In response to an increase in private equity involvement in financing health care, magnified by the Steward Healthcare situation, Massachusetts Senator Elizabeth Warren on June 11, 2024 filed the Corporate Crimes Against Health Care Act. This bill is intended to regulate the involvement of private equity firms in the health care industry and includes the following features:
- Create a new criminal penalty of up to 6 years in prison for executives whose actions endanger the safety of their patients;
- Provide state attorneys general and the DOJ with the power to claw back all compensation, including salaries, issued to private equity and portfolio company executives within a 10-year period before or after an acquired health care firm for ‘unjust enrichment.’
- Authorize an associated civil penalty of up to 5 times the clawback amount;
- Restrict private equity fund involvement in health care operations by prohibiting payments from federal health programs to entities that sell assets or use assets for a loan collateral made to a REIT, with an exemption for current arrangements and repealing the federal Tax Code to remove the 20 percent pass-through deduction for all REIT investors; and
- Require health care providers receiving federal funding to publicly report mergers, acquisitions, changes in ownership and control, and financial data, including debt and debt-to-earnings ratios.