Update: Gov. Newsom vetoes California AB 3129 targeting healthcare private equity deals | Sheppard Mullin Richter & Hampton LLP

On September 28, 2024, Governor Newsom vetoed Assembly Bill No. 3129 (AB 3129), which would have required private equity groups and hedge funds to obtain written consent from the Attorney General at least 90 days before making acquisitions or changes in control in certain areas Healthcare areas to obtain care facilities, provider groups and other providers. For more information on the background, development, and expected impacts of AB 3129, see our AB 3129 blog series.[1]

In his veto message, Governor Newsom noted that the Office of Health Care Affordability (OHCA) was created to review mergers, acquisitions and corporate affiliations

Healthcare facilities and to analyze healthcare consolidation. According to Governor Newsom, AB 3129 would unlawfully move certain transactions by private equity groups or hedge funds from the jurisdiction of the OHCA to the jurisdiction of the Attorney General, thereby creating inefficiencies. Governor Newsom also mentioned that the OHCA already has the authority to refer transactions to the Attorney General for further review if necessary.

Ultimately, this means that parties to healthcare transactions in California will not, for now, face the regulatory hurdles that would have been introduced by AB 3129, but will still need to evaluate and potentially deal with the applicability of the OHCA cost and market impact review system Execution of such transactions.

We will continue to monitor the emergence and development of similar bills across the country and provide updates on any private equity-specific requirements.

FOOTNOTES

[1] Blog series: