Metro Tristate, Inc., an Ohio corporation authorized to operate in West Virginia, had long provided non-emergency medical transportation services for veterans under contract with the Huntington VA Medical Center. In 2018, the VA awarded the contract instead to Community Pastor Care, LLC (CPC), a South Carolina company qualified as a Service-Disabled Veteran-Owned Small Business (SDVOSB). CPC did not hold authorization from the West Virginia Public Service Commission (PSC) to operate as a carrier in the state.
The VA selected CPC under the statutory requirement in 38 U.S.C. § 8127, which mandates preference for veteran-owned small businesses, including SDVOSBs, in VA contracting. CPC was also the lowest bidder. Metro, not an SDVOSB, filed a complaint with the PSC, asserting that CPC should be barred from operating until it obtained a state permit.
CPC admitted it did not hold PSC authorization but argued that its operations were exclusively under federal contract with the VA and therefore outside state regulatory jurisdiction. CPC contended that the Supremacy Clause preempted the PSC’s authority. An administrative law judge recommended dismissal, concluding that federal law preempted state regulation in this matter.
In September 2020, the PSC issued an order agreeing with CPC. The Commission determined that enforcing state carrier regulations against CPC would interfere with Congress’s intent under Section 8127 to prioritize SDVOSBs for VA contracts. The Commission dismissed Metro’s complaint on the grounds of implied conflict preemption.
Metro appealed, challenging the PSC’s decision and arguing that state regulation should apply. The Court examined preemption principles, noting that state laws are invalid where they obstruct the objectives of Congress. The Court focused on whether applying state licensing requirements would create an obstacle to the VA’s federal contracting authority.
The Court reviewed precedent, including decisions in Johnson v. Maryland, Leslie Miller, Inc. v. Arkansas, and Sperry v. Florida, which held that state laws cannot impose additional qualifications on federal employees or contractors already deemed competent by federal authorities. The Court also considered similar rulings where state licensing requirements conflicted with federal procurement determinations.
The Supreme Court of Appeals of West Virginia affirmed the PSC’s decision. It held that once the VA determined CPC met federal qualifications as an SDVOSB under 38 U.S.C. § 8127, the PSC could not impose state-law qualifications that would obstruct that determination. The Court emphasized that requiring CPC to obtain state permits would improperly allow the state to “second guess” the VA’s contracting decision, standing as an obstacle to congressional objectives.
If you are navigating issues involving Service-Disabled Veteran-Owned Small Business (SDVOSB) or CVE certification in relation to government contracting, Whitcomb, Selinsky PC assists with matters tied to certification, compliance, and disputes. Reach out to contact us to learn how our team can support your government contracting needs.