In welcome news for California health care facilities and providers, California SB-977, which would have required Attorney General approval for a broad range of transactions and other arrangements, did not pass in California’s 2020 legislative session.  With strong support from the Attorney General, organized labor, and a broad legislative coalition, SB-977 seemed poised for passage with only some amendments to its original form. Opponents of SB-977, including large California health care associations, business associations and several individual California health systems and providers mounted strong opposition on the grounds that SB-977 would impose a burdensome approval process on an overly broad range of transactions, add new substantive antitrust prohibitions, reduce the ability of providers to adjust to evolving challenges such as COVID-19 and reduce consumer access to necessary care.

With the numerous open issues surrounding SB-977, including those noted in our June 5, 2020 alert, we believe its failure to pass will be a welcome reprieve to health care facilities, providers and other stakeholders in California’s health care system. This said, and in particular with the strong support SB-977 received, we recommend California health care providers and stakeholders remain alert for the possibility it, or measures like it, could be re-introduced in the future.