Earlier this year, Indiana joined a growing number of states¹  by enacting a new notification requirement for certain healthcare transactions. Indiana Senate Bill Number 9 (SB 9), effective July 1, 2024, is likely to require healthcare providers and investors to make frequent notifications to the Indiana Attorney General for transactions in the health care space, due to the statute’s broad language. SB 9 stems from Indiana’s Health Care Cost Oversight Task Force’s initiative to tackle the state’s high healthcare costs and address concerns over mergers and acquisitions across the healthcare industry. Indiana regulators seem especially focused on private equity firms, which were explicitly included in the statutory language.

SB 9 requires an Indiana “health care entity” (HCE) that is involved in a “merger” or “acquisition” with another HCE whose total assets, including combined entities and holdings, equal at least ten million dollars ($10,000,000) to provide written notice to the Indiana Attorney General at least ninety (90) days before the transaction becomes effective. In other words, SB 9 applies to any merger or acquisition where: (1) at least one of the entities is an Indiana HCE, and (2) at least one of the other HCEs has $10 million or more in total assets. SB 9 does not specify whether asset calculations are based only on revenue generated from, or assets located in, Indiana.

Which transactions are covered?

Two forms of transactions, “mergers” and “acquisitions,” each of which is defined broadly, trigger reporting requirements under SB 9. An “acquisition” includes any “agreement, arrangement, or activity the consummation of which results in a person acquiring directly or indirectly the control of another person.” A “merger” includes “any change of ownership,” including (1) an acquisition or transfer of assets, and (2) a stock purchase made pursuant to a merger agreement.

Which entities are covered? 

For a notification to be required, one entity in a transaction must be an Indiana health care entity. The other party must also be a health care entity with at least $10 million in “total assets” from “combined entities and holdings,” but is not required to have any connection to Indiana.

Under SB 9, “health care entity” includes: 

(a) Any organization or business that provides diagnostic, medical, surgical, dental treatment, or rehabilitative care;

(b) An insurer that issues a policy of accident and sickness insurance (as defined in Indiana Code), except for certain types of coverage;

(c) A health maintenance organization (HMO), as defined in Indiana Code;

(d) A pharmacy benefit manager (PBM), as defined in Indiana Code;

(e) An administrator, as defined in Indiana Code; and 

(f) A private equity partnership, regardless of where the private equity partnership is located, that is seeking to enter into a merger or acquisition with any entity described in subdivisions (a) through (e) above. 

Notably, a private equity firm can constitute a healthcare entity, even if the firm has no healthcare investments at the time the notice is due, simply by being a party to a forthcoming transaction. Given the specific inclusion of private equity firms, and the broad definition thereof, Indiana’s notice requirement will likely trigger notifications for a higher volume of private equity healthcare transactions than analogous laws in most other states. Further, given the relatively low total asset threshold requirement under SB 9 ($10 million or more in total assets), smaller healthcare transactions will likely require notification in Indiana, even if such transactions would not trigger filings under the federal Hart-Scott-Rodino (“HSR”) Act or other states’ transaction notification laws. 

What information must parties provide?

Under SB 9, when a notification is required, each HCE must include the following information, certified by notary, in a manner prescribed by the Indiana Attorney General:

• Business address and federal tax number;
• Name and contact information of a representative of the HCE concerning the merger or acquisition;
• Description of the HCE;
• Description of the merger or acquisition, including the anticipated timeline; and
• If relevant, a copy of any materials submitted to a federal or state agency concerning the merger or acquisition (e.g., HSR Act). 

All non-public materials that are submitted will remain confidential and the public will not have access to such confidential information. 

What happens after filing?

Under SB 9, parties must submit a notification at least ninety (90) days prior to the transaction closing. During that time, the Indiana Attorney General is authorized to take the following actions: 

• Issue a written analysis of antitrust concerns with the transaction within forty-five (45) days from submission; and 
• Issue a civil investigative demand to the submitter for additional information. 

Beyond providing an opportunity to review a transaction, SB 9 does not expressly allow the Indiana Attorney General to enjoin a transaction, withhold approval or consent, or delay closing of the transaction after 90 days. The Indiana Attorney General, however, still maintains its existing authority to investigate potential transactions under the current antitrust laws and potentially seek an injunction or other penalties. What SB 9 does afford the Indiana Attorney General is a new mechanism to receive copies of HSR filings, and other state filings, and a designated period to review and respond. Ultimately, the Indiana Attorney General will have authority to more closely monitor the consolidation of healthcare providers in the state.

Further Guidance

There are a few areas where implementing rules or agency guidance would be helpful to clarify the applicability of this law and how enforcement will occur. For instance, the term “asset” is not explicitly defined in SB 9. A clearer definition would facilitate consistency in how HCEs and stakeholders calculate the value of total assets. Additionally, SB 9 does not specifically outline daily fines or penalties for noncompliance. The Indiana Attorney General has not indicated that additional clarification on these points is forthcoming. Thus, HCEs contemplating transactions in Indiana should engage with Goodwin’s healthcare regulatory and antitrust counsel, who have experience in navigating such gray areas.

Conclusion

As of July 1, 2024, Indiana will join a growing number of states that have adopted advance notification and review requirements for certain healthcare transactions. Indiana’s law is broad enough to require ninety (90) days of notice for even relatively small healthcare entity transactions, including those involving private equity firms. However, SB 9 functions primarily as a notice regime and does not confer new powers to the Indiana Attorney General to block or delay transactions. 

^[1] Goodwin, “California OHCA Publishes Final Regulations Regarding Healthcare Transaction Filing Requirements and Review Process” (Jan. 22, 2024); Goodwin, “Starting in April 2024, California Joins Growing Trend of Implementing Advance Review Processes for Healthcare Transactions” (June 21, 2023); Goodwin, “Antitrust & Competition Healthcare Quarterly Update Q3 2023” (Nov. 6, 2023);  Goodwin, “Antitrust & Competition Healthcare Quarterly Update Q2 2023” (August 11, 2023); Goodwin, “New York Enacts Requirement for Healthcare Entities to Provide Notice of ‘Material Transactions’

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