Court Opinion

ID: 1086646
Source: CourtListenerOpinion
Date Created: 2013-10-23 18:34:50.184212+00
Date Added: 2024-06-11T09:00:38.158166
License: Public Domain

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

                                             24
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.

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