September 13, 2023

Healthcare Transactions: States Enact “Mini-HSR” Acts

This Morgan Lewis alert highlights 10 states that now have enacted “mini-HSR” laws that require notifications to state agencies and waiting periods in healthcare transactions.  The alert warns that these laws will increase costs, extend timelines and create deal risk for the industry.

California, Illinois, and Minnesota are the latest states to enact laws requiring merging parties in healthcare-related transactions to notify state agencies and observe waiting periods (anywhere from less than 30 days to upwards of eight months) prior to closing. While the filing requirements, notification thresholds, waiting periods, and review standards vary, all of the statutes share the common objective of providing state agencies with the tools to review, block, and modify healthcare deals.

Several other states, including Colorado, Connecticut, Massachusetts, Nevada, New York, Oregon, and Washington, have already enacted similar “mini-HSR Acts” for healthcare transactions.

[…] It remains to be seen how state agencies will interpret and use these new healthcare premerger notification laws in future merger reviews. There is also a possibility that states will notify and then collaborate with the DOJ or FTC on healthcare deals reportable under state laws but not under the HSR Act; the DOJ and FTC can—and do—sue to stop or reverse transactions that are not reportable under the HSR Act.

The alert goes on to describe the laws in California, Illinois, and Minnesota and notes that other state legislatures are currently considering similar statutes.

On a related note, Keith Bishop has blogged about an incredibly broad bill pending in California that, if signed, would require notice to the state Attorney General before the acquisition of voting securities or assets of a retail grocery or drug firm.

– Meredith Ervine