89R2583 SRA-F
By: Hinojosa of Hidalgo S.B. No. 2130
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of certain transactions and activities
involving the provision of veterinary services; authorizing civil
penalties; creating criminal offenses.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Title 2, Business & Commerce Code, is amended by
adding Chapter 15A to read as follows:
CHAPTER 15A. CONSOLIDATION OF VETERINARY SERVICES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 15A.0001. DEFINITIONS. In this chapter:
(1) "Affiliate" means a person or entity who, directly
or indirectly through intermediaries, controls, is controlled by,
or is under common control with another entity or shares common
branding with another entity. For purposes of this subdivision,
control of an entity means having:
(A) ownership of or the direct or indirect
ability to vote 25 percent or more of the outstanding shares or
participation shares of any class of voting securities of the
entity;
(B) the ability to control in any manner the
election of the majority of the entity's directors or individuals
exercising functions similar to a director's functions; or
(C) the ability to directly or indirectly
exercise a controlling influence over the management or policies of
the entity through ownership of equity or securities, by contract,
or otherwise.
(2) "Geographic market" means a county, metropolitan
statistical area designated by the United States Office of
Management and Budget, or contiguous geographic area in this state
from which an entity draws at least 50 percent of the entity's
veterinary services clients.
(3) "Private equity company" means a for-profit firm,
sole proprietorship, corporation, limited or general partnership,
limited liability company, limited liability partnership, business
trust, investment asset manager, real estate investment trust,
joint venture, joint stock company, or other entity, including a
wholly-owned subsidiary, majority-owned subsidiary, parent
company, or affiliate of any of those entities, that:
(A) is not required to be registered or regulated
as an investment company under the Investment Company Act of 1940
(15 U.S.C. Section 80a-1 et seq.) due to the exclusion from the
definition of investment company under Section 3(c)(1) or (7) of
the Investment Company Act of 1940 (15 U.S.C. Section 80a-3(c)(1)
or (7));
(B) engages in collecting capital from
individuals or entities to invest, develop, or dispose of assets;
and
(C) limits or does not provide investors with
redemption rights in the ordinary course of business.
(4) "Transaction" means:
(A) a direct or indirect acquisition, purchase,
lease, merger, gift, encumbrance, exchange, option, receipt of a
conveyance, creation of a joint venture, or other transfer of an
interest in a veterinary services provider; or
(B) a change of control, wholly or partly, of a
veterinary services provider by a private equity company.
(5) "Veterinary medicine" has the meaning assigned by
Section 801.002, Occupations Code.
(6) "Veterinary services" means:
(A) diagnosing, treating, correcting, changing,
manipulating, relieving, providing care, advice, or guidance for,
or preventing disease, deformity, defect, injury, or other physical
or mental condition of an animal by prescribing, administering, or
dispensing to or for the animal a drug, biologic, anesthetic,
apparatus, surgery, or other therapeutic or diagnostic substance or
technique, and services provided under any other discipline or
specialty of veterinary medicine;
(B) representing an ability and willingness to
perform an act listed under Paragraph (A);
(C) using a title, a word, or letters to induce
the belief that a person is legally authorized and qualified to
perform an act listed under Paragraph (A); and
(D) receiving a fee from a client, including an
owner or caretaker of an animal, or insurer in exchange for
performing an act listed under Paragraph (A).
(7) "Veterinary services provider" means:
(A) a person licensed to practice veterinary
medicine under Chapter 801, Occupations Code, who provides
veterinary services; and
(B) a business entity owned exclusively by one or
more veterinarians as authorized by Chapter 801, Occupations Code,
that provides veterinary services.
Sec. 15A.0002. CHANGE OF CONTROL. For purposes of this
chapter, a change of control with respect to a veterinary services
provider in this state means an agreement, association,
affiliation, partnership, joint venture, transfer, or other
arrangement or event:
(1) that results in a private equity company directly
or indirectly establishing a change in governance of or sharing of
control over the provision of veterinary services by the veterinary
services provider; or
(2) in which a private equity company wholly or partly
assumes direct or indirect control over the management, operations,
or policies of the veterinary services provider through ownership
of voting securities, by contract, or through another means of
altering voting control or responsibility for the governing body of
the veterinary services provider.
Sec. 15A.0003. RULES; PROCEDURES; FORMS. The attorney
general may adopt rules, procedures, and forms necessary to
administer and enforce this chapter.
Sec. 15A.0004. MULTIPLE REMEDIES ALLOWED. The application
of one civil remedy under a provision of this chapter does not
preclude the application of any other civil or criminal remedy
under this chapter or other law. Civil remedies under this chapter
are supplemental and not mutually exclusive.
SUBCHAPTER B. REVIEW OF PROPOSED TRANSACTIONS
Sec. 15A.0051. APPLICABILITY OF SUBCHAPTER. (a) Except as
provided by Subsection (b), this subchapter applies only to a
proposed transaction between a private equity company and a
veterinary services provider:
(1) that:
(A) involves:
(i) a veterinary services provider that has
an annual gross revenue of at least $400,000;
(ii) a private equity company that has an
annual gross revenue of at least $400,000 during the three most
recent fiscal years that is derived from veterinary services
provided in this state by the private equity company and the
company's affiliates; or
(iii) a veterinary services provider
located in a geographic market in which the private equity company
has a 40 percent market share of any veterinary services; or
(B) will result in an entity that is projected to
generate an annual gross revenue of at least $400,000 during the
five years after the transaction's closing date; and
(2) with respect to which at least one of the following
material circumstances exists:
(A) the transaction is a merger, consolidation,
amalgamation, divestiture, leveraged buyout, or interest exchange
of a veterinary services provider by or with another entity;
(B) the transaction is part of a series of
related transactions for the same or related veterinary services
occurring over the past 10 years involving the same entities to the
transaction or entities affiliated with the same entities to the
transaction;
(C) the transaction involves the acquisition of a
veterinary services provider by another entity that has consummated
a similar transaction or series of similar transactions over the
past 10 years with one or more other veterinary services providers;
(D) the transaction involves the formation of a
new entity, affiliation, partnership, joint venture, or parent
corporation for the provision of veterinary services in this state
that is projected to have at least $400,000 in annual revenue at
normal or stabilized levels of utilization or operation;
(E) the transaction involves a change of control
of assets in this state that are related to the provision of
veterinary services and valued at $400,000 or more;
(F) the fair market value of the transaction is
at least $400,000 and the transaction concerns the provision of
veterinary services;
(G) the transaction is likely to increase the
annual revenue derived in this state of any party to the transaction
by either $400,000 or more or 25 percent or more at normal or
stabilized levels of utilization or operation;
(H) the transaction involves the sale, transfer,
lease, exchange, option, encumbrance, granting of a security
interest, or other disposition of 25 percent or more of the total
assets or operations of the veterinary services provider to another
entity;
(I) the transaction is part of an agreement or
series of agreements that will result in the sharing of 25 percent
or more of the veterinary services provider's revenues with the
private equity company, that company's affiliates, or a combination
of those entities;
(J) the transaction would result in the transfer
of 25 percent or more of the voting power of the members of the
governing body of the veterinary services provider, including by
adding or substituting one or more members or through any other type
of written or oral arrangement;
(K) the transaction would vest voting rights
significant enough to constitute a change in control, including
supermajority rights, veto rights, exclusivity provisions, and
similar provisions, even if ownership shares or representation on a
governing body are less than 25 percent;
(L) the transaction is part of an agreement or
series of agreements that directly or indirectly through one or
more other persons transfers to another entity the ownership of or
power to vote 25 percent or more of the outstanding shares of any
class of voting security of a veterinary services provider;
(M) the transaction is part of an agreement or
series of agreements that directly or indirectly transfers the
power to exercise a controlling influence over the management or
policies of a veterinary services provider; or
(N) the transaction would result in any other
change of control of a veterinary services provider to, or
acquisition of control of a veterinary services provider by,
another entity.
(b) This subchapter does not apply to a proposed transaction
if, immediately before the transaction, the private equity company
that is a party to the transaction already controls all other
parties to the transaction.
Sec. 15A.0052. ATTORNEY GENERAL CONSENT TO PROPOSED
TRANSACTION REQUIRED. A proposed transaction to which this
subchapter applies may not be completed unless the attorney general
provides written approval for the transaction to be completed.
Sec. 15A.0053. NOTICE TO ATTORNEY GENERAL OF PROPOSED
TRANSACTION. (a) A private equity company that is a party to a
proposed transaction shall submit to the attorney general for
approval under Section 15A.0052 written notice of the transaction
not later than the 90th day before the transaction's anticipated
closing date.
(b) A notice of a proposed transaction must contain:
(1) the name, address, federal tax identification
number, contact information, and business line or segment of each
party to the transaction;
(2) the anticipated closing date of the transaction;
(3) the annual revenue for the three most recent
fiscal years derived from the provision of veterinary services in
this state by each party to the transaction;
(4) the current geographic markets for veterinary
services of each party to the transaction;
(5) for each party to the transaction, the address of
each facility owned or operated for the provision of veterinary
services, the number of staff for each facility, and the capacity to
serve patients or the number of patients served within the
preceding three years for each geographic market;
(6) a detailed description of the terms of the
transaction;
(7) for each party to the transaction, the current
organizational chart, including charts of any parent and subsidiary
entities, and proposed charts for each entity if the transaction is
completed;
(8) the current governing documents for each entity
involved in the transaction, any amendments to the governing
documents, and any proposed updates to the governing documents that
will result from the transaction;
(9) a copy of each agreement and term sheet, with
accompanying appendices and exhibits, governing or related to the
transaction;
(10) any documents identifying the number of clients
per geographic market for each entity involved in the transaction
covering the three most recent fiscal years;
(11) the following information prepared by both
internal experts and independent consultants within the three years
preceding the scheduled closing date for the transaction:
(A) any financial report containing an economic
analysis and impact analysis on the effects of the transaction;
(B) the results of any projections or modeling of
utilization of veterinary services;
(C) the financial impacts related to the
transaction; and
(D) any valuation of the assets and operations
that are subject to the transaction;
(12) a copy of any materials submitted to or required
in connection with the transaction by any other state or federal
agency, including the United States Federal Trade Commission or the
United States Department of Justice;
(13) audited financial reports or comprehensive
financial statements, including details, for the following for each
entity involved in the transaction covering the three most recent
fiscal years:
(A) annual costs and annual receipts;
(B) realized capital gains and losses; and
(C) accumulated surplus and accumulated
reserves;
(14) tax filings and any documents related to
liabilities, debts, assets, balance sheets, statements of income
and expenses, any accompanying footnotes, and revenue of each
entity involved in the transaction covering the three most recent
fiscal years;
(15) a description of services currently provided by
the veterinary services provider involved in the transaction and
expected post-transaction impacts on veterinary services,
including:
(A) the geographic markets currently served and
any post-transaction changes to those markets; and
(B) the levels and type of veterinary services
currently offered and any post-transaction changes to those
services;
(16) a description of any other prior mergers or
acquisitions closed in the last 10 years, if applicable, that
involved:
(A) other veterinary services providers; and
(B) at least one of the entities, or their
parents, subsidiaries, predecessors, or successors, involved in
the transaction;
(17) a description of potential post-transaction
changes to ownership, governance, or operational structure,
employee staffing levels, job security, retraining policies,
wages, and benefits of the parties to the transaction; and
(18) any other information, including documents, the
attorney general determines necessary to evaluate the transaction.
(c) The attorney general may deny approval for a proposed
transaction with respect to which a private equity company submits
notice under this section on the basis that the company did not
submit adequate information, provided that the attorney general:
(1) notifies the company of the insufficiency; and
(2) allows the company a reasonable opportunity to
remedy the insufficiency.
Sec. 15A.0054. ACKNOWLEDGEMENT OF RECEIPT OF NOTICE;
COMMENCEMENT OF REVIEW PERIOD. (a) Notice of a proposed
transaction submitted by a private equity company under Section
15A.0053 is considered complete on the date the attorney general
provides a written acknowledgement to the company that the attorney
general has received all required information. The attorney
general's written acknowledgement constitutes the beginning of the
review period for the transaction.
(b) The attorney general may not unreasonably withhold an
acknowledgement that notice that meets the requirements of Section
15A.0053 has been submitted.
Sec. 15A.0055. REVIEW PERIOD. (a) Except as otherwise
provided by this section, the attorney general, not later than the
60th day after the date the attorney general provides written
acknowledgement of having received a complete notice under Section
15A.0054, shall complete a review of the proposed transaction and
provide to the parties to the transaction:
(1) written approval for the transaction and the basis
for that approval; or
(2) written denial of the transaction and the basis
for that denial.
(b) The attorney general may stay any period specified by
this section during the period of a concurrent review conducted by
another state agency, a federal regulatory agency, or a court if the
other entity's review may affect the attorney general's review of
the proposed transaction. The attorney general shall provide notice
of the stay to the parties to the transaction.
(c) The attorney general may extend the period required
under Subsection (a) by an additional 30 days, in addition to any
time for which the review period is stayed under Subsection (b), if
additional time is necessary to complete the review of the proposed
transaction. The attorney general shall provide notice of the
extension to the private equity company that submitted the notice
of the transaction under Section 15A.0053. If the extension is
necessary to obtain additional documentation or information, the
attorney general may toll the additional 30 days for any period
during which the attorney general is awaiting that documentation or
information.
Sec. 15A.0056. APPROVAL OR DENIAL OF PROPOSED TRANSACTION.
(a) The attorney general may approve or deny a proposed transaction
to which this subchapter applies based on the attorney general's
determination of whether the transaction is against the public
interest. The attorney general shall provide notice to the parties
to the transaction of the approval or denial.
(b) In determining whether a proposed transaction with
respect to which a private equity company submits notice under
Section 15A.0053 is against the public interest, the attorney
general shall consider whether the transaction may:
(1) lessen competition or create a monopoly in any
geographic market affected by the transaction;
(2) be a part of a series of similar transactions by
the private equity company that furthers a trend toward
consolidation;
(3) incentivize practices by the private equity
company that may:
(A) reduce quality of veterinary services;
(B) increase the total cost of veterinary
services for clients or insurance payors; or
(C) generate less cost-efficient patient
outcomes;
(4) require the private equity company to obtain
financing collateralized by the veterinary services provider's
operations or assets to meet the cost of the transaction, which will
subsequently shift the burden of financial risk in ways that may
undermine the financial stability or competitive effectiveness of
the veterinary services provider;
(5) reduce the options of competing veterinary
services providers within a geographic market that may incentivize
the private equity company involved in the transaction to:
(A) increase prices for veterinary services;
(B) lower the quality at a given price for
veterinary services; or
(C) provide less cost-efficient veterinary
services;
(6) enable the private equity company to accrue market
power that may reduce the incentive to compete or offer a comparable
or better patient experience within a geographic market;
(7) entrench or extend a dominant market position of
veterinary services of any entity involved in the transaction,
including extending market power into related markets through
vertical or cross-market mergers;
(8) reduce the delivery of veterinary services to
uninsured or underinsured populations within a geographic market;
(9) reduce access to affordable and quality veterinary
services within a geographic market;
(10) restrict or reduce the range of veterinary
services historically offered within a geographic market;
(11) negatively affect veterinary services provider
cost trends and containment of total animal care spending; or
(12) negatively affect the labor market by:
(A) lowering wages or slowing wage growth;
(B) worsening benefits or working conditions; or
(C) resulting in other degradations of workplace
quality.
(c) A proposed transaction may not be presumed to be
efficient for the purpose of assessing compliance with the factors
of public interest.
Sec. 15A.0057. REVIEW ASSISTANCE FROM OTHER ENTITIES. (a)
For purposes of evaluating a proposed transaction to determine
whether to approve or deny the transaction under this subchapter,
the attorney general may:
(1) contract with, consult, and receive
recommendations from any state or federal agency on terms the
attorney general considers appropriate; or
(2) contract with experts or consultants to help
review the transaction.
(b) Notwithstanding Subsection (a), the attorney general
may not incur contract costs that exceed the reasonable amount
necessary for a review of the proposed transaction.
Sec. 15A.0058. REQUEST FOR RECONSIDERATION. (a) Not later
than the 10th day after the date the attorney general provides
notice of the attorney general's determination to deny a proposed
transaction under Section 15A.0056, a party to the transaction may
request that the attorney general reconsider the decision and
modify, amend, or revoke the prior decision based on new or
different facts, circumstances, or law.
(b) A party requesting a reconsideration under Subsection
(a) shall submit to the attorney general a written affidavit
stating the new or different facts, circumstances, or law the party
requests to be considered.
(c) The attorney general shall grant or deny
reconsideration not later than the 30th day after the date of
receipt of the request under this section.
(d) If the reconsideration request is granted, the attorney
general shall provide notice to the parties to the proposed
transaction that is the subject of the request of the attorney
general's approval or denial of the transaction following
reconsideration. A decision by the attorney general under this
subsection has the same force and effect as the original decision.
Sec. 15A.0059. ADMINISTRATIVE RECORD OF ATTORNEY GENERAL
DETERMINATION. (a) The attorney general's determination to
approve or deny a proposed transaction under Section 15A.0056 or
15A.0058 must be based on and the attorney general shall maintain an
administrative record that consists of:
(1) evidence the parties to the transaction submitted;
(2) official reports made by any experts the attorney
general hired or contracted with to review the transaction;
(3) evidence the attorney general obtained from the
parties to the transaction or from third parties; and
(4) any other evidence or information the attorney
general relied on in making the determination, including
information submitted as part of the notice required by Section
15A.0053.
(b) To the extent any evidence or information is
confidential, the attorney general shall take reasonable measures
to ensure the confidentiality of that evidence or information in
the administrative record.
Sec. 15A.0060. JUDICIAL REVIEW OF ATTORNEY GENERAL
DETERMINATION. (a) Not later than the 30th day after the date the
attorney general makes a final determination under Section 15A.0056
or 15A.0058 to deny approval for a proposed transaction, a party to
the transaction may institute judicial review of the determination
by filing a petition for judicial review in a district court in
Travis County.
(b) On receipt of notice of the filing of the petition for
judicial review, the attorney general shall provide to the court
and the parties to the proposed transaction the original or a
certified copy of the administrative record related to the
transaction that the attorney general maintains under Section
15A.0059. The court may:
(1) set a deadline by which the attorney general must
submit the administrative record; and
(2) require or permit later corrections or additions
to the administrative record.
(c) Judicial review of the attorney general's final
determination regarding a proposed transaction is under the
substantial evidence rule.
(d) After a review of the records, including the
administrative record and any material submitted in support of the
petition, the court may grant the petition and approve the proposed
transaction if the court finds that the attorney general's final
determination was:
(1) arbitrary or capricious;
(2) characterized by abuse of discretion; or
(3) clearly an unwarranted exercise of discretion.
(e) Not later than the 180th day after the date the petition
for judicial review was filed, the court shall issue a written
decision providing the court's findings of fact and conclusions of
law unless extraordinary circumstances prevent the court from
issuing the decision during that period.
Sec. 15A.0061. FAILURE TO SUBMIT NOTICE: INVESTIGATION.
The attorney general or a county or district attorney may conduct an
investigation to determine whether a private equity company:
(1) failed to comply with Section 15A.0053 with
respect to a proposed or completed transaction; and
(2) is or has been engaging in or is actively preparing
to engage in an activity that constitutes a violation of Subchapter
C.
Sec. 15A.0062. FAILURE TO SUBMIT NOTICE: CIVIL PENALTY.
(a) A private equity company that violates Section 15A.0053 is
liable to this state for a civil penalty in an amount not to exceed
$2,000 for each violation.
(b) The attorney general may bring an action in a district
court of Travis County to:
(1) recover the civil penalty imposed by this section;
(2) compel compliance with the requirements of Section
15A.0053; and
(3) enjoin or unwind a transaction for failure to
comply with Section 15A.0053.
(c) The attorney may recover reasonable attorney's fees and
other reasonable costs incurred in investigating and bringing an
action under this section.
(d) The court may grant any other equitable relief the court
considers appropriate in an action under this section.
SUBCHAPTER C. PROHIBITED ACTIVITIES
Sec. 15A.0101. PROHIBITED TRANSACTIONS AND OTHER
ACTIVITIES. (a) A private equity company may not enter into a
transaction that:
(1) will substantially lessen competition in a
geographic market for veterinary services; or
(2) tends, attempts, or conspires to create a monopoly
in the veterinary services market within a geographic area.
(b) A private equity company involved in any manner with a
veterinary services provider doing business in this state, whether
as an investor or owner of the provider's assets, may not control or
direct the provider's practice of veterinary medicine, including
by:
(1) influencing or entering into contracts with third
parties on behalf of the provider;
(2) influencing or setting rates or fees to be charged
by the provider to third parties;
(3) influencing patient admissions or referrals; or
(4) influencing the selection or use of medical
supplies and pharmaceuticals.
(c) A veterinary services provider doing business in this
state may not enter into an agreement or arrangement with any entity
directly or indirectly owned or controlled wholly or partly by a
private equity company that allows the private equity company to:
(1) arrange for the collection or sale of the
provider's accounts receivable; or
(2) manage the provider's operations in exchange for:
(A) a percentage of collections or revenue; or
(B) a fee charged to the veterinary services
provider or passed through to a client, owner or caretaker of an
animal, or insurer covering veterinary services.
(d) A contract involving the management of a veterinary
services provider by a private equity company or the sale of a
veterinary services provider's real property or other assets to a
private equity company may not include a provision that prohibits:
(1) a veterinarian from competing with the provider if
the veterinarian leaves the provider's practice; or
(2) a veterinarian from disparaging, opining, or
commenting on the provider with regard to any issues involving:
(A) quality of care;
(B) utilization of care;
(C) ethical or professional standards or
guidelines; or
(D) revenue-increasing strategies employed by
the company.
(e) A contract provision described by Subsection (d) is void
and unenforceable as against public policy.
Sec. 15A.0102. INVESTIGATIVE AND ENFORCEMENT AUTHORITY.
(a) The attorney general or, subject to Subsection (f), the
appropriate district or county attorney may:
(1) investigate any activity or contemplated activity
that violates or threatens to violate any of the prohibitions in
this subchapter;
(2) bring an action to recover a civil penalty imposed
under or other remedy authorized by Section 15A.0104 or 15A.0105;
or
(3) bring an action requesting a court order under
Section 15A.0103.
(b) The appropriate local prosecuting attorney may
prosecute an offense under Section 15A.0106, 15A.0107, or 15A.0108.
(c) The attorney general or a district or county attorney
may recover fees, expenses, and costs incurred in bringing an
action under this subchapter, including court costs, reasonable
attorney's fees, witness fees, and deposition fees.
(d) Venue for an action brought under this subchapter shall
be in a district court of Travis County or in the district court of
the county in which any part of the alleged violation of any of
Section 15A.0101 occurred, is occurring, or is about to occur.
Venue for prosecution of an offense under Section 15A.0106,
15A.0107, or 15A.0108, is in any county in which the violation is
alleged to have occurred or to be occurring.
(e) The attorney general or, subject to Subsection (f), a
district or county attorney may bring an action to recover a civil
penalty under this subchapter independently or together with an
action to obtain injunctive relief. The district court issuing
injunctive relief retains jurisdiction in an action brought to
recover a civil penalty under this subchapter. An action filed
under Section 15A.0104 or 15A.0105 may not be transferred to
another county except on the order of the court.
(f) A district or county attorney, with prior written notice
to the attorney general, has the authority to bring an action under
this subchapter, provided that not later than the fifth day after
the date the attorney general receives the notice the attorney
general responds that the attorney general does not intend to act
with respect to that matter. On receipt of notice of a related
active criminal investigation or prosecution, the attorney general
shall coordinate and cooperate with the district or county attorney
engaged in the investigation or prosecution to ensure that the
filing of an action under this subchapter does not interfere with an
ongoing criminal investigation or prosecution.
(g) A district or county attorney shall bring an action
under this subchapter in the name of the state.
(h) A civil penalty collected under this subchapter by the
district or county attorney shall be deposited to the credit of the
general fund of the county in which the attorney brought action.
(i) The attorney general may retain a reasonable portion of
a civil penalty recovered under this subchapter, not to exceed
amounts specified in the General Appropriations Act, for the
enforcement of this subchapter.
Sec. 15A.0103. INVESTIGATION. (a) The attorney general or
a district or county attorney may conduct an investigation if the
attorney general or district or county attorney has reason to
believe that:
(1) a veterinary services provider or private equity
company possesses information, custody, or control of documents or
other evidence relevant to an investigation of any activity or
contemplated activity that violates or threatens to violate Section
15A.0101;
(2) a veterinary services provider or private equity
company is engaging, has engaged, or is about to engage in an act or
practice that violates Section 15A.0101; or
(3) it is in the public interest to conduct an inquiry
to ascertain whether a veterinary services provider or private
equity company is engaging, has engaged, or is about to engage in an
act or practice that violates Section 15A.0101.
(b) During an investigation under this section, the
attorney general or a district or county attorney, as applicable,
may:
(1) require the veterinary services provider or
private equity company to file a written statement under oath or
affirmation detailing all facts and circumstances concerning the
alleged violation of Section 15A.0101 and any other necessary
information;
(2) examine under oath any person connected to an
activity or contemplated activity that may violate Section
15A.0101; and
(3) issue a civil investigative demand requiring the
veterinary services provider or private equity company to produce
documents, permit inspection and copying of the document, answer in
writing written interrogatories, or give oral testimony.
(c) Except as provided by this section, the procedures
established for the issuance of a civil investigative demand under
Section 17.61 apply to the same extent and manner to the issuance of
a civil investigative demand under this section.
(d) The attorney general or a district or county attorney,
as applicable, may use information obtained in response to a civil
investigative demand, documents obtained, or product of discovery
or other record derived or created from the information as
necessary to enforce this subchapter, including by presenting the
information to a court.
(e) The attorney general or a district or county attorney
shall bear the expense of copying documents for purposes of this
section. The attorney general or a district or county attorney
shall prescribe reasonable terms allowing the veterinary services
provider or private equity company to substitute copies for
originals of requested documents if the originals are made
available for inspection. The attorney general or a district or
county attorney may obtain or review information in an electronic
format.
(f) A veterinary services provider or private equity
company served with a civil investigative demand under this section
shall comply with the terms of the demand unless a court orders
otherwise. A district or county attorney who executes and serves a
civil investigative demand may file a petition similar to a
petition described by Section 17.61(g) in the district court of the
county in which any part of the alleged violation of Section
15A.0101 occurred, is occurring, or is about to occur.
(g) Subject to Section 15A.0109, the attorney general or a
district or county attorney may seek a court order to compel
compliance with Subsection (b) within a period stated by court
order.
Sec. 15A.0104. INJUNCTIVE RELIEF. (a) The attorney
general or a district or county attorney may bring an action against
a veterinary services provider or private equity company to
restrain or enjoin temporarily or permanently any activity or
contemplated activity of the provider or company that the attorney
general or district or county attorney has reason to believe
violates or threatens to violate Section 15A.0101.
(b) The court may issue a temporary restraining order or a
temporary or permanent injunction. The injunctive relief shall be
issued without bond.
(c) This section may not be construed to require the
attorney general or a district or county attorney to notify a
veterinary services provider or private equity company that court
action is or may be under consideration. Except as otherwise
provided by this subsection, the attorney general or district or
county attorney shall, not later than the seventh day before
instituting a court action, contact the provider or company to
inform the provider or company in general of an alleged violation
under Section 15A.0101. Cessation of an alleged violation after
the prior contact may not render the court action moot under any
circumstances, and the injunctive relief shall lie even if the
provider or company has ceased the act or practice after prior
contact. Prior contact is not required if, in the opinion of the
attorney general or district or county attorney, there is good
cause to believe that:
(1) the provider or company would:
(A) evade service of process if prior contact
were made; or
(B) destroy relevant records if prior contact
were made; or
(2) an emergency exists and immediate and irreparable
injury, loss, or damage would occur as a result of a delay in
obtaining a temporary restraining order.
(d) A veterinary services provider or private equity
company that violates an injunction issued under this section shall
forfeit and pay a civil penalty of not more than $10,000 per
violation, not to exceed $50,000.
Sec. 15A.0105. CIVIL PENALTIES; ADDITIONAL ENFORCEMENT
ACTIONS. (a) The attorney general or an appropriate district or
county attorney may bring an action to recover a civil penalty
against a veterinary services provider or private equity company
that the attorney general or district or county attorney believes
has violated Section 15A.0101.
(b) A civil penalty imposed under this section for a
violation of Section 15A.0101(a) or (b) may not exceed:
(1) for an individual person, $300,000; or
(2) for a private equity company:
(A) $3 million, if the lesser of the company's
assets or market capitalization is less than $100 million;
(B) $20 million, if the lesser of the company's
assets or market capitalization is at least $100 million but less
than $500 million; or
(C) $30 million, if the lesser of the company's
assets or market capitalization is $500 million or more.
(c) A civil penalty imposed under this section for a
violation of Section 15A.0101(c) or (d) may be in an amount not to
exceed $7,500 for each violation. Each day a violation continues is
a separate violation for purposes of imposing the civil penalty
under this subsection.
(d) The amount of a civil penalty under Subsection (c) shall
be based on:
(1) the seriousness of the violation, including the
nature, circumstances, extent, and gravity of the violation;
(2) the history of previous violations;
(3) the amount necessary to deter a future violation;
(4) the economic effect of a penalty on the veterinary
services provider or private equity company on which the penalty
will be imposed;
(5) knowledge that the act constituted a violation of
this subchapter; and
(6) efforts to correct the violation.
(e) Notwithstanding Subsection (c), if the trier of fact
finds that a contract, agreement, or arrangement prohibited under
Section 15A.0101(c) or (d) may have the effect of substantially
lessening competition in a geographic market, the penalties and
remedies prescribed by Subsections (b) and (f) apply instead of the
penalty prescribed by Subsection (c).
(f) On finding a violation of Section 15A.0101(a) or (b),
the court shall:
(1) order the divestiture or other disposition of any
stock, share capital, assets, or interest acquired in violation of
Section 15A.0101(a) or (b), as applicable; and
(2) prescribe a reasonable time, manner, and degree of
the divestiture or other disposition after the court determines
that divestiture is necessary:
(A) to avoid the creation or continuation of a
monopoly or to avoid a likely substantial lessening of competition
that results from the violation; or
(B) to restore competition for veterinary
services in a geographic market that has been eliminated by the
violation.
(g) In addition to the civil penalties provided under this
section, the court may issue appropriate orders and judgments,
including:
(1) ordering the suspension or revocation of a
license, permit, or approval previously granted to a defendant by
any state agency; or
(2) imposing reasonable restrictions on the future
activities or investments of a defendant, including prohibiting a
defendant from engaging in the same type of endeavor as the
enterprise in which the defendant was engaged in conduct violating
Section 15A.0101.
Sec. 15A.0106. CERTAIN PROHIBITED TRANSACTIONS AND
ACTIVITIES: CRIMINAL OFFENSE. (a) A veterinary services provider
or private equity company commits an offense if the provider or
company violates Section 15A.0101(a) or (b).
(b) An offense under this section is a Class A misdemeanor
punishable by:
(1) a fine not to exceed $5,000;
(2) confinement in jail for a term not to exceed three
years; or
(3) both such fine and confinement.
Sec. 15A.0107. INTERFERENCE WITH INVESTIGATION: CRIMINAL
OFFENSE. (a) A veterinary services provider or private equity
company commits an offense if, after receiving actual notice that
the attorney general or a district or county attorney has initiated
or plans to initiate an investigation under this subchapter, the
provider or company intentionally conceals, alters, destroys, or
falsifies a document or record that is relevant or material to the
investigation.
(b) A veterinary services provider or private equity
company commits an offense if, after receiving a civil
investigative demand issued under Section 15A.0103, the provider or
company intentionally falsifies or withholds relevant material
that is not privileged.
(c) An offense under this section is a Class A misdemeanor.
Sec. 15A.0108. DELIBERATE NONCOMPLIANCE: CRIMINAL OFFENSE.
(a) A veterinary services provider or private equity company
commits an offense if the provider or company, with intent to wholly
or partly avoid, evade, or prevent compliance with Section
15A.0103, knowingly removes from any place, conceals, withholds,
destroys, mutilates, alters, or by any other means falsifies any
document or record that is relevant or material to an investigation
or otherwise provides inaccurate information.
(b) An offense under this section is a Class A misdemeanor
punishable by:
(1) a fine not to exceed $5,000;
(2) confinement in jail for a term not to exceed one
year; or
(3) both such fine and confinement.
Sec. 15A.0109. SCOPE OF JURISDICTION; APPEAL. (a) A
district court in which an action is filed in accordance with this
subchapter may hear and determine the matter presented and enter
any order required to implement this chapter. A final order of the
court is subject to appeal.
(b) The failure of a party to an action filed under this
subchapter to comply with a final order of the court is punishable
by contempt.
SECTION 2. The changes in law made by this Act apply to
conduct occurring on or after the effective date of this Act.
Conduct occurring before that date is governed by the law in effect
on the date the conduct occurred, and the former law is continued in
effect for that purpose.
SECTION 3. This Act takes effect September 1, 2025.