Mental Health Provider NEWCO Oregon, Inc. Sues Oregon Health Authority

PORTLAND, Ore., June 23, 2017 -- The Oregon Health Authority has violated Oregon law and the agency’s own administrative rules by repeatedly delaying a decision on a certificate of need application, according to court documents filed today in Marion County Circuit Court.

Submitted by NEWCO Oregon, Inc., which is seeking to build the Willamette Valley Behavioral Health facility in Wilsonville, OR, the court filings allege that the Oregon Health Authority operated outside its legal authority in unilaterally delaying a decision on the facility’s certificate of need. The delays have resulted in “exponentially higher development costs…and increasing costs to patients as a result.”

The allegations in the lawsuit center on a certificate of need process (CON) that has come under fire from the U.S. Department of Justice, the Federal Trade Commission and the American Medical Association. As recently as April 2017, the DOJ and FTC stated that “CON laws can restrict entry and expansion, limit consumer choice, and stifle innovation.  Additionally, the CON process can be exploited by incumbent firms to thwart or delay entry by new competitors, as well as potentially obstruct efforts to restore competition lost to an anticompetitive merger, harming free markets and consumers.”

The American Medical Association has found that “CON regimes prevent new health care entrants from competing without a state-issued CON, which is often difficult to obtain. This process has the effect of shielding incumbent health care providers from new entrants. As a result, CON programs may actually increase health care costs, as supply is depressed below competitive levels.”

“Oregon ranks last in the nation for overall outcomes related to mental health care,” said Jason Conger, an attorney at Lynch Conger McLane LLP, who represents the company. “You would think the state agency responsible for mental health care would be trying to improve the situation.”

The Treatment Advocacy Center recommends a minimum of 40 inpatient beds per 100,000 people, yet Oregon has fewer than half that number. Left untreated, mental illness places individuals at higher risk of suicide, addiction and homelessness.

“This is a clear example of why the U.S. Department of Justice and the Federal Trade Commission have tried to abolish these certificate of need laws,” said Conger. “From anti-competitive collusion between hospital monopolies to administrative malfeasance, these laws tend to encourage and sanction behavior that would otherwise be illegal.”

The lawsuit seeks a judgement against OHA requiring it to issue a decision on the application and award attorney fees and court costs related to the lawsuit.

A PDF accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/923a41af-61da-45a3-9475-e2e2a27f8a19

About NEWCO Oregon, Inc. (Willamette Valley Behavioral Health):

Willamette Valley Behavioral Health is a planned 100 bed inpatient facility serving those with privately paid insurance, private pays, and Medicare. Located in Wilsonville, Oregon, it is designed to serve veterans and active-duty military, adolescents and adults with behavioral health treatment and short-term inpatient and outpatient services.

In March 2017, the Wilsonville City Council voted unanimously to approve the project. NEWCO, Inc. submitted an application to the Oregon Health Authority on January 5, 2017.

Contact: Chris Edmonds, 503-342-7158