Yakima Valley Memorial Hospital v. Washington State Dept. of Health

A regulatory statute that creates market power to a private entity but does not delegate regulatory power does not violate the Sherman Act. A regulatory statute that restrains interstate commerce must have specific authorization from Congress to avoid violating the dormant Commerce Clause.

The Washington State Department of Health (Department) refused to grant a license to perform elective percutaneous coronary interventions (PCI) to the Yakima Valley Memorial Hospital (Memorial). Such licenses are granted under a certificate of need program established by the Washington legislature (Wash. Rev. Code § 70.38.128). The statute limits new certificates of need to geographic areas where the projected demand for elective PCI procedures exceeds the capacity of the current certificate holder by at least 300. Memorial brought suit against the Department alleging that the certificate program placed an unreasonable burden on interstate commerce in violation of the dormant Commerce Clause and that the Department’s methodology is anticompetitive because it allows current certificate holders to exclude others by expanding their capacity in violation the Sherman Act. The district court acknowledged that Memorial had standing because of its plans to participate in an interstate market for PCI procedures, but held that Memorial failed to state a claim of antitrust preemption. The Ninth Circuit affirmed on the preemption charge finding that the PCI regulations are merely a licensing requirement and do not rise to the level of restraint of trade because the state does not delegate any regulatory power to the incumbent. However, the Court reversed the dismissal because the certificate of need program restrained Memorial’s ability to conduct interstate trade and the Department did not show that Congress had authorized such a restraint. AFFIRMED IN PART, REVERSED IN PART, REMANDED.