SINGLETON v. NORTH CAROLINA DEPARTMENT OF HEALTH AND HUMAN SERVICES (2024)

This case involves a constitutional challenge to a series of statutes commonly known as the Certificate of Need law. See N.C.G.S. § 131E-175 et seq. (2023). Plaintiffs brought claims alleging that the Certificate of Need law violates their rights under the Monopolies Clause, Exclusive Emoluments Clause, and Law of the Land Clause of the North Carolina Constitution. See N.C. Const. art. I, §§ 19, 32, 34.

Plaintiffs described their constitutional claims as “as-applied” challenges in the complaint. Both the trial court and the Court of Appeals accepted plaintiffs’ characterization of these claims and evaluated the claims as as-applied challenges.

After oral argument at this Court, we requested supplemental briefing from the parties on two issues, including the following: “Whether plaintiffs’ constitutional claims, based on the facts alleged in the complaint, are facial challenges, as-applied challenges, or both, and what implications this has for our review of the Court of Appeals’ decision and the trial court's order.”

After reviewing the parties’ submissions, we conclude that plaintiffs’ complaint asserts both facial and as-applied challenges. We recognize that plaintiffs initially characterized their claims as “as-applied” challenges and expressly sought declaratory and injunctive relief “as applied to Plaintiffs.” But when courts distinguish between facial and as-applied challenges, the “label is not what matters.” Doe v. Reed, 561 U.S. 186, 194, 130 S.Ct. 2811, 177 L.Ed.2d 493 (2010). When the “plaintiffs’ claim and the relief that would follow” could “reach beyond the particular circumstances of these plaintiffs,” then that claim becomes “a facial challenge to the extent of that reach.” Id.

Here, plaintiffs’ complaint alleges facts that could undermine the Certificate of Need law's constitutionality far beyond the particular circumstances of these plaintiffs. Indeed, in their supplemental briefing, plaintiffs acknowledge that, should they prevail, the “need for relief that extends beyond [plaintiffs] will likely arise here” and “will likely entail facial relief.”

We agree. The complaint contains allegations that, if proven, could render the Certificate of Need law unconstitutional in all its applications. See In re Certificate of Need for Aston Park Hosp., Inc., 282 N.C. 542, 551–52, 193 S.E.2d 729 (1973). Accordingly, plaintiffs’ complaint asserts both facial and as-applied challenges to the Certificate of Need law.

This is a crucial determination because a facial constitutional challenge to the validity of an act of the General Assembly is governed by additional jurisdictional and procedural criteria that do not apply to as-applied challenges. See N.C.G.S. § 1-267.1 (2023); N.C.G.S. § 1A-1, Rule 42(b)(4) (2023).

Because the trial court and the Court of Appeals mistakenly treated plaintiffs’ claims exclusively as as-applied challenges, we vacate the decision of the Court of Appeals and remand this matter to the Court of Appeals with instructions to vacate the trial court's judgment and remand for further proceedings. On remand, the trial court should proceed as provided in N.C.G.S. § 1-267.1 and N.C.G.S. § 1A-1, Rule 42(b)(4).

Because we vacate the decision of the Court of Appeals on this basis, we need not address plaintiffs’ challenges to that decision asserted in the briefing before this Court. However, for the benefit of the trial court on remand, we disavow the Court of Appeals’ jurisdictional analysis concerning the exhaustion of administrative remedies and direct the trial court to this Court's recent decisions in Askew v. City of Kinston, 902 S.E.2d 722 (N.C. 2024), and Kinsley v. Ace Speedway Racing, Ltd., 904 S.E.2d 720 (N.C. 2024).

VACATED AND REMANDED.

PER CURIAM.