For at least five years, under both Republican and Democrat administrations, there has been a focus on private equity actors in the healthcare space. Since at least 2020, the Department of Justice (DOJ) has focused on private equity in enforcement efforts. In 2023, during the Biden administration, the Senate conducted a bipartisan investigation of the effect that private equity could have on the healthcare industry. Also, during the Biden administration, legislation was proposed to curb private equity’s influence over healthcare services. California lawmakers have been following federal legislative efforts to reign in the influence of private equity in healthcare.
In June 2020, during the first Trump administration, the DOJ made clear that it was focusing on private equity firms that take an active role in companies engaged in illegal conduct. See, e.g., Statement of Ethan Davis, Deputy Assistant Attorney General, DOJ’s Civil Division (June 2020) “Where a private equity firm takes an active role in illegal conduct by the acquired company, it can expose itself to False Claims Act liability”. These sentiments were echoed in 2024 during the Biden administration. See Statement of Brian Boynton, Principal Deputy Assistant Attorney General, DOJ’s Civil Division (Feb. 2024)“We have already had a few cases involving private equity firms. And given the significant role that private equity is increasingly playing in the healthcare field, we anticipate that their impact on healthcare billings will continue to grow as well.”
Since early 2023, federal lawmakers have expended considerable efforts focusing on and regulating private equity in healthcare. Senator Grassley (R-Iowa) initiated the investigation in March 2023 and he and Senator Sheldon Whitehouse (D-R.I.) held bipartisan hearings last summer that put the spotlight on the negative impact of private equity in healthcare. These hearings were the result of increased focus on private equity since early 2023. In January 2025, Senators Grassley and Whitehouse released their bipartisan report concluding that private equity control over healthcare providers harms patients. See here. Federal lawmakers proposed legislation, the Health Over Wealth Act, in July 2024 during the 118th Congress, to limit the reach of private equity in healthcare in July 2024. See here and here.
The states are joining these efforts. California’s SB 351, just proposed on February 12, 2025, is the latest effort (and one on a state level) to limit the effect of private equity. An earlier bill, AB 3129, was also proposed during the Biden administration, and would have deemed private equity transactions in healthcare disallowed. That bill passed in August 2024, but was vetoed by California Governor Gavin Newsome on September 28, 2024. In January 2025, the Massachusetts government signed into law H4653, a law which had first been proposed by the Massachusetts House in May 2024, which expands the reach of the Massachusetts False Claims Act to owners or investors, including private equity, who become aware of FCA violations but fail to report it within 60 days of identifying the violation. See Bill H.5159.
Bipartisan efforts at the federal level to focus on and limit the perceived harmful effect that private equity ownership and management could have on healthcare have been ongoing for at least five years. States are also scrutinizing private equity ownership of companies in the healthcare space. This bipartisan focus is very likely to continue for the foreseeable future.
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