Most people would pay little attention to an ambulance with a “For Sale” sign sitting on the side of the road. But when Phillip Truesdell spotted the ambulance, he saw a business opportunity.
Over the past two years and with the help of his family, Truesdell has taken that ambulance and built a business, Legacy Medical Transport. Legacy is a non-emergency ambulance company that employs multiple people and services hundreds of patients. In two short years, Truesdell has grown Legacy to seven ambulances that complete more than 1,500 trips a year.
Truesdell’s success story captures our nation’s entrepreneurial spirit. But Kentucky ambulance operators just across the river don’t see it that way. They see Truesdell as a threat to their business and stranglehold on the market.
Legacy's Legal Competition
Legacy is based in Aberdeen, Ohio, located just a mile from the Kentucky border. Legacy provides transportation to medical appointments for people who need extra support while traveling, such as those confined to a stretcher or who suffer from extreme muscle weakness. Given its proximity to Kentucky, Legacy’s clients often require transportation across the state border.
While Truesdell can take customers into Kentucky, he cannot pick them back up. Under Kentucky law, ambulance providers must obtain a state-issued certificate of need to transport clients around and out of the state. A certificate of need requires would-be ambulance companies to convince state regulators there is a “need” for their service. But demonstrating “need” is nearly impossible. Usually, an entrepreneur demonstrates it’s needed by throwing open their doors and allowing the market to decide. As you’d expect, existing ambulance companies weren’t happy to see Truesdell growing his business on their turf.Kentucky requires entrepreneurs to prove “by a preponderance of the evidence” in advance of operating that the market will sustain them.
Worse, part of demonstrating “need” requires proving that you won’t take away business from existing ambulance providers. Those incumbent companies may also protest the application and show up at a hearing to offer evidence that the new company isn’t “necessary.” Because certificate of need laws essentially give existing businesses the power to exclude new competition, they are sometimes described as a “competitor’s veto.”
As you’d expect, existing ambulance companies weren’t happy to see Truesdell growing his business on their turf. His application to operate in Kentucky was denied after incumbent companies opposed his application on the basis that he might take away some of their customers.
Lawsuit for the Right to Earn a Living
Sounds crazy, right? Truesdell thought so, too, so he decided to fight back. Represented by the Pacific Legal Foundation (PLF), he filed a lawsuit asking a federal court to strike down this law because it violates his constitutional right to earn a living.
“Competitor’s veto” laws are a failed experiment. Thought initially to lower prices and to increase rural access to health care, these laws have been shown to do precisely the opposite. In Kentucky, for example, the average wait time for an ambulance is over ten minutes, nearly 30 percent higher than the national average. According to a recent study by the Pegasus Institute, a Kentucky-based think tank, the average wait time in Louisville (ten minutes and 19 seconds) was significantly higher compared to neighboring cities Nashville (seven minutes and 12 seconds) and Indianapolis (five minutes and 44 seconds) where competitor’s veto laws don’t apply to ambulance companies.
Recognizing that these laws have failed to achieve their intended goals, a White House report from last year called on states to do away with competitor’s veto laws. But most states, including Kentucky, wouldn’t hear it. Incumbent businesses that benefit from these laws are willing to spend significant amounts of time and money to keep them on the books. This fight isn’t just about one man’s livelihood—it’s about preserving our nation’s entrepreneurial spirit. In the face of political pressure, lawmakers often have a tough time trying to change the law.
Although Kentucky is one of only four states with a competitor’s veto requirement for ambulance companies, over half of the states have similar competitor’s veto programs in the transportation and the medical industries.
In 2014, a federal court struck down Kentucky’s competitor’s veto requirement for moving companies. Under that law, competitors tried to shut down entrepreneur Raleigh Bruner and his budding business, Wildcat Moving. Represented pro bono by PLF, Raleigh successfully argued that the law violated his constitutional right to earn a living without arbitrary government interference. The judge found that the law operated solely to “protect existing moving companies—regardless of their quality of service—against potential competition.” Since his victory in court, Raleigh has grown his business into other states and achieved tremendous success.
If Phillip Truesdell is similarly successful in his suit, he’ll enjoy the same opportunity to grow his business that Raleigh enjoyed. But this fight isn’t just about one man’s livelihood—it’s about preserving our nation’s entrepreneurial spirit. For that to happen, competitor’s veto laws have to go.