Existing law requires a nonprofit corporation that operates or controls a health facility or other facility that provides similar health care to provide written notice to, and to obtain the written consent of, the Attorney General prior to entering into any agreement or transaction to sell, transfer, lease, exchange, option, convey, or otherwise dispose of the asset, or to transfer control, responsibility, or governance of the asset or operation, to a for-profit corporation or entity, to a mutual benefit corporation or entity, or to a nonprofit corporation, as specified.
This bill would require a private equity group or a hedge fund, as defined, to provide written notice to, and obtain the written consent of, the Attorney General before a transaction between the private equity group or hedge fund and a health care facility, provider, or provider group, as those terms are defined, and any of those entities that directly or indirectly control, are controlled by, are under common control of, or are otherwise affiliated with a payor, except as specified. The bill would require the notice to be submitted at the same time that any other state or federal agency is notified pursuant to state or federal law, and otherwise at least 90 days before the transaction. The bill would authorize the Attorney General to extend that 90-day period under certain circumstances. The bill would additionally require a private equity group or hedge fund to provide advance written notice to the Attorney General before a transaction between a private equity group or hedge fund and a nonphysician provider or a provider, with specified gross annual revenue.
The bill would authorize the Attorney General to give the private equity group or hedge fund a written waiver or the notice and consent requirements if specified conditions apply, including, but not limited to, that the party makes a written waiver request, the health care facility's, provider group's, or provider's operating costs have exceeded its operating revenue in the relevant market for 3 or more years and the party cannot meet its debts, and the transaction will ensure continued health care access in the relevant markets. The bill would require the Attorney General to grant or deny the waiver within 45 days, as prescribed.
The bill would authorize the Attorney General to consent to, give conditional consent to, or not consent to a transaction between a private equity group or hedge fund and a health care facility, provider group, or provider if the transaction may have a substantial likelihood of anticompetitive effects or may create a significant effect on the access or availability of health care services to the affected community, applying a public interest standard, as defined. The bill would authorize the private equity group or hedge fund to elect to participate in an evidentiary hearing before an administrative law judge assigned to the Office of Administrative Hearings, and would set forth the requirements for that hearing. The bill would require the administrative law judge to issue a statement of decision after the close of the hearing, and would require the Attorney General to issue a final determination accepting or rejecting the statement of decision, as specified. The bill would authorize the private equity group or hedge fund to seek subsequent judicial review, as specified, of the Attorney General's final determination if the Attorney General does not consent or gives conditional consent to a transaction.
The bill would prohibit a private equity group or hedge fund involved in any manner with a physician, psychiatric, or dental practice doing business in this state from interfering with the professional judgment of physicians, psychiatrists, or dentists in making health care decisions, among other things. The bill would authorize the Attorney General to adopt regulations and contract with state agencies, experts, or consultants to implement its requirements, as specified.
Existing law requires a health care entity to provide the Office of Health Care Affordability with written notice of agreements and transactions that would sell, transfer, lease, exchange, option, encumber, convey, or otherwise dispose of a material amount of assets, or that would transfer control, responsibility, or governance of a material amount of the assets or operations to one or more entities, except as specified.
This bill would exempt transactions involving private equity groups or hedge funds that are subject to Attorney General review pursuant to the bill from this notice requirement.

Statutes affected:
AB3129: 127507 HSC
06/19/24 - Amended Senate: 127507 HSC, 127507 HSC
06/27/24 - Amended Senate: 127507 HSC
08/15/24 - Amended Senate: 127507 HSC
08/23/24 - Amended Senate: 127507 HSC
08/28/24 - Amended Senate: 127507 HSC
09/05/24 - Enrolled: 127507 HSC