Lawsuit: Kentucky 'certificate of need' law blocked opening of Louisville health care firm

Kishor Sapkota (left) and Dipendra Tiwari (right).
Kishor Sapkota (left) and Dipendra Tiwari (right).

UPDATE: The U.S. Court of Appeals for the Sixth Circuit ruled against Tiwari and Sapkota on Feb. 14, 2022. Their attorneys, with the Institute for Justice, said the court declared any changes to the law in the "certificate of need" area would have to come from the U.S. Supreme Court, which the legal group will consider petitioning to review the appellate court's decision.


Two Nepali immigrants in the Louisville area will sue the state of Kentucky, claiming its "certificate of need" law has prevented them from opening a home health care company.

Standing in front of the Gene Snyder Federal Courthouse on Wednesday, Dipendra Tiwari, Kishor Sapkota and their attorneys from the Institute of Justice announced their plan to file a federal lawsuit against several state agencies and officials over not being able to open Grace Home Care Inc. this year.

Tiwari, 45, immigrated to the United States in 2008, earned an MBA and became a certified public accountant.

He said he saw an urgent need for the thousands of Nepali immigrants living in the Louisville area to have the option to receive home health care from workers who understood their language and culture.

His dream was to open a modest business that would employ nurses and health aides to serve the Nepali community and anyone else needing health care in their home.

Tiwari teamed up with Sapkota, a 44-year-old fellow Nepali immigrant who works in home heath care, and the two said they "carefully followed" the home health agency application procedures.

“The people who speak Nepali don’t receive the services they need because of the language barriers," Tiwari said, "and we’re trying to help them."

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But this past January, the state rejected their application to open Grace Home Care due to a certificate of need law that Institute for Justice attorneys claim stifles competition in Kentucky.

In the 1970s, the federal government encouraged states to pass certificate of need laws to control costs and prevent health care providers from entering the market or making changes without first receiving the approval of state regulators.

As the Kentucky Cabinet for Health and Family Services says on its website, the "certificate of need process prevents the proliferation of health care facilities, health services and major medical equipment that increase the cost of quality health care in the commonwealth."

But Institute for Justice attorneys said Wednesday that the federal government eventually realized the certificate of need laws were not working as intended and reversed course.

“There is a near universal consensus that these laws make health care worse, not better,” said Andrew Ward, an attorney for the Institute for Justice. “Giant health care conglomerates don’t need the government to protect them from new ideas.”

Last year, President Donald Trump's administration urged states to scale back their certificate of need laws, noting in a report that the policies instead hurt competition and health care quality while driving up costs.

While numerous states have repealed the laws, Kentucky is one of 18 states that continues to require a "certificate of need" to open a home health agency.

That's despite Kentucky hiring consulting firm Deloitte in 2013 to issue a report that recommended suspending or "discontinuing the CON program for health agencies."

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With no action from legislators, attorneys for Tiwari and Sapkota said large health care companies in Kentucky have been able to "effectively monopolize home health services in the state."

The attorneys added that the application for Grace Home Care was formally opposed by the "$2 billion Baptist Health conglomerate, which operates its own home health agency."

Today, the attorneys added, new home health agencies are allowed to open in just six of the state's 120 counties.

Jefferson County is not one of the six, with the state determining Louisville and its suburbs have no need for new home health agencies, according to the suit.

The Institute for Justice has represented Louisville business owners before, including local food truck owners in a 2017 lawsuit that resulted in a federal consent decree related to how the city categorizes and regulates food trucks.

The new lawsuit filed by Institute for Justice attorneys on behalf of Tiwari and Sapkota names the Cabinet for Health and Family Services as well as the cabinet's secretary, Adam Meier, inspector general, Steven D. Davis, and the Office of the Inspector General's Division of Certificate of Need as defendants.

Christina Dettman, a spokeswoman for the health cabinet, said since the cabinet hasn't seen the lawsuit, "we can't comment."

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Reporter Ben Tobin contributed to this story.

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This article originally appeared on Louisville Courier Journal: Kentucky certificate of need law halted health care firm, lawsuit says