Bass, Berry & Sims attorneys Krista Cooper and Laura Carrier co-authored an article for Corporate Compliance Insights discussing the impact of California’s recent healthcare laws, AB 1415 and SB 351, which target investments in the healthcare industry. As outlined by the authors, these “bills create new pretransaction notice obligations, broaden oversight of management services organizations (MSOs) and dental services organizations (DSOs) and limit the ways private equity firms and hedge funds can influence clinical practices.”
AB 1415 expands its existing pretransaction notice framework to require “noticing entities,” including hedge funds and private equity groups, to file written pretransaction notices with the state’s Office of Health Care Affordability (OHCA) before closing a material change transaction involving a healthcare entity or MSO. SB 351 codifies restrictions on clinical and managerial decisions within physician and dental practices.
Krista and Laura cautioned investors that it could take longer when entering material transactions with a healthcare entity or MSO in California. “For investors and deal teams, the practical upshot is to anticipate structuring friction, new compliance obligations after closing and possible limits on contractual protections historically used by investors,” note Krista and Laura.
The authors also mention that AB 1415’s reporting requirements will be clarified by future regulations. OHCA announced that it plans to enact implementing regulations by spring 2026, but the agency has yet to publish any proposed text for the regulations.
The full article, “California’s Prescription for Healthcare Investors: New Restrictions, New Reporting,” was published by Corporate Compliance Insights on March 2 and is available online. To view the full article, you may click here.
In addition to the requirements imposed on investors by AB 1415 and SB 351, California recently enacted Senate Bill No. 25, a “mini-HSR” law that, starting in 2027, will require certain parties filing premerger notifications under the federal Hart-Scott-Rodino Act to additionally file copies of their federal filings with the California Attorney General. Bass, Berry & Sims published an article summarizing this new law, which you can access here.
Bass, Berry & Sims is actively tracking these legislative trends via our interactive healthcare transactions map. For more information about California’s recent laws and others throughout the United States, please access the map or contact a member of the Bass, Berry & Sims Healthcare Private Equity team.