capacity or

geographical misallocation. Appellees’ Br. at 54; see also 12

Va. Admin. Code § 5-230-30. Moreover, appellants have provided

23
no general context or perspective to support their equal

protection challenge, and we are disinclined to pick apart the

Virginia statute specialty by specialty or to unravel a complex

medical regulatory scheme strand by strand. We thus affirm the

district court’s dismissal of appellants’ equal protection

claim.

B.

Second, appellants argue that the certificate requirement

violates the Fourteenth Amendment’s Due Process Clause.

Appellants’ specific claim, which seeks to import further

substantive rights into a clause whose focus is procedural,

rests on the contention that the certificate program

irrationally burdens appellants’ right to earn a living and

fails to advance any state purpose other than bald economic

protectionism. Compl. ¶¶ 221-25.

The certificate-of-need program does not infringe any

fundamental or enumerated right and is therefore subject to

rational basis review under the Due Process Clause. See

Washington v. Glucksberg, 521 U.S. 702, 719-20 (1997). Rational

basis scrutiny in the due process context -- as in the equal

protection context -- is quite deferential. See Star Scientific

Inc. v. Beales, 278 F.3d 339, 348-49 (4th Cir. 2002).

Here, appellants have failed to plausibly rebut the state’s

asserted justifications for the certificate-of-need program. The

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state, both in its brief and its implementing regulations,

articulates a variety of legitimate purposes served by the

statute, including ensuring geographically convenient access to

healthcare for Virginia residents at a reasonable cost.

Appellees’ Br. at 49-50. Appellants’ cursory, unsubstantiated

assertion that the statute fails to advance this purpose or any

other is insufficient to merit further factual inquiry. As is

the case with their equal protection claim, appellants have

failed to state a plausible due process entitlement to relief.

Iqbal, 556 U.S. at 678. The district court’s dismissal of this

count is therefore affirmed.

C.

Finally, appellants contend that the certificate-of-need

program contravenes the “right to earn an honest living”

embodied in the Fourteenth Amendment’s Privileges or Immunities

Clause, which provides that “No State shall make or enforce any

law which shall abridge the privileges or immunities of citizens

of the United States.” They concede, however, that this

particular claim is foreclosed by the Supreme Court’s decision

in the Slaughter-House Cases, 83 U.S. 36, 79-80 (1872), which

confined the reach of that clause to a set of national rights

that does not include the right to pursue a particular

occupation. This court lacks the authority to disturb an

unimpeached precedent issued by a superior tribunal. State Oil

25
Co. v. Khan, 522 U.S. 3, 20 (1997). This is especially the case

where recognition of an unenumerated substantive right would

open the door to a host of textually dubious challenges to state

economic regulation of every sort. The district court’s

dismissal of appellants’ privileges or immunities claim is

therefore affirmed.

IV.

In sum, appellants’ Commerce Clause challenges require

closer scrutiny and further proceedings before the district

court, but the Fourteenth Amendment claims were properly

dismissed. We thus affirm in part, reverse in part, and remand

this case for further proceedings in accordance with this

decision.

AFFIRMED IN PART,
REVERSED IN PART,
AND REMANDED

26
WILSON, District Judge, concurring:

Plaintiffs would like to render medical services in

Virginia with equipment they cannot utilize without first

proving to the Commonwealth that the competition they bring with

them will not harm established local health care providers. In

my opinion, little distinguishes such a regulatory system from

one that offends the dormant commerce clause by isolating local

interests from the national economy.

A handful of states initially developed certificate of need

regulations in the 1960s. Congress injected the certificate of

need regimen more broadly into national health care planning

when it enacted the National Health Planning and Resource

Development Act of 1974 (the “NHPRDA”), Pub. L. 93-641, 88 Stat.

2225, §§ 1-3, to control escalating health care costs and the

widely diverging availability of health care services. The

NHPRDA had the incidental effect of protecting the states’

certificate of need regimens from dormant commerce clause

scrutiny. But twelve years later, Congress repealed the NHPRDA,

Pub. L. 99-60, 100 Stat. 3743 (1986), after its failures had

become well past obvious. The NHPRDA’s repeal removed the

certificate of need’s shield from dormant commerce clause

scrutiny. Yet, twenty-seven years later, in Virginia, and

throughout much of the country, state certificate of need

regimens continue to grow and now regulate an enormous segment

27
of the national economy. The Virginia regimen explicitly

regulates its share of that economy by using the certificate of

need to “discourage[] the proliferation of services that would

undermine the ability of essential community providers to

maintain their financial viability.” 12 Va. Admin. Code § 5-230-

30 (2013). Stripped of its linguistic pretense, the

Commonwealth’s purpose is to protect established “community

providers” (i.e., established in-state interests) from the

effects of competition. Though this purpose or goal may be

legitimate, I find little difference in the means it employs to

accomplish that goal -- the limitation of competition -- from

illegitimate efforts to isolate local economic interests from

the national economy. Wyoming v. Oklahoma, 502 U.S. 437, 456-57

(1992) (noting the court has “often examined a ‘presumably

legitimate goal,’ only to find that the State attempted to

achieve it by ‘the illegitimate means of isolating the State

from the national economy’”). But even apart from its stated

purpose, in my view, a state regulatory system that chooses to

limit competition as its means to promote the delivery of health

care will still likely, if not inevitably, entangle itself with

the dormant commerce clause.

28