| AI Summary |
SB25-198: Regulation of Material Change Transactions and Health Care Referrals
Regulation of Material Change Transactions (C.R.S. 6-19-101 to 6-19-107)
- Requires health care entities to notify the Attorney General (AG) of material change transactions before they take effect.
- The AG must assess whether the transaction is contrary to the public interest based on factors such as competition, costs, access, and community health outcomes.
- If concerns arise, the AG may impose conditions on the transaction or convert the investigation into an antitrust review under the Colorado State Antitrust Act of 2023.
- Judicial review is available within 35 days for parties disputing the AG’s assessment.
Post-Transaction Reporting Requirements (C.R.S. 6-19-105)
- Entities involved in material change transactions must submit annual reports for five years covering:
- Compliance with conditions imposed by the AG.
- Additional material transactions.
- Use of assets previously designated for charitable purposes.
- Reports must be made publicly available on the AG’s website and the entities’ websites.
Penalties for Non-Compliance (C.R.S. 6-19-106)
- Violations can result in civil penalties of up to $200 per day.
- Failure to notify the AG of a material change transaction may lead to the transaction being voided or unwound.
Attorney General’s Rulemaking Authority (C.R.S. 6-19-107)
- The AG may adopt rules to:
- Define terms and exemptions.
- Establish criteria for evaluating material change transactions.
- Require additional reporting requirements for compliance.
Disclosure of Health Care Provider Financial Interests (C.R.S. 25-49-107)
- Health care providers must disclose financial relationships when referring patients for designated health services (such as imaging, lab tests, and outpatient care).
- Patients must be given alternative referral options if requested.
- Entities failing to disclose financial interests cannot bill for services provided under such referrals.
- Violations constitute a deceptive trade practice under the Colorado Consumer Protection Act.
Consumer Protection Provisions (C.R.S. 6-1-105)
- Adds violations of material change transaction regulations as a deceptive trade practice under state law.
Applicability and Effective Date
- Applies to transactions with an anticipated effective date at least 90 days after enactment.
- Includes a safety clause for immediate implementation to protect public peace, health, and safety.
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| Summary |
The bill repeals and reenacts, with amendments, the current
requirements for providing notice of transactions involving licensed
hospitals and requires that the parties to a merger, acquisition, or
contracting affiliation of one or more health-care entities, long-term care
entities, or veterinary care entities (material change transaction) submit
specified notice requirements to the attorney general at least 60 days
before the effective date of the material change transaction. If the terms
of the material change transaction are altered or modified following the
submission of the written notice, the parties must provide notice to the
attorney general of the alteration or modification.
The attorney general may review a required notice of a material
change transaction and may assess whether the proposed material change
transaction is contrary to the public interest using factors specified in the
bill. The attorney general may convert their review of the material change
transaction to an investigation under the Colorado State Antitrust Act of
2023.
The bill prohibits a material change transaction unless:
•
The attorney general states that a formal assessment and
review of the material change transaction are not necessary;
•
The attorney general issues an assessment that the material
change transaction is not likely to be contrary to the public
interest;
•
A court finds that the material change transaction is not
likely to be contrary to the public interest;
•
90 days have elapsed since the parties to the material
change transaction submitted notice of the material change
transaction, and the attorney general has not issued an
assessment and has not notified the parties to the material
change transaction that more time is required to complete
an assessment; or
•
The attorney general has notified the parties that more time
is required to complete the assessment, and 45 days have
elapsed since the attorney general provided the notice.
The attorney general may bring an action in district court to enjoin
or unwind a material change transaction or seek other equitable relief
necessary to protect the public interest.
Parties to a material change transaction may challenge the attorney
general's assessment of a material change transaction in the district court
for the city and county of Denver. The reviewing court shall affirm the
attorney general's assessment unless a person seeking judicial review
proves, by a preponderance of the evidence, specified criteria regarding
the attorney general's assessment.
The bill grants the attorney general authority to seek additional
information regarding a material change transaction, including requiring
the parties to a material change transaction to:
•
File a statement or report in writing answering, or to
answer in writing, questions propounded by the attorney
general as to the facts and circumstances reasonably related
to an alleged or potential violation of the bill;
•
Appear pursuant to a subpoena or produce relevant
documents in aid of an investigation or inquiry; and
•
Allow the attorney general to make true copies of
documents that may be offered into evidence.
If a person fails to comply with an investigation or inquiry
pursuant to a request or subpoena issued by the attorney general, the
attorney general may apply to a district court for relief, including a civil
penalty of up to $5,000, reasonable costs, and attorney fees or a protective
order.
For at least 5 years after the effective date of a material change
transaction, the parties to the material change transaction shall provide the
attorney general an annual report meeting specified requirements. The
report must be made available to the public on the attorney general's and
the parties' websites.
A person that fails to comply with any provision of the bill is
subject to a civil penalty of not more than $200 for each day the person
remains in violation. Failure of a party to a material change transaction to
provide notice of the material change transaction is an independent and
sufficient ground for a court to enjoin or unwind the material change
transaction.
The bill requires that, if certain health-care providers refer a
patient to an entity for health-care services and the provider, or an
immediate family member of the provider, has a financial relationship
with the entity, the provider shall disclose the nature of the financial
relationship to the patient at the time of the referral.
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