California 2019-2020 Regular Session Status: Passed Senate

SB 977 — Health care system consolidation: Attorney General approval and enforcement.

Last action — Ordered to third reading.

  1. ✓
    Introduced
  2. ✓
    In Committee
  3. 3
    Passed Senate
  4. 4
    Passed Assembly
  5. 5
    To Executive
  6. 6
    Enacted

This bill died with 2019-2020 Regular Session. It reached “Passed Senate” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.

This bill is no longer active — its legislative session has ended, so there is no live prognosis. It would have to be reintroduced in the current session to move again.

Summary

(1) Existing law requires any nonprofit corporation that operates or controls a health facility or other facility that provides similar health care to provide written notice to, and to obtain the written consent of, the Attorney General prior to entering into any agreement or transaction to sell, transfer, lease, exchange, option, convey, or otherwise dispose of the asset, or to transfer control, responsibility, or governance of the asset or operation, to a for-profit corporation or entity, to a mutual benefit corporation or entity, or to a nonprofit corporation, as specified. Existing law authorizes the Attorney General to determine what information is required to be contained in the notice. This bill would require a health care system, as defined, private equity group, or hedge fund to provide written notice to, and obtain the written consent of, the Attorney General prior to a change of control, as defined, or an acquisition between the entity and a health care facility or provider, as those terms are defined, except as specified. The bill would authorize the Attorney General to deny consent to a change of control or an acquisition between a health care system, private equity group, hedge fund, and a health care facility, provider, or both, unless the health care system, private equity group, or hedge fund demonstrates that the change of control or acquisition will result in a substantial likelihood of clinical integration, a substantial likelihood of increasing or maintaining the availability and access of services to an underserved population, or both. The bill would authorize a health care system, private equity group, or hedge fund located in a rural area, as defined, to request a waiver of this prohibition. The bill would authorize the Attorney General to deny consent to a change of control or an acquisition between a health care system, private equity group, or hedge fund and a health care facility, provider, or both, if there is a substantial likelihood of anticompetitive effects that outweigh the benefits of a substantial likelihood of clinical integration, a substantial likelihood of an increase in, or maintenance of, services to an underserved population, or both. The bill would additionally require a health care system, private equity group, or hedge fund to provide advance written notice to the Attorney General prior to a change of control or acquisition between a health care system, private equity group, or hedge fund and a nonphysician provider, as defined. The bill would make these provisions applicable to any transaction initiated, completed, or pending on or before December 31, 2025. This bill would require a health care system that is acquiring or making a change of control with a specified provider, group of providers, or health care facility, including, among other instances, when the transactional value is $1,000,000 or less, to provide written notice to the Attorney General and would require the Attorney General to provide one of 2 specified notices within 30 days, either not objecting to the transaction or raising concerns, as specified. The bill would make these provisions applicable to any transaction initiated, completed, or pending on or before December 31, 2025. This bill would require the Attorney General, beginning July 1, 2021, to establish the Health Policy Advisory Board, composed of specified appointed members, for the purpose of evaluating and analyzing health care markets in California and providing recommendations to the Attorney General's office. The bill would authorize the board to review a written notification submitted by a health care system, as described above, and provide the Attorney General with written information with regard to whether to grant or deny consent to the change of control or acquisition. The bill would require the board members to file a statement of economic interest with the Fair Political Practices Commission and would prohibit board members from receiving compensation for service on the board or from making, participating in making, or using their official position to influence the making of a decision that the member knows or has reason to know will have a reasonably foreseeable material financial effect, distinguishable from its effect on the public generally, on the member or a member of their immediate family. The bill would repeal these provisions on January 1, 2027. (2) Existing law authorizes the Attorney General to bring an action, seeking civil penalties, against any person who engages, has engaged, or proposes to engage in unfair competition. Existing law authorizes the Attorney General to bring the civil action in a court of competent jurisdiction. This bill would make it unlawful for one or more health care systems, either independently or dependently, to use their market power to, among other things, cause anticompetitive effects, as described, and would authorize the Attorney General to bring a civil action for a violation of this unlawful conduct. The bill would require a court to impose civil fines for these violations, calculated either as $1,000,000 or as twice the gross gain to the health care system or gross loss to any other party multiplied by 2, whichever is greater. The bill would require the fines to be deposited into the Attorney General antitrust account within the General Fund. The bill would require a court to impose monetary relief for the state in the amount of 3 times the total damage sustained, as specified.

Bill Text

Action History

  1. Ordered to third reading.

  2. Read third time and amended.

  3. Assembly Rule 63 suspended.

  4. Read second time. Ordered to third reading.

  5. From committee: Do pass. (Ayes 10. Noes 4.) (August 20).

  6. August 18 set for first hearing. Placed on suspense file.

  7. Read second time and amended. Re-referred to Com. on APPR.

  8. From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 8. Noes 4.) (August 4).

  9. From committee with author's amendments. Read second time and amended. Re-referred to Com. on HEALTH.

  10. Referred to Com. on HEALTH.

  11. In Assembly. Read first time. Held at Desk.

  12. Read third time. Passed. (Ayes 21. Noes 11. Page 3874.) Ordered to the Assembly.

  13. Read second time. Ordered to third reading.

  14. Read second time and amended. Ordered to second reading.

  15. From committee: Do pass as amended. (Ayes 5. Noes 2. Page 3768.) (June 18).

  16. Set for hearing June 18.

  17. June 9 hearing: Placed on APPR. suspense file.

  18. Set for hearing June 9.

  19. Hearing rescheduled due to Capitol closure.

  20. Set for hearing June 1.

  21. Read second time and amended. Re-referred to Com. on APPR.

  22. From committee: Do pass as amended and re-refer to Com. on APPR. (Ayes 7. Noes 2. Page 3533.) (May 13).

  23. Re-referred to Com. on HEALTH.

  24. Set for hearing May 13 in HEALTH pending receipt.

  25. From committee with author's amendments. Read second time and amended. Re-referred to Com. on RLS.

  26. Referred to Com. on RLS.

  27. From printer. May be acted upon on or after March 13.

  28. Introduced. Read first time. To Com. on RLS. for assignment. To print.

Sponsors

  • Monning · Primary

Sponsorship breakdown

Export CSV (upgrade) →

1 sponsors · 0 co-sponsors · 121 not signed on · 4 voted No

Sponsors (1)

  • Monning

Co-sponsors (0)

None.

Not signed on (121)

121 members have not signed on to this bill.

Show all 121 →

"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

Whip count is in markup. Polling the chamber and every recorded vote this session. Only the first open is slow. It’s instant for you after this. Calling the roll · Tallying · Engrossing

Votes

Do pass.

Passed 10 Yea · 4 Nay · 4 Other
Party YeaNayPresentNot Voting
Unaffiliated 6302
Democratic 4002
Republican 0100
Total 10404
% of votes cast 56%22%0%22%
How each member voted (18)
Member Party Vote
Quirk — Yea
Gonzalez — Yea
Chau — Yea
Eggman — Yea
Voepel — Nay
Fong — Nay
Bigelow — Nay
Diep — Not Voting
Bloom — Not Voting
Eduardo Garcia — Yea
Wendy Carrillo — Yea
Bauer-Kahan, Rebecca Democratic Not Voting
Bonta, Mia Democratic Yea
Calderon, Lisa Democratic Yea
Gabriel, Jesse Democratic Yea
Petrie-Norris, Cottie Democratic Not Voting
Rivas, Robert Democratic Yea
Dahle, Megan Republican Nay

Official roll call →

Do pass as amended and be re-referred to the Committee on [Appropriations]

Passed 8 Yea · 4 Nay · 3 Other
Party YeaNayPresentNot Voting
Unaffiliated 6301
Democratic 2002
Republican 0100
Total 8403
% of votes cast 53%27%0%20%
How each member voted (15)
Member Party Vote
McCarty — Yea
Nazarian — Yea
Santiago — Yea
Rodriguez — Yea
Wood — Yea
Mayes — Nay
Waldron — Nay
Bigelow — Nay
Burke — Not Voting
Wendy Carrillo — Yea
Aguiar-Curry, Cecilia M. Democratic Yea
Bonta, Mia Democratic Yea
Limón, Monique Democratic Not Voting
Ramos, James C. Democratic Not Voting
Flora, Heath Republican Nay

Official roll call →

3rd Reading

Passed 21 Yea · 11 Nay · 8 Other
Party YeaNayPresentNot Voting
Unaffiliated 14805
Democratic 7003
Republican 0300
Total 211108
% of votes cast 53%28%0%20%
How each member voted (40)
Member Party Vote
Leyva — Yea
Atkins — Yea
Skinner — Yea
Allen — Yea
Dodd — Yea
Hertzberg — Yea
Roth — Yea
Mitchell — Yea
Pan — Yea
Beall — Yea
Wieckowski — Yea
Monning — Yea
Portantino — Yea
Hueso — Yea
Morrell — Nay
Chang — Nay
Nielsen — Nay
Wilk — Nay
Moorlach — Nay
Melendez — Nay
Glazer — Nay
Borgeas — Nay
Rubio — Not Voting
Hill — Not Voting
Bates — Not Voting
Bradford — Not Voting
Galgiani — Not Voting
Archuleta, Bob Democratic Yea
Caballero, Anna M. Democratic Yea
Durazo, Maria Elena Democratic Yea
Gonzalez, Lena A. Democratic Yea
Hurtado, Melissa Democratic Not Voting
Jackson, Corey A. Democratic Yea
McGuire, Mike Democratic Not Voting
Stern, Henry I. Democratic Yea
Umberg, Thomas J. Democratic Not Voting
Wiener, Scott D. Democratic Yea
Dahle, Megan Republican Nay
Grove, Shannon Republican Nay
Jones, Brian W. Republican Nay

Official roll call →

Do pass as amended

Passed 5 Yea · 2 Nay
Party YeaNayPresentNot Voting
Unaffiliated 5100
Republican 0100
Total 5200
% of votes cast 71%29%0%0%
How each member voted (7)
Member Party Vote
Leyva — Yea
Wieckowski — Yea
Hill — Yea
Portantino — Yea
Bradford — Yea
Bates — Nay
Jones, Brian W. Republican Nay

Official roll call →

Placed on suspense file

Passed 7 Yea · 0 Nay
Party YeaNayPresentNot Voting
Republican 1000
Unaffiliated 6000
Total 7000
% of votes cast 100%0%0%0%
How each member voted (7)
Member Party Vote
Leyva — Yea
Wieckowski — Yea
Hill — Yea
Portantino — Yea
Bates — Yea
Bradford — Yea
Jones, Brian W. Republican Yea

Official roll call →

Subjects

healthcare health-insurance
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Frequently asked questions

What does SB 977 do?
(1) Existing law requires any nonprofit corporation that operates or controls a health facility or other facility that provides similar health care to provide written notice to, and to obtain the written consent of, the Attorney General prior to entering into any agreement or transaction to sell, transfer, lease, exchange, option, convey, or otherwise dispose of the asset, or to transfer control, responsibility, or governance of the asset or operation, to a for-profit corporation or entity, to a mutual benefit corporation or entity, or to a nonprofit corporation, as specified. Existing law authorizes the Attorney General to determine what information is required to be contained in the notice. This bill would require a health care system, as defined, private equity group, or hedge fund to provide written notice to, and obtain the written consent of, the Attorney General prior to a change of control, as defined, or an acquisition between the entity and a health care facility or provider, as those terms are defined, except as specified. The bill would authorize the Attorney General to deny consent to a change of control or an acquisition between a health care system, private equity group, hedge fund, and a health care facility, provider, or both, unless the health care system, private equity group, or hedge fund demonstrates that the change of control or acquisition will result in a substantial likelihood of clinical integration, a substantial likelihood of increasing or maintaining the availability and access of services to an underserved population, or both. The bill would authorize a health care system, private equity group, or hedge fund located in a rural area, as defined, to request a waiver of this prohibition. The bill would authorize the Attorney General to deny consent to a change of control or an acquisition between a health care system, private equity group, or hedge fund and a health care facility, provider, or both, if there is a substantial likelihood of anticompetitive effects that outweigh the benefits of a substantial likelihood of clinical integration, a substantial likelihood of an increase in, or maintenance of, services to an underserved population, or both. The bill would additionally require a health care system, private equity group, or hedge fund to provide advance written notice to the Attorney General prior to a change of control or acquisition between a health care system, private equity group, or hedge fund and a nonphysician provider, as defined. The bill would make these provisions applicable to any transaction initiated, completed, or pending on or before December 31, 2025. This bill would require a health care system that is acquiring or making a change of control with a specified provider, group of providers, or health care facility, including, among other instances, when the transactional value is $1,000,000 or less, to provide written notice to the Attorney General and would require the Attorney General to provide one of 2 specified notices within 30 days, either not objecting to the transaction or raising concerns, as specified. The bill would make these provisions applicable to any transaction initiated, completed, or pending on or before December 31, 2025. This bill would require the Attorney General, beginning July 1, 2021, to establish the Health Policy Advisory Board, composed of specified appointed members, for the purpose of evaluating and analyzing health care markets in California and providing recommendations to the Attorney General's office. The bill would authorize the board to review a written notification submitted by a health care system, as described above, and provide the Attorney General with written information with regard to whether to grant or deny consent to the change of control or acquisition. The bill would require the board members to file a statement of economic interest with the Fair Political Practices Commission and would prohibit board members from receiving compensation for service on the board or from making, participating in making, or using their official position to influence the making of a decision that the member knows or has reason to know will have a reasonably foreseeable material financial effect, distinguishable from its effect on the public generally, on the member or a member of their immediate family. The bill would repeal these provisions on January 1, 2027. (2) Existing law authorizes the Attorney General to bring an action, seeking civil penalties, against any person who engages, has engaged, or proposes to engage in unfair competition. Existing law authorizes the Attorney General to bring the civil action in a court of competent jurisdiction. This bill would make it unlawful for one or more health care systems, either independently or dependently, to use their market power to, among other things, cause anticompetitive effects, as described, and would authorize the Attorney General to bring a civil action for a violation of this unlawful conduct. The bill would require a court to impose civil fines for these violations, calculated either as $1,000,000 or as twice the gross gain to the health care system or gross loss to any other party multiplied by 2, whichever is greater. The bill would require the fines to be deposited into the Attorney General antitrust account within the General Fund. The bill would require a court to impose monetary relief for the state in the amount of 3 times the total damage sustained, as specified.
Who sponsors SB 977?
SB 977 is sponsored by Monning.
What is the current status of SB 977?
This bill died with 2019-2020 Regular Session. It reached “Passed Senate” and never advanced before the session ended, so it can no longer move — a new version would have to be reintroduced in the current session.
Where can I track SB 977?
Track SB 977 free on One Click Politics — get push/email alerts when it moves.

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