On March 13, 2024, Indiana Gov. Eric Holcomb signed into law Senate Bill No. 9, which requires Indiana healthcare entities and private equity firms to notify the Office of the Indiana Attorney General of qualifying transactions at least 90 days prior to closing. This new law goes into effect July 1, 2024.
This is the latest in a proliferation of statutes passed by states across the country that require preclosing notice and review of certain transactions for the purpose of gaining additional insight into potential antitrust and healthcare access, quality, cost and equity concerns related to transactional activity. Of particular note, although similar laws have almost exclusively been passed in so-called “blue states,” Senate Bill No. 9 was supported by Republican senators in what is largely considered a “red state” — an indication that this trend in transaction notice requirements may be accelerating as these laws begin to garner support from across the political spectrum.
The Indiana law has a much broader reach than many of its peer transaction notice laws that have passed in other states. The Indiana law applies to any merger or acquisition — which includes a stock purchase, the acquisition or transfer of assets, or the acquisition of direct or indirect control — between healthcare entities where (i) at least one of the entities is an Indiana healthcare entity, and (ii) at least one of the entities has $10 million or more in total assets.
First, this $10 million asset threshold is much lower than many other similar laws, which often incorporate size-related thresholds as well, especially considering that the law requires an entity to include any of its combined entities and holdings in its calculation of total assets. Second, the statutory definition of “healthcare entity” includes not only traditionally defined healthcare entities but also expressly extends to any private equity partnership that seeks to enter into a transaction with a traditionally defined healthcare entity. Third, the 90-day preclosing notice period, while not unprecedented, is longer than many of its peer laws and longer than the 60-day notice requirement included in the National Academy for State Health Policy’s Model Act for State Oversight of Proposed Health Care Mergers, which many states have used in drafting their own transaction notice laws.
If the above notice requirements are triggered, the involved Indiana healthcare entity must provide written and certified notice to the state’s attorney general. The notice filing must include various enumerated items, including copies of any materials that have been submitted to a federal or state agency regarding the transaction. For example, if the proposed transaction triggers a federal filing under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR), all documents filed in connection with the HSR requirements also must be included in the Indiana filing. Notably, this requirement also extends to any related filings made to state agencies.
Within 45 days of the notice’s submission, the attorney general must review the information submitted. If the attorney general decides to analyze in writing any antitrust concerns with the transaction, that written analysis must be provided within those 45 days to the person who submitted the notice. The attorney general also has the express authority to issue a civil investigative demand for additional information about the proposed transaction. While the attorney general already had this power to investigate potential transactions under the existing antitrust laws, this new law provides the attorney general with (i) a way to monitor consolidation of healthcare providers in the state, (ii) real-time access to related HSR filings and other state filings, and (iii) a period of time to review the proposed transaction and decide how to respond.
Traditional healthcare entities and private equity firms in, or interested in entering, Indiana should pay close attention to developments related to this law in the coming months. Currently, the law contains very few definitions, and implementing rules or agency guidance will be necessary to clarify a variety of gaps:
- It is unclear what exactly would constitute an “asset” or how to measure the value of such asset.
- Unlike many similar laws, the Indiana law does not specifically outline daily fines or penalties for noncompliance.
- It is unclear what the parties to the transaction are allowed to do if the attorney general does not communicate any antitrust concerns by the 45-day mark. While it appears that the parties would still have to wait for the full 90 days to toll, it may be that the attorney general has the power to grant an early termination of the waiting period.
- While the law goes into effect July 1, 2024, it is unclear whether the attorney general will begin accepting filings in advance of that date or whether there will be a phase-in period or grace period for compliance. Otherwise, as currently written, covered transactions may need to close on or before June 30, 2024, or be forced to wait at least another 90 days to close.
Overall, barring any implementing rules or agency guidance that limit its perceived reach, this law — with its relatively low monetary threshold, specific inclusion of private equity firms and minimal definitions — has the potential to encompass significantly more healthcare transactions than other state notice laws do.
As McGuireWoods has continued to cover, the current list of states with notice laws includes Washington, Oregon, Massachusetts, Nevada, Connecticut, New York, Minnesota, Illinois, California (effective April 1, 2024) and now Indiana (effective July 1, 2024).
McGuireWoods has extensive experience assisting clients with these state healthcare transaction reporting requirements, and the firm’s integrated healthcare transactions teams — which bring together regulatory, corporate and antitrust expertise — have significant experience navigating state healthcare filings such as this. In addition, team lawyers closely track guidance and developments in this area for purposes of providing clients with informed strategic advice, from the point of considering the regulatory burden associated with acquiring individual targets in their pipeline through achieving approval by state regulators. If you have any questions, please reach out to the authors or your McGuireWoods contact.