New California Laws Increasing Oversight of Private Equity and Hedge Funds in Healthcare: SB 351 and AB 1415
Corporate Practice of Medicine Provisions, Expansion of Noticing Entities, Noncompete Restrictions
Description
California recently enacted two significant laws, AB 1415 and SB 351, that will increase the state's oversight of PE and hedge fund participation in healthcare transactions. Both laws, effective Jan. 1, 2026, signal California's enhanced scrutiny of consolidation in healthcare. Counsel should be aware of how these laws may impact current or proposed healthcare deals including those involving ownership/control changes, M&A, and MSO arrangements.
SB 351 clarifies and codifies certain aspects of California's corporate practice of medicine doctrine including prohibiting PE groups and hedge funds involved in any manner with a physician or dental practice from interfering with the professional judgment of physicians or dentists in making healthcare decisions. Prohibited actions include dictating when diagnostic tests are ordered, controlling how many patients a physician or dentist treats, and maintaining responsibility for a patient's overall care.
Additionally, SB 351 carves out select administrative functions that cannot be delegated to an unlicensed entity including owning or determining the content of patient medical records, decision-making regarding billing and coding practices, and approving the selection of medical equipment and supplies for the practice. SB 351 also prohibits the use of noncompetition or non-disparagement clauses in contracts involving the management of a practice by a PE firm or hedge fund or the sale of real estate or other assets owned by a practice to a PE group, hedge fund, or their affiliates, except in limited circumstances.
AB 1415 broadens the application of the Health Care Quality and Affordability Act (HCQAA) and could significantly increase the number of transactions that need to be notified by expanding the types of entities that are subject to HCQAA reporting requirements including hedge funds and PE groups. These new "noticing entities" must provide at least 90 days' notice to the Office of Health Care Affordability (OHCA) before closing healthcare deals involving material changes. The new law expands OHCA's authority to approve or deny transactions.
Listen as our expert panel examines SB 351 and AB 1415 and discusses how each will impact PE groups and hedge funds involved in California healthcare transactions. The panel will address new requirements and prohibitions and offer best practices for compliance.
Presented By
Mr. Friedman advises clients at the forefront of the healthcare industry in areas such as government insurance programs, digital health, accountable care and value-based payments, and regulatory compliance. A former leader of one of the largest Medicaid programs in the country, he provides valuable insight and solutions to healthcare companies and investors navigating complex transactional, regulatory, enforcement and policy matters. Over the course of his career, Mr. Friedman has held top positions at the New York State Department of Health (NYSDOH), including Director of Strategic Initiatives and Special Medicaid Counsel, and most recently, Deputy Commissioner and State Medicaid Director. Prior to joining NYSDOH, he was co-head of the firm’s digital health initiative. At the firm, Mr. Friedman advises payers and providers on the transition to accountable care and value-based payment and assists investors with a range of transactional needs. Additionally, he counsels clients facing government investigations, audits and self-disclosures, as well as violations of healthcare fraud and abuse laws.
Ms. Romig has significant experience in advising clients on a variety of complex transactional, enforcement and regulatory matters within the healthcare and digital health industries. She advises healthcare industry clients, private equity firms and other investors on structuring and negotiating mergers and acquisitions, joint ventures, affiliations and a variety of contractual arrangements and general business transactions. Ms. Romig has particular experience counseling clients on an array of data privacy, security and cybersecurity matters under HIPAA as well as state privacy and security laws. She regularly represents clients involved in security incidents and breaches involving protected health and other sensitive personal information, including in matters involving the U.S. Department of Health and Human Services, Office for Civil Rights and state authorities. Ms. Romig has also provided guidance to clients with respect to negotiation, implementation and adherence to Corporate Integrity Agreements.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Wednesday, January 28, 2026
- schedule
1:00 p.m. ET./10:00 a.m. PT
I. Introduction: legislative history
II. SB 351
A. Purpose
B. Covered entities
C. Prohibited activities
D. Transaction impact
E. Enforcement
F. Best practices for compliance
III. AB 1415
A. Purpose
B. Covered entities
C. Notice requirements: new categories of "noticing entity"
D. Transaction impact
E. Enforcement
F. Best practices for compliance
IV. Practitioner takeaways
The panel will review these and other key issues:
- What is the purpose behind SB 351? How will the new prohibitions impact hedge funds and PE groups involved in healthcare deals?
- How does AB 1415's expansion of "noticing entities" affect healthcare transactions involving PE groups and hedge funds?
- What should counsel be doing to review current and proposed healthcare transactions for compliance?
Related Courses
New California Laws Increasing Oversight of Private Equity and Hedge Funds in Healthcare: SB 351 and AB 1415
Wednesday, January 28, 2026
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Medical Record Issues in Healthcare Practice Closings and Transfers: Regulatory Update, Best Practices for Compliance
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