Opposition Brief — Madarang v. Bermudes

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In The | JOSEPH F seanigy |

Supreme Court of the United States——“*

October Term, 1989

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JOVENCIO F. MADARANG and

J.F. MADARANG, D.D.S. & ASSOCIATES,

A Professional Corporation,

Petitioners,

V.

MARIANO R. BERMUDES, INDIVIDUALLY AND

AS EXECUTIVE DIRECTOR OF COMMONWEALTH

HEALTH PLANNING AND DEVELOPMENT AGENCY,

JOSE T. VILLAGOMEZ, INDIVIDUALLY AND

AS DIRECTOR OF THE DEPARTMENT OF

PUBLIC HEALTH AND ENVIRONMENTAL

SERVICES, AND THE COMMONWEALTH

HEALTH COORDINATING COUNCIL,

Respondents.

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On Petition For Writ Of Certiorari To The

Supreme Court Of The United States On The

Decision Of The United States Court Of

Appeals For The Ninth Circuit

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BRIEF IN OPPOSITION

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RosBert NARAJA

Attorney General

James B. PARSONS

Assistant Attorney General

*Etuioit A. SATTLER

Assistant Attorney General

Commonwealth of the Northern

Mariana Islands

Office of the Attorney General

2nd Floor — Administrative Bldg.

Capitol Hill

Saipan, MP 94950

(670) 322-4311

Attorneys for Respondents

*Counsel of Record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

RESPONDENTS’ RESTATEMENT OF

THE QUESTIONS PRESENTED

FOR REVIEW

QUESTION 1. Does the Equal Protection Clause of

the Fourteenth Amendment prohibit the Commonwealth

from requiring a showing of need before new health care

facilities can be constructed?

QUESTION 2. Is the Petitioner denied the oppor-

tunity to practice his profession if he is not allowed to

construct a dental clinic in a jurisdiction other than where

he resides?

QUESTION 3. Did the Petitioner present any evi-

dence of a violation of due process?

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TABLE OF CONTENTS

Page

RESPONDENTS’ QUESTIONS PRESENTED FOR

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TABLE OF AUTHIORITIOS.. ......0:ccccecedscshesss iii

SIATEMENT OF THE CAGE... 6 scensscdheueeeee 1

ARGUMENT IN OPPOSITION TO PETITION FOR

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TABLE OF AUTHORITIES

Page

CASES

Board of Regents of State Colleges v. Roth, 408 US.

564, 92 S.Ct. 2701, 33 L.Ed.2d 548 (1972)........... 7

City of New Orleans v. Dukes, 427 U.S. 297, 96 S.Ct.

po A EB eee enn 3

Community Psychiatric Centers, Inc. v. Grant, 664

i ee Ce PEP. crc crewesceesscncsesveeres 5

Dandridge v. Williams, 397 U.S. 471, 90 S.Ct. 1153,

co be eSbs cn lenesavvesessoeeess 3, 7

Goodwin v. Oklahoma, 436 F. Supp. 583 (W.D. Okla.

Ce ances sac eebearisneretsenesesss 5

Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31

Dee Gate OO tnt. SOF CIDID).. oc ccc ccccccccvens x. 3

McGowan v. Maryland, 366 U.S. 420, 81 S.Ct. 1101,

rE CEES oo b0 604 Kove ¥¥Ceeserdccuseesees 3

Metropolis Theater Co. v. City of Chicago, 228 U.S.

St, oo OAS. O61, 56 L.Ed. 750 (191D) .... cee eceness 4

Munn v. Illinois, 94 U.S. 113, 24 L.Ed. 77 (1877) ...... 4

Nebbia v. New York, 291 U.S. 502, 54 S.Ct. 505, 78

sess ea wakes ce ee oe eee enn nae veces 2

North Dakota State Board of Pharmacy v. Snyder's

Drug Stores, 414 U.S. 156, 94 S.Ct. 407, 38

ee cle receetehneevedeeeussns née. 8

Personnel Administrator of Massachusetts v. Fenny,

442 U.S. 256, 99 S.Ct. 2282, 60 L.Ed.2d 870 (1970) ..... 5

Richardson v. Belcher, 404 U.S. 78, 92 S.Ct. 254, 30

re te i ecebeedueevavevetets 5

iv

TABLE OF AUTHORITIES - Continued

Page

Village of Belle Terre v. Boraas, 416 U.S. 1, 94 S.Ct.

SOR, SP Le FOF CEST E 6 5 ccc ciccccencccvcccnces 7

Williamson v. Lee Optical of Oklahoma, 348 U.S. 483,

72 GAR. G61, GFP LB. TES CITB)... cc vcccccccccvsces 4

Young v. American Mini Theaters, Inc., 427 U.S. 50,

96 S.Ct. 2440, 49 L.Ed.2d 310 (1976)................ 6

STATEMENT OF THE CASE

Petitioner Madarang (“Madarang”) is a dentist who

is a citizen of the United States and a resident of Guam.

In attempting to establish a dental clinic in the Common-

wealth of the Northern Mariana Islands (“CNMI”), Mad-

arang’s professional corporation, J.F. Madarang &

Associates (hereinafter with Dr. Madarang collectively

refered to as “Madarang” or “Petitioner”) applied for a

Certificate of Need (“CON”) from the CNMI.

The CNMI has a law that requires a CON before the

construction and operation of any new health facility or

the expenditure of more than $50,000.00 on any existing

facility. The law was required by the enactment of the

National Health Planning and Resources Development

Act of 1974, 42 U.S.C. Section 300k, et seq. (since

repealed).

Public notice of the Madarang application was given,

and comments were sought. Respondant Bermudes (“Ber-

mudes”), the person designated by statute to make a

recommendation to accept or reject the CON, called a

public hearing. Madarang and his attorney attended the

hearing, and comments were allowed from those in atten-

dance. After all of the written and oral comments were

received, Bermudes recommended to the Commonwealth

Health Planning and Development Agency (“the

Agency”) that the application be denied. The Agency

denied the application based on Petitioner’s failure to

show there was a need for a new dental clinic. Petitioner

did not request reconsideration of the denial, but filed an

action in the United States District Court for the Northern

Mariana Islands. Prior to trial, the parties stipulated there

was no “need” for an additional dental clinic as that term

is used in the CON law.

The District Court held that the right to work for a

living is a fundamental right protected by the Fourteenth

Amendment, and any law which discriminates in that

area is subject to strict judicial review to determine if

there is a compelling state interest to justify the discrimi-

nation. The District Court found that no compelling state

interest had been shown, and struck down the CON law

as unconstitutional.

The Ninth Circuit Court of Appeals reversed the

District Court, holding that the right to pursue a calling is

not a fundamental right for purposes of the Fourteenth

Amendment. It further held that economic legislation

must only have some reasonable basis, and protecting the

health needs of its citizens is a reasonable activity of the

CNMI government.

Petitioner timely filed his petition for a writ of cer-

tiorari to this Court.

,

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ARGUMENT IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

A. The CNMI may regulate economic activity by pre-

venting duplication of health services in order to

insure adequate health care for its citizens.

When an individual engages in an occupation in

which the public has an interest, the state may regulate

that occupation in the exercise of its police power. Nebbia

v. New York, 291 U.S. 502, 54 S.Ct. 505, 78 L.Ed. 940 (1934).

When a local economic regulation is challenged solely as

violating the Equal Protection Clause, the court consis-

tently defers to legislative determinations as to the desir-

ability of particular statutory discriminations. City of New

Orleans v. Dukes, 427 U.S. 297, 96 S.Ct. 2513, 49 L.Ed.2d

511 (1976) (per curiam). ©

The CNMI enacted its certificate of need statute to

ensure proper health care for its citizens by regulating the

industry to prevent an oversupply of health care facili-

ties. In the area of economic and social welfare, a state

does not violate the Equal Protection Clause merely -

because a classification made by its laws is imperfect.

Dandridge v. Williams, 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.

491 (1970). If a classification has some reasonable basis, it

does not offend the Constitution simply because the clas-

sification “is not made with mathematical nicety or

because in practice it results in some inequality.” Lindsley

v. Natural Carbonic Gas Co., 220 U.S. 61, 78, 31 S.Ct. 337,

340, 55 L.Ed. 369, 377 (1911). “A statutory discrimination

will not be set aside if any state of facts reasonably may

be conceived to justify it.” McGowan v. Maryland, 366 U.S.

420, 426, 81 S.Ct. 1101, 1105, 6 L.Ed.2d 393, 399 (1961).

There is no question that Respondents met the

requirements contained in regulations promulgated to

implement the CON statute. Petitioner filed for a CON

and a hearing was held pursuant to the CON statute.

Input was received from other health professionals and a

recommendation was made to the Agency, whose respon-

sibility it was to determine if the certificate should be

granted. After consideration and review of the evidence,

the Agency made a determination that there was no need

for a new dental clinic, and denied Petitioner’s applica-

tion. In fact, the Petitioner stipulated prior to trial that

there was no “need” as that term is defined in the CON

statute.

To accept Petitioner’s position, this Court would

have to find that any CON statute violates the Fourteenth

Amendment if such statute prevents an individual from

constructing and operating a private business such as a

dental clinic. It would further have to conclude that statu-

tory regulation may not reflect a state’s legitimate interest

in ensuring the well being of its citizens through ade-

quate and properly run dental clinics if such regulation

would prevent one person or organization from con-

structing a health care facility. Such a determination

would require a regulatory system without an adverse

impact on anyone - in short, a perfect system. Govern-

ment regulation of economic activity does not require

perfection. “The problems with government are practical

ones and may justify, if they do not require, rough accom-

modations---illogical, it may be, and unscientific.”

Metropolis Theater Co. v. City of Chicago, 228 U.S. 61, 69-70,

33 S.Ct. 441, 443, 56 L.Ed. 730 (1913).

The prohibition of the Equal Protection Clause goes

no further than invidious discrimination. Williamson v. Lee

Optical of Oklahoma, 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed.

563 (1955). There was no showing that Petitioner was

treated differently than any other applicant. Therefore, no

invidious discrimination toward the Petitioner can be

demonstrated. “For protection against abuses by legisla-

tures, the people must resort to the polls, not the courts.”

Williamson, 348 U.S. at 488, 75 S.Ct. at 465, 99 L.Ed. at 572

(citing Munn uv. Illinois, 94 U.S. 113, 24 L.Ed. 77 (1877)).

The cornerstone of any equal protection challenge

must be a showing of disparate treatment. Personnel

Administrator of Massachusetts v. Fenny, 442 U.S. 256, 99

S.Ct. 2282, 60 L.Ed.2d 870 (1970). No disparate treatment

has been shown in this case. No other applications for

certificates of need had been filed at the time of Peti-

tioner’s application. There can be no evidence of dispa-

rate treatment because there can be no comparison with

any other application.

In addition to acting to insure adequate healthcare,

the CNMI was following the dictates of the federal gov-

ernment in applying for federal hospital funds pursuant

to 42 U.S.C. § 300k et seq., which required a CON statute

before funds would be distributed. Other courts have

upheld CON statutes passed in order to collect these

federal funds. See, e.g., Community Psychiatric Centers, Inc.

v. Grant, 664 F.2d 1148 (9th Cir. 1981); Goodwin v. Okla-

homa, 436 F. Supp. 583 (W.D. Okla. 1977), citing Richardson

v. Belcher, 404 U.S. 78, 92 S.Ct. 254, 30 L.Ed.2d 231 (1971).

The equal protection clause of the 14th

Amendment does not take from the state the

power to classify in the adoption of police law,

but admits of the exercise of a wide scope of

discretion in that regard, and avoids what is

done only when it is without any reasonable

basis, and therefore is purely arbitrary.

Lindsley, 220 U.S. at 78, 31 S.Ct. at 340, 55 L.Ed. 377.

The CNMI is granted the discretion to enact laws

regulating economic activities which have rational basis.

If the number of health care facilities are not regulated,

duplication of services and equipment can occur.

Although it may be argued competition might produce

benefits in the short run, the legislature found it would

more likely prevent health care facilities from accumulat-

ing sufficient revenues to purchase increasingly costly

but medically important health care technology. Unfet-

tered competition may result in outdated medical equip-

ment and techniques within the CNMI. Protecting the

health and welfare of the CNMI population by ensuring

adequate and secure health services is of paramount con-

cern and constitutes, at the very least, a rational basis for

the CON law. ,

B. Petitioner presented no evidence that he could not

practice his profession either in the CNMI or Gaum.

Petitioner did not present any evidence that he was

denied the opportunity to practice his profession in the

CNMI. His argument is simply that he could not con-

struct a dental clinic. There are two dental clinics pres-

ently operating in Saipan, by far most populous island in

the CNMI. Both clinics were operating before the CON

statute was enacted. Petitioner did not present any evi-

dence that he was refused employment with the other

dental clinics. He simply makes an illogical leap that

because he could not construct a dental clinic, he could

not practice his profession.

Such an argument is akin to an attorney arguing that

if he can not construct a law office, he cannot practice

law. Many governmental entities enact legislation which

regulates or prohibits certain types of construction, such

as zoning regulations restricting commercial office build-

ings or those that prevent certain types of businesses

from operating in particular locations. Young v. American

Mini Theaters, Inc., 427 U.S. 50, 96 S.Ct. 2440, 49 L.Ed.2d

310 (1976). If there are too many office buildings in a

particular location, a government can place a moratorium

on construction, even if the result is that a group of

people are denied the right to practice their chosen pro-

fession in that area. See, e.g., Village of Belle Terre v. Boraas,

416 U.S. 1, 94 S.Ct. 1536, 39 L.Ed.2d 797 (1974).

A rational basis test is applied to state legislation

restricting the availability of employment opportunities.

Dandridge, 397 U.S. at 485, 90 S.Ct. at 1162, 25 L.Ed.2d at

502. Petitioner may still practice his profession on Guam

and, in the absence of a showing that he cannot secure

employment in any other dental clinic in the CNMI, it

may be presumed he can also practice his profession in

the CNMI. Even if a person is denied employment, if he

is free to seek another job, due process has been met.

Board of Regents of State Colleges v. Roth, 408 U.S. 564, 92

S.Ct. 2701, 33 L.Ed.2d 548 (1972).

C. Petitioner received both notice and a hearing, and

was accorded full due process rights.

When Petitioner first filed his application for a CON,

the information provided therein was inconsistent. Mr.

Burmudes, as acting executive director of the Agency,

was designated by statute to receive and review each

application, and make a recommendation based on the

information supplied plus comments solicited from the

appropriate agencies and the public. A notice that the

application had been filed and that a hearing was to be

held was published in the local newspaper.

Petitioner and his attorney attended the public hear-

ing. Questions were asked of the Petitioner, and testi-

mony from others in attendance was taken. After all the

evidence was received, the application was denied

because there was no showing of need for another dental

clinic. The steps leading to that determination, however,

afforded Petitioner full procedural due process.

Economic regulation of professional services need

not violate substantive due process. North Dakota State

Board of Pharmacy v. Snyder’s Drug Stores, 414 U.S. 156, 94

S.Ct. 407, 38 L.Ed.2d 379 (1973). As stated by the Ninth

Circuit Court of Appeals in this case, the nature of the

purported violation of substantive due process is not

specified by either the Petitioner or the District Court,

and none appears from the record. The days when courts

regularly and automatically struck down economic legis-

lation on substantive due process grounds have long

since passed.

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CONCLUSION

For the foregoing reasons, Respondents respectfully

request that the Court deny Petitioner’s application for a

Writ of Certiorari.

Respectfully submitted,

Rosert NARAJA

Attorney General

James B. Parsons

Assistant Attorney General

Exuiotr A. SATTLER

Assistant Attorney General

Commonwealth of the Northern

Mariana Islands

Office of the Attorney General

2nd Floor — Administrative Bldg.

Capitol Hill

Saipan, MP 94950

(670) 322-4311

Attorneys for Respondents