California Healthcare Providers Face State AG Enforcement Surge Amid Federal Pullback
California healthcare providers must adapt to a new state-level enforcement landscape as federal antitrust and fraud oversight recedes, with the state Attorney General actively targeting private equity and management services organization arrangements.
Federal antitrust and fraud enforcement is weakening through withdrawn safe harbors, reduced merger-reporting tools, and slower investigations due to HHS staffing cuts. In contrast, California has enacted SB 351 and AB 1415 (effective January 1, 2026), which impose corporate practice of medicine restrictions on private equity and hedge funds and bring these entities under the Office of Health Care Affordability’s pre-transaction notice requirements. The California Attorney General is already enforcing these rules through recent settlements with Aspen Dental and Carbon Health, plus an amicus brief advocating a broad interpretation of the corporate practice ban. Healthcare providers must reassess deal structures, diligence processes, OHCA notice timing, MSO-PC arrangements, and governance to comply with this rapidly evolving state-level scrutiny.