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General Assembly Substitute Bill No. 7224
January Session, 2025
AN ACT EXPANDING LIABILITY UNDER THE FALSE CLAIMS ACT
FOR ENTITIES WITH AN OWNERSHIP INTEREST AND PROHIBITING
THE LICENSING OF HOSPITALS WITH CERTAIN LEASE BACK
ARRANGEMENTS.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. Section 4-274 of the general statutes is repealed and the 1
following is substituted in lieu thereof (Effective October 1, 2025): 2
As used in this section and section 4-275, as amended by this act: 3
(1) "Knowing" and "knowingly" means that a person, with respect to 4
information: (A) Has actual knowledge of the information; (B) acts in 5
deliberate ignorance of the truth or falsity of the information; or (C) acts 6
in reckless disregard of the truth or falsity of the information, without 7
regard to whether the person intends to defraud; 8
(2) "Claim" (A) means any request or demand, whether under a 9
contract or otherwise, for money or property and whether or not the 10
state has title to the money or property, that (i) is presented to an officer, 11
employee or agent of the state, or (ii) is made to a contractor, grantee or 12
other recipient, if the money or property is to be spent or used on the 13
state's behalf or to advance a state program or interest, and if the state 14
provides or has provided any portion of the money or property that is 15
requested or demanded, or if the state will reimburse such contractor, 16
grantee or other recipient for any portion of the money or property that 17 Substitute Bill No. 7224
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is requested or demanded, and (B) does not include a request or demand 18
for money or property that the state has paid to an individual as 19
compensation for state employment or as an income subsidy with no 20
restrictions on that individual's use of the money or property; 21
(3) "Person" means any natural person, corporation, limited liability 22
company, firm, association, organization, partnership, business, trust or 23
other legal entity; 24
(4) "State" means the state of Connecticut, any agency or department 25
of the state or any quasi-public agency, as defined in section 1-120; 26
(5) "Obligation" means an established duty, whether fixed or not, 27
arising from (A) an express or implied contractual, grantor-grantee or 28
licensor-licensee relationship, (B) a fee-based or similar relationship, (C) 29
statute or regulation, or (D) the retention of an overpayment; [and] 30
(6) "Material" means having a natural tendency to influence, or be 31
capable of influencing, the payment or receipt of money or property; 32
and 33
(7) "Ownership or investment interest" means any (A) direct or 34
indirect possession of equity in the capital, stocks or profits totaling 35
more than ten per cent of an entity, (B) interest held by an investor or 36
group of investors who engages in the raising or returning of capital and 37
who invests, develops or disposes of specified assets, or (C) interest held 38
by a pool of funds by investors, including a pool of funds managed or 39
controlled by private limited partnerships, if such investors or the 40
management of such pool or private limited partnership employ 41
investment strategies of any kind to earn a return on such pool of funds. 42
Sec. 2. Section 4-275 of the general statutes is repealed and the 43
following is substituted in lieu thereof (Effective October 1, 2025): 44
(a) No person shall: 45
(1) Knowingly present, or cause to be presented, a false or fraudulent 46
claim for payment or approval; 47 Substitute Bill No. 7224
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(2) Knowingly make, use or cause to be made or used, a false record 48
or statement material to a false or fraudulent claim; 49
(3) Conspire to commit a violation of this section; 50
(4) Having possession, custody or control of property or money used, 51
or to be used, by the state, knowingly deliver, or cause to be delivered, 52
less property than the amount for which the person receives a certificate 53
or receipt; 54
(5) Being authorized to make or deliver a document certifying receipt 55
of property used, or to be used, by the state and intending to defraud 56
the state, make or deliver such document without completely knowing 57
that the information on the document is true; 58
(6) Knowingly buy, or receive as a pledge of an obligation or debt, 59
public property from an officer or employee of the state who may not 60
lawfully sell or pledge the property; 61
(7) Knowingly make, use or cause to be made or used, a false record 62
or statement material to an obligation to pay or transmit money or 63
property to the state; [or] 64
(8) Knowingly conceal or knowingly and improperly avoid or 65
decrease an obligation to pay or transmit money or property to the state; 66
or 67
(9) (A) Have an ownership or investment interest in any corporation, 68
limited liability company, firm, association, organization, partnership, 69
business, trust or other legal entity that has violated subdivisions (1) to 70
(8), inclusive, of this subsection, (B) know about such violation, and (C) 71
fail to report such violation to the state not later than sixty days after 72
knowing of such violation. 73
(b) Any person who violates the provisions of subsection (a) of this 74
section shall be liable to the state for: (1) A civil penalty of not less than 75
five thousand five hundred dollars or more than eleven thousand 76
dollars, or as adjusted from time to time by the federal Civil Penalties 77 Substitute Bill No. 7224
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Inflation Adjustment Act of 1990, 28 USC 2461, (2) three times the 78
amount of damages that the state sustains because of the act of that 79
person, and (3) the costs of prosecution of such violation. Liability under 80
this section shall be joint and several for any violation of this section 81
committed by two or more persons. 82
(c) Notwithstanding the provisions of subsection (b) of this section 83
concerning treble damages, if the court finds that: (1) A person 84
committing a violation of subsection (a) of this section furnished 85
officials of the state responsible for investigating false claims violations 86
with all information known to such person about the violation not later 87
than thirty days after the date on which the person first obtained the 88
information; (2) such person fully cooperated with an investigation by 89
the state of such violation; and (3) at the time such person furnished the 90
state with the information about the violation, no criminal prosecution, 91
civil action or administrative action had commenced under sections 4-92
276 to 4-280, inclusive, with respect to such violation, and such person 93
did not have actual knowledge of the existence of an investigation into 94
such violation, the court may assess not less than two times the amount 95
of damages which the state sustains because of the act of such person. 96
Any information furnished pursuant to this subsection shall be exempt 97
from disclosure under section 1-210. 98
(d) In any civil action, arbitration or other civil proceeding in which 99
the state is a defendant, the state shall not assert a counterclaim, set-off 100
or defense alleging a violation of this section. 101
(e) The provisions of this section shall not apply to any claim, record 102
or statement made under any tax law administered by this state or a 103
political subdivision of this state. 104
Sec. 3. Section 19a-486i of the general statutes is repealed and the 105
following is substituted in lieu thereof (Effective October 1, 2025): 106
(a) As used in this section: 107
(1) "Affiliation" means the formation of a relationship between two or 108 Substitute Bill No. 7224
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more entities that permits the entities to negotiate jointly with third 109
parties over rates for professional medical services; 110
(2) "Captive professional entity" means a partnership, professional 111
corporation, limited liability company or other entity formed to render 112
professional services in which a partner, a member, a shareholder or a 113
beneficial owner is a physician, directly or indirectly, employed by, 114
controlled by, subject to the direction of, or otherwise designated by (A) 115
a hospital, (B) a hospital system, (C) a medical school, (D) a medical 116
foundation, organized pursuant to subsection (a) of section 33-182bb, or 117
(E) any entity that controls, is controlled by or is under common control 118
with, whether through ownership, governance, contract or otherwise, 119
another person, entity or organization described in subparagraphs (A) 120
to (D), inclusive, of this subdivision; 121
(3) "Hospital" has the same meaning as provided in section 19a-646; 122
(4) "Hospital system" means: (A) A parent corporation of one or more 123
hospitals and any entity affiliated with such parent corporation through 124
ownership, governance or membership; or (B) a hospital and any entity 125
affiliated with such hospital through ownership, governance or 126
membership; 127
(5) "Health care provider" has the same meaning as provided in 128
section 19a-17b; 129
(6) "Medical foundation" means a medical foundation formed under 130
chapter 594b; 131
(7) "Physician" has the same meaning as provided in section 20-13a; 132
(8) "Person" has the same meaning as provided in section 35-25; 133
(9) "Professional corporation" has the same meaning as provided in 134
section 33-182a; 135
(10) "Group practice" means two or more physicians, legally 136
organized in a partnership, professional corporation, limited liability 137 Substitute Bill No. 7224
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company formed to render professional services, medical foundation, 138
not-for-profit corporation, faculty practice plan or other similar entity 139
(A) in which each physician who is a member of the group provides 140
substantially the full range of services that the physician routinely 141
provides, including, but not limited to, medical care, consultation, 142
diagnosis or treatment, through the joint use of shared office space, 143
facilities, equipment or personnel; (B) for which substantially all of the 144
services of the physicians who are members of the group are provided 145
through the group and are billed in the name of the group practice and 146
amounts so received are treated as receipts of the group; or (C) in which 147
the overhead expenses of, and the income from, the group are 148
distributed in accordance with methods previously determined by 149
members of the group. An entity that otherwise meets the definition of 150
group practice under this section shall be considered a group practice 151
although its shareholders, partners or owners of the group practice 152
include single-physician professional corporations, limited liability 153
companies formed to render professional services or other entities in 154
which beneficial owners are individual physicians; [and] 155
(11) "Primary service area" means the smallest number of zip codes 156
from which the group practice draws at least seventy-five per cent of its 157
patients; and 158
(12) "Main campus of a hospital" means the licensed premises within 159
which the majority of inpatient beds are located. 160
(b) At the same time that any person conducting business in this state 161
that files merger, acquisition or any other information regarding market 162
concentration with the Federal Trade Commission or the United States 163
Department of Justice, in compliance with the Hart-Scott-Rodino 164
Antitrust Improvements Act, 15 USC 18a, where a hospital, hospital 165
system or other health care provider is a party to the merger or 166
acquisition that is the subject of such information, such person shall 167
provide written notification to the Attorney General of such filing and, 168
upon the request of the Attorney General, provide a copy of such 169
merger, acquisition or other information. 170 Substitute Bill No. 7224
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(c) Not less than thirty days prior to the effective date of any 171
transaction that results in a material change to the business or corporate 172
structure of a group practice, the parties to the transaction shall submit 173
written notice to the Attorney General of such material change. For 174
purposes of this subsection, a material change to the business or 175
corporate structure of a group practice includes: (1) The merger, 176
consolidation or other affiliation of a group practice with (A) another 177
group practice that results in a group practice comprised of eight or 178
more physicians, or (B) a hospital, hospital system, captive professional 179
entity, medical foundation or other entity organized or controlled by 180
such hospital or hospital system; (2) the acquisition of all or 181
substantially all of (A) the properties and assets of a group practice, or 182
(B) the capital stock, membership interests or other equity interests of a 183
group practice by (i) another group practice that results in a group 184
practice comprised of eight or more physicians, or (ii) a hospital, 185
hospital system, captive professional entity, medical foundation or 186
other entity organized or controlled by such hospital or hospital system; 187
(3) the employment of all or substantially all of the physicians of a group 188
practice by (A) another group practice that results in a group practice 189
comprised of eight or more physicians, or (B) a hospital, hospital system, 190
captive professional entity, medical foundation or other entity 191
organized by, controlled by or otherwise affiliated with such hospital or 192
hospital system; and (4) the acquisition of one or more insolvent group 193
practices by (A) another group practice that results in a group practice 194
comprised of eight or more physicians, or (B) a hospital, hospital system, 195
captive professional entity, medical foundation or other entity 196
organized by, controlled by or otherwise affiliated with such hospital or 197
hospital system. 198
(d) (1) The written notice required under subsection (c) of this section 199
shall identify each party to the transaction and describe the material 200
change as of the date of such notice to the business or corporate structure 201
of the group practice, including: (A) A description of the nature of the 202
proposed relationship among the parties to the proposed transaction; 203
(B) the names and specialties of each physician that is a member of the 204 Substitute Bill No. 7224
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group practice that is the subject of the proposed transaction and who 205
will practice medicine with the resulting group practice, hospital, 206
hospital system, captive professional entity, medical foundation or 207
other entity organized by, controlled by, or otherwise affiliated with 208
such hospital or hospital system following the effective date of the 209
transaction; (C) the names of the business entities that are to provide 210
services following the effective date of the transaction; (D) the address 211
for each location where such services are to be provided; (E) a 212
description of the services to be provided at each such location; and (F) 213
the primary service area to be served by each such location. 214
(2) Not later than thirty days after the effective date of any transaction 215
described in subsection (c) of this section, the parties to the transaction 216
shall submit written notice to the Commissioner of Health Strategy. 217
Such written notice shall include, but need not be limited to, the same 218
information described in subdivision (1) of this subsection. The 219
commissioner shall post a link to such notice on the Office of Health 220
Strategy's Internet web site. 221
(e) Not less than thirty days prior to the effective date of any 222
transaction that results in an affiliation between one hospital or hospital 223
system and another hospital or hospital system, the parties to the 224
affiliation shall submit written notice to the Attorney General of such 225
affiliation. Such written notice shall identify each party to the affiliation 226
and describe the affiliation as of the date of such notice, including: (1) A 227
description of the nature of the proposed relationship among the parties 228
to the affiliation; (2) the names of the business entities that are to provide 229
services following the effective date of the affiliation; (3) the address for 230
each location where such services are to be provided; (4) a description 231
of the services to be provided at each such location; and (5) the primary 232
service area to be served by each such location. 233
(f) Not less than thirty days prior to the effective date of any 234
transaction that results in the lease of the main campus of a hospital 235
from a health care real estate investment trust, as defined in Section 856 236
of the Internal Revenue Code of 1986, or any subsequent corresponding 237 Substitute Bill No. 7224
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internal revenue code of the United States, as amended from time to 238
time, the parties to the transaction shall submit written notice of such 239
proposed lease to the Attorney General and the Commissioner of Health 240
Strategy. 241
[(f)] (g) Written information submitted to the Attorney General 242
pursuant to subsections (b) to [(e)] (f), inclusive, of this section shall be 243
maintained and used by the Attorney General in the same manner as 244
provided in section 35-42. 245
[(g)] (h) Not later than January 15, 2018, and annually thereafter, each 246
hospital and hospital system shall file with the Attorney General and 247
the Commissioner of Health Strategy a written report describing the 248
activities of the group practices owned or affiliated with such hospital 249
or hospital system. Such report shall include, for each such group 250
practice: (1) A description of the nature of the relationship between the 251
hospital or hospital system and the group practice; (2) the names and 252
specialties of each physician practicing medicine with the group 253
practice; (3) the names of the business entities that provide services as 254
part of the group practice and the address for each location where such 255
services are provided; (4) a description of the services provided at each 256
such location; and (5) the primary service area served by each such 257
location. 258
[(h)] (i) Not later than January 15, 2018, and annually thereafter, each 259
group practice comprised of thirty or more physicians that is not the 260
subject of a report filed under subsection [(g)] (h) of this section shall file 261
with the Attorney General and the Commissioner of Health Strategy a 262
written report concerning the group practice. Such report shall include, 263
for each such group practice: (1) The names and specialties of each 264
physician practicing medicine with the group practice; (2) the names of 265
the business entities that provide services as part of the group practice 266
and the address for each location where such services are provided; (3) 267
a description of the services provided at each such location; and (4) the 268
primary service area served by each such location. 269 Substitute Bill No. 7224
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[(i)] (j) Not later than January 15, 2018, and annually thereafter, each 270
hospital and hospital system shall file with the Attorney General and 271
the Commissioner of Health Strategy a written report describing each 272
affiliation with another hospital or hospital system. Such report shall 273
include: (1) The name and address of each party to the affiliation; (2) a 274
description of the nature of the relationship among the parties to the 275
affiliation; (3) the names of the business entities that provide services as 276
part of the affiliation and the address for each location where such 277
services are provided; (4) a description of the services provided at each 278
such location; and (5) the primary service area served by each such 279
location. 280
Sec. 4. Section 19a-486g of the general statutes is repealed and the 281
following is substituted in lieu thereof (Effective October 1, 2025): 282
(a) The Commissioner of Public Health shall refuse to issue a license 283
to, or if issued shall suspend or revoke the license of, a hospital if the 284
commissioner finds, after a hearing and opportunity to be heard, that: 285
(1) There was a transaction described in section 19a-486a that 286
occurred without the approval of the Commissioner of Health Strategy, 287
if such approval was required by sections 19a-486 to 19a-486h, inclusive; 288
(2) There was a transaction described in section 19a-486a without the 289
approval of the Attorney General, if such approval was required by 290
sections 19a-486 to 19a-486h, inclusive, and the Attorney General 291
certifies to the Commissioner of Health Strategy that such transaction 292
involved a material amount of the nonprofit hospital's assets or 293
operations or a change in control of operations; or 294
(3) The hospital is not complying with the terms of an agreement 295
approved by the Attorney General and Commissioner of Health 296
Strategy pursuant to sections 19a-486 to 19a-486h, inclusive. 297
(b) On and after October 1, 2025, the Commissioner of Public Health 298
shall refuse to issue a license to a hospital, or renew any such license, if 299
the commissioner finds, after a hearing and opportunity to be heard, 300 Substitute Bill No. 7224
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that the main campus of the hospital, as defined in section 19a-486i, as 301
amended by this act, is leased from a health care real estate investment 302
trust, as defined in Section 856 of the Internal Revenue Code of 1986, or 303
any subsequent corresponding internal revenue code of the United 304
States, as amended from time to time, unless such lease was entered into 305
prior to October 1, 2025. 306
This act shall take effect as follows and shall amend the following
sections:
Section 1 October 1, 2025 4-274
Sec. 2 October 1, 2025 4-275
Sec. 3 October 1, 2025 19a-486i
Sec. 4 October 1, 2025 19a-486g
Statement of Legislative Commissioners:
Section 2(a)(9)(A) was redrafted for clarity and consistency with
Sections 1(3) and (7).
GAE Joint Favorable Subst. -LCO