On March 13, 2024, Indiana joined a growing number of states in enacting health care merger notification laws when Governor Eric Holcomb signed Senate Enrolled Act No. 9 (“SEA 9”) into law. SEA 9 places increased scrutiny on health care mergers and acquisitions throughout the state by requiring certain health care entities involved in a merger or acquisition to provide advanced written notice to the Indiana Attorney General’s office prior to consummating a transaction.
SEA 9 comes on the heels of increased federal scrutiny of large-scale transactions across the country. For instance, as recently as December 2023, the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) issued updated merger guidelines aimed at increasing transparency into proposed mergers and acquisitions. For detailed information about the requirements of the federal merger guidelines, please review our previous article.
SEA 9 – Background and Notice Requirements
Beginning on July 1, 2024, any Indiana health care entity that is involved in a merger or acquisition with another health care entity with total assets of at least $10 million must provide 90 days written notice to the Indiana Attorney General’s office. The $10 million threshold is a relatively low bar and will likely capture a significant number of health care transactions throughout the state. Similarly, SEA 9 is likely to implicate a higher volume of health care transactions compared to similar statutes enacted in other states because it utilizes a broad definition of “health care entity” that includes (i) any organization or business that provides diagnostic, medical, surgical, dental treatment or rehabilitative care; (ii) certain insurers, health maintenance organizations and insurance administrators; and (iii) private equity enterprises seeking to enter into transactions with the health care entities outlined in (i) and (ii).
Once it is determined that a health care transaction meets thresholds established by SEA 9, each health care entity must report the following information at least 90 days prior to the date of the merger or acquisition:
- Business address and federal tax number.
- Name and contact information of a representative of the health care entity concerning the merger or acquisition.
- Description of the health care entity.
- Description of the merger or acquisition, including the anticipated timeline.
- A copy of any materials that have been submitted to a federal or state agency concerning the merger or acquisition.
Attorney General Authority
SEA 9 permits the Indiana Attorney General to review the information submitted and analyze potential antitrust concerns within 45 days of submission. Additionally—and potentially most importantly—SEA 9 explicitly allows the Indiana Attorney General to issue a civil investigative demand requesting additional details surrounding the transaction from a health care entity that submits notice under the statute.
SEA 9 is solely a notice statute and does not require the Attorney General’s approval to close the transaction. However, it is possible that the Indiana Attorney General could use information obtained through the notice or a subsequent civil investigative demand to challenge a potentially anticompetitive transaction through Indiana’s state antitrust laws.
Practical Takeaways
- SEA 9 is likely to result in delays and increased costs for health care transactions throughout the state. Health care entities considering a significant transaction should work with counsel to build appropriate timeframes for the new notice requirement and associated changes in cost into their transaction work plans and considerations at the outset of a transaction.
- SEA 9 highlights a trend across the country of both state and federal lawmakers—including the Indiana legislature—seeking greater transparency into large-scale transactions. According to the Indiana legislature, SEA 9—which received bipartisan support in the Indiana statehouse—advances the goals of curbing rising costs, increasing access to care and addressing potential antitrust concerns. To that end, SEA 9 is likely a starting point, rather than an end-state, and health care entities should monitor whether the Indiana legislature seeks to pursue more restrictive legislation moving forward.
- Private equity groups entering and/or operating in the Indiana market should engage counsel to better understand the requirements of SEA 9, which could materially impact a private equity group’s strategy and timing of developing and growing an Indiana health care platform.
- Additionally, it is expected that the FTC and DOJ will jointly release the final version of the revised Hart-Scott-Rodino (“HSR”) Filing Requirements within the next few weeks. These revised filing requirements are expected to significantly increase the amount of information requested as part of the filing. SEA 9 would require submission of a copy of the HSR filing (if the transaction meets the federal reporting thresholds) to the Indiana Attorney General, allowing the state increased access to a wide range of information concerning the proposed transaction.
The passage of SEA 9 will allow the Indiana Attorney General increased transparency into many health care transactions occurring throughout the state. That transparency, combined with the stated position of the Indiana legislature, the DOJ and the FTC, indicates that we will likely see increased antitrust scrutiny of future health care transactions. Early involvement of counsel can assist in attaining closing deadlines despite the new notice requirements, avoiding unnecessary pitfalls and navigating any antitrust risk.
If your health care organization is considering additional M&A activity, please contact:
- John Bowen at jbowen@hallrender.com or (317) 429-3629;
- Kelci Laster at klaster@hallrender.com or (317) 977-1401;
- Hannah Clarke at hclarke@hallrender.com or (317) 429-3615;
- Eric Speer at espeer@hallrender.com or (317) 429-3634; or
- Your primary Hall Render contact.
Hall Render blog posts and articles are intended for informational purposes only. For ethical reasons, Hall Render attorneys cannot—outside of an attorney-client relationship—answer specific questions that would be legal advice.
