On March 13, 2024, Indiana Governor Eric J. Holcomb signed Senate Enrolled Act No. 9 (“SEA 9”) which will amend the Indiana Code with respect to notice of health care entity mergers and acquisitions.

The measure, effective July 1, 2024, adds a new Chapter 8.5 to the Indiana Code providing in Section 4(a) that “[a]n Indiana health care entity that is involved in a merger or acquisition with another health care entity with total assets, including combined entities and holdings, of at least ten million dollars ($10,000,000) shall, at least ninety (90) days prior to the merger or acquisition, provide written notice of the merger or acquisition to the office of the attorney general in a manner prescribed by the office of the attorney general.”

The bill was introduced by State Senator Chris Garten (R-Charlestown) and is a direct result of recommendations by a Health Care Oversight Task Force.

“The task force, which Garten chaired, studied reasons why Hoosiers continued to pay among the highest health care costs in the nation,” stated a press release issued by Indiana Senate Republicans. “Testimony during task force meetings highlighted the role market consolidation plays in driving up health care costs.”

Indiana SEA 9 is also a product of Garten’s collaborative work with health care stakeholders and experts to create a merger review policy allowing the state to monitor antitrust issues, according to the release. “SEA 9 would be an effective method to accomplish that and be considerably less intrusive than laws in states that require approval for mergers because it requires only notice.”

Notice

The required notice must include:

1. The business address and federal tax number;
2. The name and contact information of a representative of the health care entity concerning the merger or acquisition;
3. A description of the health care entity;
4. A description of the merger or acquisition, including the anticipated timeline;
5. A copy of any materials that have been submitted to a federal or state agency concerning the merger or acquisition.

The notice must be certified before a notary public. The legislation provides that the state office of attorney general shall keep confidential all nonpublic information, and that this confidential information may not be released to the public.

Definitions

Indiana SEA 9 provides the following definitions:

Acquisition. Any agreement, arrangement, or activity the consummation of which results in a person acquiring directly or indirectly the control of another person.

Health Care Entity includes:

1. Any organization or business that provides diagnostic, medical, surgical, dental treatment, or rehabilitative care.
2. An insurer that issues a policy of accident and sickness insurance as defined in the Indiana Code, except for the following types of coverage:
   • Accident only, credit, dental, vision, long term care, or disability income insurance;
   • Coverage issued as a supplement to liability insurance;
   • Automobile medical payment insurance;
   • A specified disease policy;
   • A policy that provides indemnity benefits not based on any expense incurred requirements; including a plan that provides coverage for:
     • Hospital confinement, critical illness, or intensive care, or
     • Gaps for deductibles or copayments;
   • Worker’s compensation or similar insurance;
   • A student health plan;
   • A supplemental plan that always pays in addition to other coverage.
3. A health maintenance organization (as defined by the Indiana Code);
4. A pharmacy benefit manager (as defined in the Indiana Code);
5. An administrator (as defined in the Indiana Code);
6. A private equity partnership, regardless of where the private equity partnership is located, seeking to enter into a merger or acquisition with an entity described in subdivisions (1) through (5).

Merger means any change of ownership, including: (1) an acquisition or transfer of assets; or (2) the purchase of stock effectuated by a merger agreement.

Review and Consent

Indiana SEA 9 provides that: “not later than forty-five (45) days from the submission of a notice under subsection (a), the office of the attorney general (1) shall review the information submitted with the notice; and (2) may analyze in writing any antitrust concerns with the merger or acquisition.”

Finally, Indiana SEA 9 provides that the office of the attorney general shall provide the required written analysis to the requester; and may issue a civil investigative demand under the Indiana Code to a health care entity that has submitted a notice under this section for additional information. It further notes that any information received or produced by the state office of the attorney general under this section is confidential.

Takeaways

The National Conference of State Legislatures reported that in 2023 (as of October 2023), states enacted at least 36 bills across 24 states related to health system consolidation and competition, including policies related to health system merger and review. Through these enacted bills, some states would require, or may in the future require, notice or consent of transactions.[1] Such laws or proposed laws would require a potential acquirer to demonstrate that the proposed transaction will not have an adverse impact on the cost of, quality of, access to health care services, or adversely impact the health care workforce. In states where health care transactions have already been impacted or have a likelihood of being impacted by notice or approval filing requirements, providers and sponsors should begin considering what data they would produce in the event of being required to file such a notice or consent application and begin gathering and tracking that supporting data now.

For Indiana, providers and sponsors should be cognizant that the dollar threshold ($10,000,000) is much lower than other states such as California (Cal. Code Regs. tit. 22, § 97435 et seq.), New York (N.Y. Pub. Health L. §§ 4550 et seq.) or Oregon (Or. Rev. Stat. §§ 415.500 et seq.), among others, and that the definition of “health care entity” is not limited to traditional providers but also includes a private equity firm, regardless of geographic location. These combined factors may increase the number of transactions that are subject to SEA 9’sninety (90) day pre-closing notice obligation.

Epstein Becker Green Staff Attorney Ann W. Parks contributed to the preparation of this post.

[1] See e.g., Proposed CA Assembly Bill 3129: Notice & Consent for Private Equity, Hedge Funds Acquiring/Changing Control of Health Care Facilities, Provider Groups, Health Law Advisor (March 14, 2024); New York State Enacts New Notice Requirements Targeting Private Equity Health Care Transactions, Health Law Advisor (July 12, 2023);;Proposed Minnesota House Bill HF 4206 Would Prohibit Ownership Interests, Operational/Financial Control of Health Care Providers by Private Equity and REITS, Health Law Advisor (March 15, 2024); and Time Runs Out in the Oregon State Senate for HB 4130, but Will Likely Return in 2025, Health Law Advisor (March 12, 2024).