Court Opinion

ID: 3171269
Source: CourtListenerOpinion
Date Created: 2016-01-21 20:01:01.643634+00
Date Added: 2024-06-11T12:02:18.245694
License: Public Domain

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    wrote    the
opinion, in which Judge King and Judge Wynn joined.

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. O’Keeffe, IV, JOHNSON, ROSEN &
O’KEEFFE, 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.

                               3
WILKINSON, Circuit Judge:

       Virginia’s certificate of need (CON) program governs the

establishment and expansion of certain medical facilities inside

the    state.       In    this     case   two       providers    of    medical       imaging

services,       Colon       Health      Centers      of    America     and       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. §§ 32.1–102.1 et seq.; 12 Va. Admin. Code §§ 5–220–10

et    seq.   Virginia’s           CON   program     applies     to    most       health    care

capital      expenditures,          including       investments       in     new    computed

tomographic          (CT)        and    magnetic          resonance        imaging        (MRI)

facilities.         See     Va.    Code   Ann.       §    32.1-102.2.       It     does    not,

                                                4
however, cover the “[r]eplacement of existing equipment.” Id. at

§    32.1–102.1.       The    program    requires       that    an     applicant      show   a

sufficient public need for its proposed venture in the relevant

geographic          area.     Virginia        asserts       that       this    preapproval

mechanism      helps        prevent     the    redundant       accretion       of    medical

facilities,          protect     the      economic          viability         of    existing

providers,          promote    indigent       care,     and    assist     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 project’s

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    a    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. § 32.1–102.6.

          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    the     agencies      must     hold     a     public    hearing       in   the

vicinity       of    the     proposed     investment        site,      where       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    a

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

32.1–102.3(A).           The    Commissioner’s           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.                                     Id. at §

32.1–102.3(B)(1)–(8).             For    example,        the     Commissioner          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 § 32.1–102.3(B)(1),(5). An application is

considered       approved      and     a     certificate          is     granted         if     the

Commissioner fails to issue a decision within seventy days after

the closing of the record.

      Constructing         new       facilities           or      augmenting            existing

operations       without       a     certificate          of     need     is      a     Class     1

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 Commissioner’s decision may seek judicial review under the

Virginia Administrative Procedure Act. See id. at § 32.1–24.

                                              B.

      Appellants Colon Health Centers and Progressive Radiology

are   out-of-state        medical       providers          who     wish      to       establish,

through    the    use     of       private    funds,       specialized            MRI    and    CT

services         in       Virginia.            Appellants               challenged              the

constitutionality of the CON program, claiming that it violates

the   dormant         Commerce       Clause        as     well     as     the         Fourteenth

Amendment’s      Equal     Protection,        Due       Process,       and     Privileges        or

Immunities    Clauses.         The    district          court    dismissed         appellants’

                                              7
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,   we    affirmed       the    dismissal    of    appellants’

Fourteenth      Amendment    claims,    reversed      the    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 Virginia’s CON requirement violates

the dormant Commerce Clause by discriminating against interstate

commerce in both purpose and effect. Second, appellants contend

that     even    if    the    program       does     not     unconstitutionally

discriminate,     it   nevertheless      violates      the     dormant   Commerce

Clause because it places an undue burden on interstate commerce.

We address each of these arguments in turn.

                                        8
                                                 II.

                                                  A.

       The     general      framework        of    the      law    in    this       area    is     well

settled.       The    Commerce        Clause      gives      Congress         the    power        “[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    primarily         by       concerns      over     “economic         protectionism --

that     is,     regulatory          measures          designed     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       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).        “[W]hen      a     state      statute        []     discriminates             against

interstate        commerce,           it    will       be    struck          down     unless       the

discrimination         is       demonstrably           justified        by    a     valid     factor

unrelated       to    economic         protectionism.”            Yamaha       Motor       Corp.     v.

Jim’s    Motorcycle,            Inc.,      401    F.3d      560,    567      (4th     Cir.        2005)

                                                  9
(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. Dep’t of Envtl.

Quality     of    State      of   Or.,   511     U.S.   93,   99    (1994),      not    all

economic     harms      or    anticompetitive       choices    can      or     should    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      statute          may     discriminate          against      interstate

commerce     in    one     of    three       ways:    “facially,      in    its   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 Virginia’s 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-of-

state 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        a    completed

application”).

       Appellants         do,    however,         maintain       that    the        CON    program

discriminates          in    both    purpose           and    effect.        With       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    the        certificate       requirement           is     to    shelter         those

providers         from      competition       at       the    expense        of     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, Virginia’s program serves an

                                                  12
array    of    legitimate               public     purposes:         improving       health       care

quality       by    discouraging             the    proliferation             of    underutilized

facilities,         enabling          underserved        and       indigent        populations     to

access     necessary               medical       services,          and    encouraging           cost-

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

may be dissatisfied with the Virginia General Assembly’s 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 Virginia’s 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          to    thwart       the    market          entrance    of    out-of-state

providers      in       three       ways.    First,          the    code     allows    interested

parties to request an informal fact-finding conference so that

the     merits          of     a     particular         application           can     be    further

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

according          to        appellants,         can     significantly              lengthen      the

administrative               review      period        and     increase        the     costs       and

uncertainty         borne          by     applicants.         Second,         the    intervention

                                                   13
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    ”informal”        label,    fact-finding         conferences    “often

resemble     full-blown        litigation”          and    “[a]pplicants       regularly

retain    counsel.”      Appellants’         Br.    at    10.     Finally,    appellants

argue that the process gives a structural edge to established

interests:       Because     applications          are    grouped    and     reviewed   in

batches,     “Virginia-based              entities        [can]     submit     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        effect,       appellants      must    demonstrate    that

Virginia’s       CON    law,    “if       enforced,       would     negatively    impact

interstate       commerce      to     a     greater       degree     than     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 non-

domestic entities.” Id. at 546. Here, the Commonwealth’s 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     State’s       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       fifty    percent     of     out-of-Commonwealth               entities

[were]    forced       to   undergo      the     entire        administrative            process

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

      Appellants,        for    their     part,    condemn           the    state    expert’s

approach. They argue that “the district court erred by crediting

the     Commonwealth’s         expert’s     decision       to        base     his    analysis

entirely on whether a particular entity was legally incorporated

in Virginia or elsewhere.” Appellant’s 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    State’s       expert    to

consider an entity’s state of incorporation in demarcating the

                                            15
boundary       between        in-state        and      out-of-state           applicants.         The

district       court     noted     simply       that     “state      of       incorporation        is

relevant       to   whether        an     entity       is    an    out-of-state             business

discriminated against by Virginia’s regulatory scheme.” J.A. 62.

And    indeed       it      is    relevant.           Not    only        is     the       state    of

incorporation          an     easily      applied       criterion.            By    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    CORPORATIONS § 3:2 (3d ed. 2015)

(“In   selecting         the     state    of     incorporation,           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 corporation’s officers

and directors and the rights of its stockholders”).

       Appellants further contest the district court’s decision on

the ground that the court “improperly credited the testimony of

[the   Commonwealth’s]            expert        over    [their      expert’s             analysis].”

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

that     the    “Virginia         law      undisputedly            and    expressly          favors

granting       CONs      to      entities       that        have    previously            completed

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

Admin.    Code      § 5-230-60).          In    other       words,       appellants’          expert

concluded       that     the      certificate          requirement            discriminates        in

                                                 16
favor of incumbent health care providers at the expense of new,

predominantly out-of-state firms.

       We   reject    appellants’       argument      as      a       matter   of    law,    for

incumbency     bias    in   this   context       is     not       a    surrogate      for    the

“negative[]     impact      [on]   interstate         commerce”           with      which    the

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 previously-

                                          17
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      Virginia’s    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

legislature’s 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     a     law   does       not    facially,      in    effect,     or

purposefully discriminate against interstate commerce, we have

in   past    cases     undertaken       a    second     analytical        step,    asking

whether     any   of    the    law’s        incidental    burdens     on     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 Pike’s 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 law’s benefits

and burdens may be “a very subtle exercise.” Dep’t 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.         We    are     ill-equipped      to      “second-guess       the

empirical      judgments      of   lawmakers      concerning      the    utility   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      protectionism,              laws         which     do   not     so

discriminate       face     only       “less        strict    scrutiny.”          Wyoming      v.

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

“putative       local   benefits”        to     be     weighed          against     incidental

burdens    on    interstate      commerce,            Pike,       397     U.S.    at   142,    we

therefore       apply   a     rational     basis       standard          of     review.    Colon

Health, 733 F.3d at 535.

     Virginia       advances       a    number        of     legitimate          interests    in

support    of    its    CON    program.        First,        it    argues       that   the    CON

program     boosts        healthcare           quality.           The     Virginia        Health

Department’s designee Erik Bodin noted in deposition testimony

that by reducing excess medical capacity, the CON program may

“increase the quality of the care that’s 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       perfect,         or      at    least       familiarity             with

sophisticated          medical    devices         is    to    be    preferred       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       a

certain level of indigent care each year. Va. Code Ann. § 32.1-

102.4(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      caregivers     serving          indigent      patients,      service       at

least   in   part     motivated       by    the    CON    program,       those      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 Virginia’s Eastern Shore and far Southwest. “In

determining       whether”      to     issue       a    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      fashion.        By     reducing         competition        in    highly

profitable        operations,         the     program          may     provide        existing

hospitals      with    the     revenue       they      need     not    only    to     provide

indigents      with    care,     but       also    to    support       money-losing         but

nonetheless       important       operations            like     trauma       centers       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           services      with    the

                                             23
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      gastroenterology      and    radiology        facilities,        not   new

community     health     centers.   Concerns     that     such    practices        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 system’s 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 Ass’n & Va

Health    Care    Ass’n    (“Hospitals’      Brief”)     at     21.    And   a    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    barriers      to   entry    like   CON     programs         may    reduce

competition      and    thereby     allow    entrenched     incumbents         to    exert

market     power       and    charge   inefficiently           high    prices.       Like

Virginia’s 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

lion’s share of the bill; they thus lack the normal incentives

to    shop     for    price.       Providers      are    not    free     agents      either.

Squeezed      by     insurers,      regulation,     and       obligations       to   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,   after    all,    play    a   crucial     role   in   our

constitutional   scheme.     To    override    their   judgments     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 Virginia’s 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 Virginia’s lack of expert testimony on the general

effectiveness of CON programs with their expert’s 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), Virginia’s are not so

here.    The    Commonwealth       has     supported        them        with        reasonable

argument and the record testimony of individuals well versed in

the CON program’s 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     empirical      battle      in,    for     starters,           every     dormant

Commerce      Clause    case,     there    would       be    no        end     to     judicial

interference         with   legislation         touching         no    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     program’s      “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,     used    a   “differential        tax    scheme”          in    which    interest

income      derived     from      bonds    issued        by     the       state     and     its

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

interest     income      earned    from     the    bonds       of     other       states    was

taxable.     Davis,     553    U.S.   at    332-35.       The       Court     rejected      the

challenge to the law under Pike.                  It noted both the challengers’

argument     that     the   law   “blocks”       other    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         are     possible       at     all.”      Id.     “[A]n       elected

legislature      is    the     preferable       institution            for    incurring         the

economic     risks      of     any     alteration          in   the     way        things       have

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    CON        program.    Their        combined      ability          to    act    as

“laboratories         for     experimentation”             in   such    a     complex       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 Commonwealth’s 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   a   better   path.        While   we        cannot   say   whether

Virginia’s   program   is   ultimately       wise,      it    most    certainly   is

constitutional. The judgment is affirmed.

                                                                            AFFIRMED

                                      31