## Facts

- Washington regulates certain health-care services through a certificate-of-need (CON) program requiring preapproval for specified investments and services.
- The Washington legislature directed the Department of Health to require a CON for elective percutaneous coronary interventions (PCI); the Department issued implementing regulations in 2008.
- Emergency PCI could be performed without a CON, and Yakima Valley Memorial Hospital (Memorial) already provided emergency PCI.
- Memorial sought to provide elective PCI but was denied a CON based on the Department’s need and volume criteria.
- Memorial sued in federal court, alleging the elective-PCI CON regulations violated the dormant Commerce Clause and the Sherman Act.

## Issues

1. Whether Washington’s elective-PCI CON regulations violate the dormant Commerce Clause by discriminating against interstate commerce or by imposing burdens on interstate commerce that are clearly excessive relative to local benefits.
2. Whether the elective-PCI CON program constitutes an unlawful restraint of trade under the Sherman Act, or instead is exempt under state action (Parker) immunity.

## Decision

- The Ninth Circuit affirmed dismissal of the complaint for failure to state a claim.
- The court held the elective-PCI CON regulations are facially neutral and do not discriminate in purpose or effect against interstate commerce.
- Applying Pike balancing, the court held any interstate burdens asserted by Memorial (on out-of-state patients or physicians) were speculative and indirect, and not clearly excessive compared to the state’s asserted benefits.
- The court held Memorial’s Sherman Act claim was barred by state action immunity because the challenged restraint was the product of clearly articulated state policy implemented by a state agency.

## Legal Principles

- A facially neutral state regulation violates the dormant Commerce Clause only if it discriminates against interstate commerce in purpose or effect, or if incidental burdens on interstate commerce are clearly excessive in relation to putative local benefits (Pike balancing).
- States may regulate health-care markets through CON programs as an exercise of state police power; non-protectionist goals such as cost control, avoiding duplicative capacity, and quality standards can constitute legitimate local benefits.
- Under Parker state action immunity, anticompetitive effects are exempt from Sherman Act liability when they result from a clearly articulated and affirmatively expressed state policy to displace competition and are carried out by the state acting through its agencies.

## Conclusion

The Ninth Circuit upheld Washington’s requirement that hospitals obtain a CON before offering elective PCI, concluding the rules neither discriminated against nor unduly burdened interstate commerce and that any competitive restraint created by the program was immune from Sherman Act challenge as state regulatory action.


Yakima Valley Mem'l Hosp. v. Wash. State Dep't of Health, 654 F.3d 919 (9th Cir. 2011)