CON Law Amendments Ease Change of Ownership Transactions

This month, Alabama Governor Robert Bentley signed into law key revisions to the state’s Certificate of Need (CON) Laws that clarify and, we believe, will facilitate change of ownership transactions among health care providers. In a nutshell, the amendments clarify that transactions involving the sale, lease, or change of ownership of CON-owning entities are not subject to CON review.

The amendments erase any lingering questions about the remaining applicability of the withdrawn and vacated Alabama Court of Civil Appeals opinion in Florence Surgery Center, L.P., d/b/a Shoals Outpatient Surgery, and SCA-Florence, LLC v. Eye Surgery Center of Florence, LLC; Valley Surgery Center, L.L.C.; and Alabama State Health Planning and Development Agency, No. 2110812, 2013 Ala. Civ. App. LEXIS 38 (Ala. Civ. App., Feb. 8, 2013), which found that the transfer of a CON could only be accomplished through the purchase of all of the stock of a corporation holding the CON and that a CON issued to a limited liability company could not be transferred through any means to a totally separate and unrelated limited liability company. The recent legislative amendments explicitly expand the CON provisions to limited liability companies and other legal entities.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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