SB 977

Bill Subjects

Abstract

(1) Existing law requires any 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. Existing law authorizes the Attorney General to determine what information is required to be contained in the notice. This bill would require a health care system, as defined, private equity group, or hedge fund to provide written notice to, and obtain the written consent of, the Attorney General prior to a change of control, as defined, or an acquisition between the entity and a health care facility or provider, as those terms are defined, except as specified. The bill would authorize the Attorney General to deny consent to a change of control or an acquisition between a health care system, private equity group, hedge fund, and a health care facility, provider, or both, unless the health care system, private equity group, or hedge fund demonstrates that the change of control or acquisition will result in a substantial likelihood of clinical integration, a substantial likelihood of increasing or maintaining the availability and access of services to an underserved population, or both. The bill would authorize a health care system, private equity group, or hedge fund located in a rural area, as defined, to request a waiver of this prohibition. The bill would authorize the Attorney General to deny consent to a change of control or an acquisition between a health care system, private equity group, or hedge fund and a health care facility, provider, or both, if there is a substantial likelihood of anticompetitive effects that outweigh the benefits of a substantial likelihood of clinical integration, a substantial likelihood of an increase in, or maintenance of, services to an underserved population, or both. The bill would additionally require a health care system, private equity group, or hedge fund to provide advance written notice to the Attorney General prior to a change of control or acquisition between a health care system, private equity group, or hedge fund and a nonphysician provider, as defined. The bill would make these provisions applicable to any transaction initiated, completed, or pending on or before December 31, 2025. This bill would require a health care system that is acquiring or making a change of control with a specified provider, group of providers, or health care facility, including, among other instances, when the transactional value is $1,000,000 or less, to provide written notice to the Attorney General and would require the Attorney General to provide one of 2 specified notices within 30 days, either not objecting to the transaction or raising concerns, as specified. The bill would make these provisions applicable to any transaction initiated, completed, or pending on or before December 31, 2025. This bill would require the Attorney General, beginning July 1, 2021, to establish the Health Policy Advisory Board, composed of specified appointed members, for the purpose of evaluating and analyzing health care markets in California and providing recommendations to the Attorney General's office. The bill would authorize the board to review a written notification submitted by a health care system, as described above, and provide the Attorney General with written information with regard to whether to grant or deny consent to the change of control or acquisition. The bill would require the board members to file a statement of economic interest with the Fair Political Practices Commission and would prohibit board members from receiving compensation for service on the board or from making, participating in making, or using their official position to influence the making of a decision that the member knows or has reason to know will have a reasonably foreseeable material financial effect, distinguishable from its effect on the public generally, on the member or a member of their immediate family. The bill would repeal these provisions on January 1, 2027. (2) Existing law authorizes the Attorney General to bring an action, seeking civil penalties, against any person who engages, has engaged, or proposes to engage in unfair competition. Existing law authorizes the Attorney General to bring the civil action in a court of competent jurisdiction. This bill would make it unlawful for one or more health care systems, either independently or dependently, to use their market power to, among other things, cause anticompetitive effects, as described, and would authorize the Attorney General to bring a civil action for a violation of this unlawful conduct. The bill would require a court to impose civil fines for these violations, calculated either as $1,000,000 or as twice the gross gain to the health care system or gross loss to any other party multiplied by 2, whichever is greater. The bill would require the fines to be deposited into the Attorney General antitrust account within the General Fund. The bill would require a court to impose monetary relief for the state in the amount of 3 times the total damage sustained, as specified.