Health Law Advisor

A new year brings about new legislation. Given the recent trend of health care transactions coming under increased scrutiny at the state level, EBG has released its map summarizing states that already have laws regulating health care transactions. As legislatures reconvene around the country, there continues to be regulatory scrutiny of health care transactions and private equity investment in health care. Below is a brief summary of recently proposed legislation.

California

On February 12, 2025, the California Senate introduced SB 351, which is remarkably similar to AB 3129, a bill the EBG team wrote about extensively in 2024 and that Governor Gavin Newsom vetoed in September 2024. The proposed legislation has three key components: (i) it adds new defined terms, including “hedge fund” and “private equity group,” in an attempt to capture all parties involved with Management Service Organizations (“MSOs”) and Dental Service Organizations (“DSOs”); (ii) it provides a list of prohibitions for any “private equity group” or “hedge fund” that is “involved in any manner with a physician or dental practice doing business in the state; and (iii) it contains a provision that restates existing California law on restrictive covenants and California’s prohibition on restrictions barring a provider from competing with a practice in the event of termination or resignation. Whether this bill advances and is ultimately signed remains unclear. EBG is actively monitoring this legislation.

Recently, the California Legislature made a series of major revisions to Assembly Bill 3129 (“AB 3129” or “the Bill”), a highly anticipated piece of legislation expected to have a substantial impact on transactions in California’s healthcare space.  Although Epstein Becker Green has previously discussed the Bill (see original post here, as well as a first update here), this blog post will discuss the legislature’s most recent revisions on June 19 and June 27.

Why Assembly Bill 3129 Was Introduced

The Bill was introduced by Assembly Member Wood and is supported by Attorney General Bonta in response to growing concerns about the increasing involvement of private equity and hedge funds in California’s healthcare sector. As private equity firms have increasingly acquired healthcare facilities and provider groups, California’s legislature wants to strengthen oversight to ensure that these transactions are conducted in a transparent manner that protects patients, ensures access, and preserves affordability.

What the Bill Will Do

AB 3129 seeks to address these concerns by requiring private equity groups and hedge funds to provide written notice to, and obtain the written consent of, the Attorney General before engaging in any change of control or acquisition involving healthcare facilities, provider groups, or nonphysician providers. This includes changes of control, acquisitions, or agreements that may impact healthcare services or access.

On March 13, 2024, Indiana Governor Eric J. Holcomb signed Senate Enrolled Act No. 9 (“SEA 9”) which will amend the Indiana Code with respect to notice of health care entity mergers and acquisitions.

The measure, effective July 1, 2024, adds a new Chapter 8.5 to the Indiana Code providing in Section 4(a) that “[a]n Indiana health care entity that is involved in a merger or acquisition with another health care entity with total assets, including combined entities and holdings, of at least ten million dollars ($10,000,000) shall, at least ninety (90) days prior to the merger or ...

Due diligence is a standard phase of any corporate transaction, whether structured as an asset or stock sale or joint venture, and sellers are often surprised, and even overwhelmed, by the comprehensiveness of the diligence investigation.  Preparing prior to soliciting bids or looking for a buyer can ease the burden of diligence and allow the seller to focus on other areas of the transaction, such as negotiating important terms and documents.

According to a report by West Monroe Partners, approximately 40% of companies engaged in corporate transactions reported finding a cybersecurity issue during post-acquisition integration of the target company.  While companies routinely conduct robust transactional due diligence to manage legal risk, many fail to adequately conduct cybersecurity due diligence. As a consequence, many companies and investors are leaving themselves vulnerable to potentially severe latent cyber risks.

Cybersecurity is especially relevant in healthcare transactions as the industry ...