Update: Governor Newsom vetoed California bill AB 3129 targeting private equity health care offerings | Sheppard Mullin Richter & Hampton LLP

On September 28, 2024, Governor Newsom vetoed Assembly Bill 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 acquiring or changing control of certain health sectors of a nursing facility. health care provider groups and other health care providers. For more information on the background, evolution, and anticipated impact of AB 3129, please visit 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 involving

medical entities and analyze the consolidation of health care. According to Governor Newsom, AB 3129 would inappropriately transfer certain transactions conducted by private equity groups or hedge funds from the purview of the OHCA to the purview 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, for now, parties to health care transactions in California will not have to face the regulatory hurdles that would be implemented by AB 3129, but they will still need to evaluate the application of and potentially navigate the OHCA cost and impact review system in carrying out such transactions.

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

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(1) Blog series: