Health Law Diagnosis
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Authored by Yelena Greenberg, Danielle H. Tangorre, Conor O. Duffy, Leslie J. Levinson, and Seth B. Orkand
Massachusetts has expanded regulatory oversight of health care transactions by imposing False Claims Act liability on health care owners and investors for changes including failure to disclose violations. On January 8, 2025, Governor Maura Healey signed into law H.5159, An Act enhancing the market review process (the Act). Among other matters, the Act aims to strengthen oversight of private equity investors and related entities in the health care industry, including the expansion of the investigatory and enforcement powers of the Massachusetts Attorney General as they relate to health care activities. The Act also intends to fill perceived gaps in regulatory oversight, that many view as contributors to the Steward Health Care bankruptcy and related hospital closures across Massachusetts, by directly addressing regulation of for-profit health care entities and private equity ownership.
The following Act provisions expand the authority of the Massachusetts Health Policy Commission (HPC), Center for Health Information and Analysis (CHIA), and Attorney General’s Office (AGO) to oversee private equity investors and related entities, including through expansions of HPC’s existing oversight authority and extension of the Commonwealth’s state False Claims Statute (MA FCA) to owners and investors of violators. The Act also contains myriad changes impacting the health care industry. It strengthens regulatory oversight over private equity, pharmacy benefit managers, real estate investment trusts (REITs), management service organizations (MSOs), and other industry participants. Read more.
Massachusetts Expands FCA Liability to Owners and Private Equity Investors
Authored by Danielle H. Tangorre, Conor O. Duffy, Leslie J. Levinson, and Seth B. Orkand
Under a new 2025 law, Massachusetts is one of the first in the nation to broaden its state False Claims Act (FCA) to require disclosures by investors and owners of health care entities. On January 8, 2025, Governor Maura Healey signed into law H.5159, An Act enhancing the market review process (the Act), significantly changing Massachusetts’s regulatory and enforcement landscape. As discussed in further detail here, the law imposes FCA liability against investors and focuses on private equity and corporate ownership in health care. While this Act appears to be the first direct codification of FCA liability, it is consistent with the Department of Justice (DOJ) and Office of the Inspector General, U.S. Department of Health and Human Services’ (HHS-OIG) recent focus on private equity and the impact on health care. While the DOJ has focused on private equity firms that allegedly knew of misconduct at portfolio companies and failed to stop it through their involvement in the operations of those companies, the MA FCA goes further by imposing liability on health care investors for merely being aware of misconduct and failing to report it to the state. H. 5159 expands the scope of the MA FCA enforced by the Commonwealth’s Attorney General[1] to apply to any person who has an “ownership or investment interest” and any person who violates the false claim statute that “knowingly” or “knows” about the violation[2] and fails to disclose the violation to the government within 60 days of identifying the violation. This is a significant expansion of the traditional protections afforded by the corporate veil and appears to be designed to hold private equity and other owners liable if they become aware of any MA FCA violations and fail to take action. Read more.
