Texas 2025 - 89th Regular

Texas Senate Bill SB2130 Compare Versions

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1	1	89R2583 SRA-F
2	2	By: Hinojosa of Hidalgo S.B. No. 2130
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7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to the regulation of certain transactions and activities
10	10	involving the provision of veterinary services; authorizing civil
11	11	penalties; creating criminal offenses.
12	12	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
13	13	SECTION 1. Title 2, Business & Commerce Code, is amended by
14	14	adding Chapter 15A to read as follows:
15	15	CHAPTER 15A. CONSOLIDATION OF VETERINARY SERVICES
16	16	SUBCHAPTER A. GENERAL PROVISIONS
17	17	Sec. 15A.0001. DEFINITIONS. In this chapter:
18	18	(1) "Affiliate" means a person or entity who, directly
19	19	or indirectly through intermediaries, controls, is controlled by,
20	20	or is under common control with another entity or shares common
21	21	branding with another entity. For purposes of this subdivision,
22	22	control of an entity means having:
23	23	(A) ownership of or the direct or indirect
24	24	ability to vote 25 percent or more of the outstanding shares or
25	25	participation shares of any class of voting securities of the
26	26	entity;
27	27	(B) the ability to control in any manner the
28	28	election of the majority of the entity's directors or individuals
29	29	exercising functions similar to a director's functions; or
30	30	(C) the ability to directly or indirectly
31	31	exercise a controlling influence over the management or policies of
32	32	the entity through ownership of equity or securities, by contract,
33	33	or otherwise.
34	34	(2) "Geographic market" means a county, metropolitan
35	35	statistical area designated by the United States Office of
36	36	Management and Budget, or contiguous geographic area in this state
37	37	from which an entity draws at least 50 percent of the entity's
38	38	veterinary services clients.
39	39	(3) "Private equity company" means a for-profit firm,
40	40	sole proprietorship, corporation, limited or general partnership,
41	41	limited liability company, limited liability partnership, business
42	42	trust, investment asset manager, real estate investment trust,
43	43	joint venture, joint stock company, or other entity, including a
44	44	wholly-owned subsidiary, majority-owned subsidiary, parent
45	45	company, or affiliate of any of those entities, that:
46	46	(A) is not required to be registered or regulated
47	47	as an investment company under the Investment Company Act of 1940
48	48	(15 U.S.C. Section 80a-1 et seq.) due to the exclusion from the
49	49	definition of investment company under Section 3(c)(1) or (7) of
50	50	the Investment Company Act of 1940 (15 U.S.C. Section 80a-3(c)(1)
51	51	or (7));
52	52	(B) engages in collecting capital from
53	53	individuals or entities to invest, develop, or dispose of assets;
54	54	and
55	55	(C) limits or does not provide investors with
56	56	redemption rights in the ordinary course of business.
57	57	(4) "Transaction" means:
58	58	(A) a direct or indirect acquisition, purchase,
59	59	lease, merger, gift, encumbrance, exchange, option, receipt of a
60	60	conveyance, creation of a joint venture, or other transfer of an
61	61	interest in a veterinary services provider; or
62	62	(B) a change of control, wholly or partly, of a
63	63	veterinary services provider by a private equity company.
64	64	(5) "Veterinary medicine" has the meaning assigned by
65	65	Section 801.002, Occupations Code.
66	66	(6) "Veterinary services" means:
67	67	(A) diagnosing, treating, correcting, changing,
68	68	manipulating, relieving, providing care, advice, or guidance for,
69	69	or preventing disease, deformity, defect, injury, or other physical
70	70	or mental condition of an animal by prescribing, administering, or
71	71	dispensing to or for the animal a drug, biologic, anesthetic,
72	72	apparatus, surgery, or other therapeutic or diagnostic substance or
73	73	technique, and services provided under any other discipline or
74	74	specialty of veterinary medicine;
75	75	(B) representing an ability and willingness to
76	76	perform an act listed under Paragraph (A);
77	77	(C) using a title, a word, or letters to induce
78	78	the belief that a person is legally authorized and qualified to
79	79	perform an act listed under Paragraph (A); and
80	80	(D) receiving a fee from a client, including an
81	81	owner or caretaker of an animal, or insurer in exchange for
82	82	performing an act listed under Paragraph (A).
83	83	(7) "Veterinary services provider" means:
84	84	(A) a person licensed to practice veterinary
85	85	medicine under Chapter 801, Occupations Code, who provides
86	86	veterinary services; and
87	87	(B) a business entity owned exclusively by one or
88	88	more veterinarians as authorized by Chapter 801, Occupations Code,
89	89	that provides veterinary services.
90	90	Sec. 15A.0002. CHANGE OF CONTROL. For purposes of this
91	91	chapter, a change of control with respect to a veterinary services
92	92	provider in this state means an agreement, association,
93	93	affiliation, partnership, joint venture, transfer, or other
94	94	arrangement or event:
95	95	(1) that results in a private equity company directly
96	96	or indirectly establishing a change in governance of or sharing of
97	97	control over the provision of veterinary services by the veterinary
98	98	services provider; or
99	99	(2) in which a private equity company wholly or partly
100	100	assumes direct or indirect control over the management, operations,
101	101	or policies of the veterinary services provider through ownership
102	102	of voting securities, by contract, or through another means of
103	103	altering voting control or responsibility for the governing body of
104	104	the veterinary services provider.
105	105	Sec. 15A.0003. RULES; PROCEDURES; FORMS. The attorney
106	106	general may adopt rules, procedures, and forms necessary to
107	107	administer and enforce this chapter.
108	108	Sec. 15A.0004. MULTIPLE REMEDIES ALLOWED. The application
109	109	of one civil remedy under a provision of this chapter does not
110	110	preclude the application of any other civil or criminal remedy
111	111	under this chapter or other law. Civil remedies under this chapter
112	112	are supplemental and not mutually exclusive.
113	113	SUBCHAPTER B. REVIEW OF PROPOSED TRANSACTIONS
114	114	Sec. 15A.0051. APPLICABILITY OF SUBCHAPTER. (a) Except as
115	115	provided by Subsection (b), this subchapter applies only to a
116	116	proposed transaction between a private equity company and a
117	117	veterinary services provider:
118	118	(1) that:
119	119	(A) involves:
120	120	(i) a veterinary services provider that has
121	121	an annual gross revenue of at least $400,000;
122	122	(ii) a private equity company that has an
123	123	annual gross revenue of at least $400,000 during the three most
124	124	recent fiscal years that is derived from veterinary services
125	125	provided in this state by the private equity company and the
126	126	company's affiliates; or
127	127	(iii) a veterinary services provider
128	128	located in a geographic market in which the private equity company
129	129	has a 40 percent market share of any veterinary services; or
130	130	(B) will result in an entity that is projected to
131	131	generate an annual gross revenue of at least $400,000 during the
132	132	five years after the transaction's closing date; and
133	133	(2) with respect to which at least one of the following
134	134	material circumstances exists:
135	135	(A) the transaction is a merger, consolidation,
136	136	amalgamation, divestiture, leveraged buyout, or interest exchange
137	137	of a veterinary services provider by or with another entity;
138	138	(B) the transaction is part of a series of
139	139	related transactions for the same or related veterinary services
140	140	occurring over the past 10 years involving the same entities to the
141	141	transaction or entities affiliated with the same entities to the
142	142	transaction;
143	143	(C) the transaction involves the acquisition of a
144	144	veterinary services provider by another entity that has consummated
145	145	a similar transaction or series of similar transactions over the
146	146	past 10 years with one or more other veterinary services providers;
147	147	(D) the transaction involves the formation of a
148	148	new entity, affiliation, partnership, joint venture, or parent
149	149	corporation for the provision of veterinary services in this state
150	150	that is projected to have at least $400,000 in annual revenue at
151	151	normal or stabilized levels of utilization or operation;
152	152	(E) the transaction involves a change of control
153	153	of assets in this state that are related to the provision of
154	154	veterinary services and valued at $400,000 or more;
155	155	(F) the fair market value of the transaction is
156	156	at least $400,000 and the transaction concerns the provision of
157	157	veterinary services;
158	158	(G) the transaction is likely to increase the
159	159	annual revenue derived in this state of any party to the transaction
160	160	by either $400,000 or more or 25 percent or more at normal or
161	161	stabilized levels of utilization or operation;
162	162	(H) the transaction involves the sale, transfer,
163	163	lease, exchange, option, encumbrance, granting of a security
164	164	interest, or other disposition of 25 percent or more of the total
165	165	assets or operations of the veterinary services provider to another
166	166	entity;
167	167	(I) the transaction is part of an agreement or
168	168	series of agreements that will result in the sharing of 25 percent
169	169	or more of the veterinary services provider's revenues with the
170	170	private equity company, that company's affiliates, or a combination
171	171	of those entities;
172	172	(J) the transaction would result in the transfer
173	173	of 25 percent or more of the voting power of the members of the
174	174	governing body of the veterinary services provider, including by
175	175	adding or substituting one or more members or through any other type
176	176	of written or oral arrangement;
177	177	(K) the transaction would vest voting rights
178	178	significant enough to constitute a change in control, including
179	179	supermajority rights, veto rights, exclusivity provisions, and
180	180	similar provisions, even if ownership shares or representation on a
181	181	governing body are less than 25 percent;
182	182	(L) the transaction is part of an agreement or
183	183	series of agreements that directly or indirectly through one or
184	184	more other persons transfers to another entity the ownership of or
185	185	power to vote 25 percent or more of the outstanding shares of any
186	186	class of voting security of a veterinary services provider;
187	187	(M) the transaction is part of an agreement or
188	188	series of agreements that directly or indirectly transfers the
189	189	power to exercise a controlling influence over the management or
190	190	policies of a veterinary services provider; or
191	191	(N) the transaction would result in any other
192	192	change of control of a veterinary services provider to, or
193	193	acquisition of control of a veterinary services provider by,
194	194	another entity.
195	195	(b) This subchapter does not apply to a proposed transaction
196	196	if, immediately before the transaction, the private equity company
197	197	that is a party to the transaction already controls all other
198	198	parties to the transaction.
199	199	Sec. 15A.0052. ATTORNEY GENERAL CONSENT TO PROPOSED
200	200	TRANSACTION REQUIRED. A proposed transaction to which this
201	201	subchapter applies may not be completed unless the attorney general
202	202	provides written approval for the transaction to be completed.
203	203	Sec. 15A.0053. NOTICE TO ATTORNEY GENERAL OF PROPOSED
204	204	TRANSACTION. (a) A private equity company that is a party to a
205	205	proposed transaction shall submit to the attorney general for
206	206	approval under Section 15A.0052 written notice of the transaction
207	207	not later than the 90th day before the transaction's anticipated
208	208	closing date.
209	209	(b) A notice of a proposed transaction must contain:
210	210	(1) the name, address, federal tax identification
211	211	number, contact information, and business line or segment of each
212	212	party to the transaction;
213	213	(2) the anticipated closing date of the transaction;
214	214	(3) the annual revenue for the three most recent
215	215	fiscal years derived from the provision of veterinary services in
216	216	this state by each party to the transaction;
217	217	(4) the current geographic markets for veterinary
218	218	services of each party to the transaction;
219	219	(5) for each party to the transaction, the address of
220	220	each facility owned or operated for the provision of veterinary
221	221	services, the number of staff for each facility, and the capacity to
222	222	serve patients or the number of patients served within the
223	223	preceding three years for each geographic market;
224	224	(6) a detailed description of the terms of the
225	225	transaction;
226	226	(7) for each party to the transaction, the current
227	227	organizational chart, including charts of any parent and subsidiary
228	228	entities, and proposed charts for each entity if the transaction is
229	229	completed;
230	230	(8) the current governing documents for each entity
231	231	involved in the transaction, any amendments to the governing
232	232	documents, and any proposed updates to the governing documents that
233	233	will result from the transaction;
234	234	(9) a copy of each agreement and term sheet, with
235	235	accompanying appendices and exhibits, governing or related to the
236	236	transaction;
237	237	(10) any documents identifying the number of clients
238	238	per geographic market for each entity involved in the transaction
239	239	covering the three most recent fiscal years;
240	240	(11) the following information prepared by both
241	241	internal experts and independent consultants within the three years
242	242	preceding the scheduled closing date for the transaction:
243	243	(A) any financial report containing an economic
244	244	analysis and impact analysis on the effects of the transaction;
245	245	(B) the results of any projections or modeling of
246	246	utilization of veterinary services;
247	247	(C) the financial impacts related to the
248	248	transaction; and
249	249	(D) any valuation of the assets and operations
250	250	that are subject to the transaction;
251	251	(12) a copy of any materials submitted to or required
252	252	in connection with the transaction by any other state or federal
253	253	agency, including the United States Federal Trade Commission or the
254	254	United States Department of Justice;
255	255	(13) audited financial reports or comprehensive
256	256	financial statements, including details, for the following for each
257	257	entity involved in the transaction covering the three most recent
258	258	fiscal years:
259	259	(A) annual costs and annual receipts;
260	260	(B) realized capital gains and losses; and
261	261	(C) accumulated surplus and accumulated
262	262	reserves;
263	263	(14) tax filings and any documents related to
264	264	liabilities, debts, assets, balance sheets, statements of income
265	265	and expenses, any accompanying footnotes, and revenue of each
266	266	entity involved in the transaction covering the three most recent
267	267	fiscal years;
268	268	(15) a description of services currently provided by
269	269	the veterinary services provider involved in the transaction and
270	270	expected post-transaction impacts on veterinary services,
271	271	including:
272	272	(A) the geographic markets currently served and
273	273	any post-transaction changes to those markets; and
274	274	(B) the levels and type of veterinary services
275	275	currently offered and any post-transaction changes to those
276	276	services;
277	277	(16) a description of any other prior mergers or
278	278	acquisitions closed in the last 10 years, if applicable, that
279	279	involved:
280	280	(A) other veterinary services providers; and
281	281	(B) at least one of the entities, or their
282	282	parents, subsidiaries, predecessors, or successors, involved in
283	283	the transaction;
284	284	(17) a description of potential post-transaction
285	285	changes to ownership, governance, or operational structure,
286	286	employee staffing levels, job security, retraining policies,
287	287	wages, and benefits of the parties to the transaction; and
288	288	(18) any other information, including documents, the
289	289	attorney general determines necessary to evaluate the transaction.
290	290	(c) The attorney general may deny approval for a proposed
291	291	transaction with respect to which a private equity company submits
292	292	notice under this section on the basis that the company did not
293	293	submit adequate information, provided that the attorney general:
294	294	(1) notifies the company of the insufficiency; and
295	295	(2) allows the company a reasonable opportunity to
296	296	remedy the insufficiency.
297	297	Sec. 15A.0054. ACKNOWLEDGEMENT OF RECEIPT OF NOTICE;
298	298	COMMENCEMENT OF REVIEW PERIOD. (a) Notice of a proposed
299	299	transaction submitted by a private equity company under Section
300	300	15A.0053 is considered complete on the date the attorney general
301	301	provides a written acknowledgement to the company that the attorney
302	302	general has received all required information. The attorney
303	303	general's written acknowledgement constitutes the beginning of the
304	304	review period for the transaction.
305	305	(b) The attorney general may not unreasonably withhold an
306	306	acknowledgement that notice that meets the requirements of Section
307	307	15A.0053 has been submitted.
308	308	Sec. 15A.0055. REVIEW PERIOD. (a) Except as otherwise
309	309	provided by this section, the attorney general, not later than the
310	310	60th day after the date the attorney general provides written
311	311	acknowledgement of having received a complete notice under Section
312	312	15A.0054, shall complete a review of the proposed transaction and
313	313	provide to the parties to the transaction:
314	314	(1) written approval for the transaction and the basis
315	315	for that approval; or
316	316	(2) written denial of the transaction and the basis
317	317	for that denial.
318	318	(b) The attorney general may stay any period specified by
319	319	this section during the period of a concurrent review conducted by
320	320	another state agency, a federal regulatory agency, or a court if the
321	321	other entity's review may affect the attorney general's review of
322	322	the proposed transaction. The attorney general shall provide notice
323	323	of the stay to the parties to the transaction.
324	324	(c) The attorney general may extend the period required
325	325	under Subsection (a) by an additional 30 days, in addition to any
326	326	time for which the review period is stayed under Subsection (b), if
327	327	additional time is necessary to complete the review of the proposed
328	328	transaction. The attorney general shall provide notice of the
329	329	extension to the private equity company that submitted the notice
330	330	of the transaction under Section 15A.0053. If the extension is
331	331	necessary to obtain additional documentation or information, the
332	332	attorney general may toll the additional 30 days for any period
333	333	during which the attorney general is awaiting that documentation or
334	334	information.
335	335	Sec. 15A.0056. APPROVAL OR DENIAL OF PROPOSED TRANSACTION.
336	336	(a) The attorney general may approve or deny a proposed transaction
337	337	to which this subchapter applies based on the attorney general's
338	338	determination of whether the transaction is against the public
339	339	interest. The attorney general shall provide notice to the parties
340	340	to the transaction of the approval or denial.
341	341	(b) In determining whether a proposed transaction with
342	342	respect to which a private equity company submits notice under
343	343	Section 15A.0053 is against the public interest, the attorney
344	344	general shall consider whether the transaction may:
345	345	(1) lessen competition or create a monopoly in any
346	346	geographic market affected by the transaction;
347	347	(2) be a part of a series of similar transactions by
348	348	the private equity company that furthers a trend toward
349	349	consolidation;
350	350	(3) incentivize practices by the private equity
351	351	company that may:
352	352	(A) reduce quality of veterinary services;
353	353	(B) increase the total cost of veterinary
354	354	services for clients or insurance payors; or
355	355	(C) generate less cost-efficient patient
356	356	outcomes;
357	357	(4) require the private equity company to obtain
358	358	financing collateralized by the veterinary services provider's
359	359	operations or assets to meet the cost of the transaction, which will
360	360	subsequently shift the burden of financial risk in ways that may
361	361	undermine the financial stability or competitive effectiveness of
362	362	the veterinary services provider;
363	363	(5) reduce the options of competing veterinary
364	364	services providers within a geographic market that may incentivize
365	365	the private equity company involved in the transaction to:
366	366	(A) increase prices for veterinary services;
367	367	(B) lower the quality at a given price for
368	368	veterinary services; or
369	369	(C) provide less cost-efficient veterinary
370	370	services;
371	371	(6) enable the private equity company to accrue market
372	372	power that may reduce the incentive to compete or offer a comparable
373	373	or better patient experience within a geographic market;
374	374	(7) entrench or extend a dominant market position of
375	375	veterinary services of any entity involved in the transaction,
376	376	including extending market power into related markets through
377	377	vertical or cross-market mergers;
378	378	(8) reduce the delivery of veterinary services to
379	379	uninsured or underinsured populations within a geographic market;
380	380	(9) reduce access to affordable and quality veterinary
381	381	services within a geographic market;
382	382	(10) restrict or reduce the range of veterinary
383	383	services historically offered within a geographic market;
384	384	(11) negatively affect veterinary services provider
385	385	cost trends and containment of total animal care spending; or
386	386	(12) negatively affect the labor market by:
387	387	(A) lowering wages or slowing wage growth;
388	388	(B) worsening benefits or working conditions; or
389	389	(C) resulting in other degradations of workplace
390	390	quality.
391	391	(c) A proposed transaction may not be presumed to be
392	392	efficient for the purpose of assessing compliance with the factors
393	393	of public interest.
394	394	Sec. 15A.0057. REVIEW ASSISTANCE FROM OTHER ENTITIES. (a)
395	395	For purposes of evaluating a proposed transaction to determine
396	396	whether to approve or deny the transaction under this subchapter,
397	397	the attorney general may:
398	398	(1) contract with, consult, and receive
399	399	recommendations from any state or federal agency on terms the
400	400	attorney general considers appropriate; or
401	401	(2) contract with experts or consultants to help
402	402	review the transaction.
403	403	(b) Notwithstanding Subsection (a), the attorney general
404	404	may not incur contract costs that exceed the reasonable amount
405	405	necessary for a review of the proposed transaction.
406	406	Sec. 15A.0058. REQUEST FOR RECONSIDERATION. (a) Not later
407	407	than the 10th day after the date the attorney general provides
408	408	notice of the attorney general's determination to deny a proposed
409	409	transaction under Section 15A.0056, a party to the transaction may
410	410	request that the attorney general reconsider the decision and
411	411	modify, amend, or revoke the prior decision based on new or
412	412	different facts, circumstances, or law.
413	413	(b) A party requesting a reconsideration under Subsection
414	414	(a) shall submit to the attorney general a written affidavit
415	415	stating the new or different facts, circumstances, or law the party
416	416	requests to be considered.
417	417	(c) The attorney general shall grant or deny
418	418	reconsideration not later than the 30th day after the date of
419	419	receipt of the request under this section.
420	420	(d) If the reconsideration request is granted, the attorney
421	421	general shall provide notice to the parties to the proposed
422	422	transaction that is the subject of the request of the attorney
423	423	general's approval or denial of the transaction following
424	424	reconsideration. A decision by the attorney general under this
425	425	subsection has the same force and effect as the original decision.
426	426	Sec. 15A.0059. ADMINISTRATIVE RECORD OF ATTORNEY GENERAL
427	427	DETERMINATION. (a) The attorney general's determination to
428	428	approve or deny a proposed transaction under Section 15A.0056 or
429	429	15A.0058 must be based on and the attorney general shall maintain an
430	430	administrative record that consists of:
431	431	(1) evidence the parties to the transaction submitted;
432	432	(2) official reports made by any experts the attorney
433	433	general hired or contracted with to review the transaction;
434	434	(3) evidence the attorney general obtained from the
435	435	parties to the transaction or from third parties; and
436	436	(4) any other evidence or information the attorney
437	437	general relied on in making the determination, including
438	438	information submitted as part of the notice required by Section
439	439	15A.0053.
440	440	(b) To the extent any evidence or information is
441	441	confidential, the attorney general shall take reasonable measures
442	442	to ensure the confidentiality of that evidence or information in
443	443	the administrative record.
444	444	Sec. 15A.0060. JUDICIAL REVIEW OF ATTORNEY GENERAL
445	445	DETERMINATION. (a) Not later than the 30th day after the date the
446	446	attorney general makes a final determination under Section 15A.0056
447	447	or 15A.0058 to deny approval for a proposed transaction, a party to
448	448	the transaction may institute judicial review of the determination
449	449	by filing a petition for judicial review in a district court in
450	450	Travis County.
451	451	(b) On receipt of notice of the filing of the petition for
452	452	judicial review, the attorney general shall provide to the court
453	453	and the parties to the proposed transaction the original or a
454	454	certified copy of the administrative record related to the
455	455	transaction that the attorney general maintains under Section
456	456	15A.0059. The court may:
457	457	(1) set a deadline by which the attorney general must
458	458	submit the administrative record; and
459	459	(2) require or permit later corrections or additions
460	460	to the administrative record.
461	461	(c) Judicial review of the attorney general's final
462	462	determination regarding a proposed transaction is under the
463	463	substantial evidence rule.
464	464	(d) After a review of the records, including the
465	465	administrative record and any material submitted in support of the
466	466	petition, the court may grant the petition and approve the proposed
467	467	transaction if the court finds that the attorney general's final
468	468	determination was:
469	469	(1) arbitrary or capricious;
470	470	(2) characterized by abuse of discretion; or
471	471	(3) clearly an unwarranted exercise of discretion.
472	472	(e) Not later than the 180th day after the date the petition
473	473	for judicial review was filed, the court shall issue a written
474	474	decision providing the court's findings of fact and conclusions of
475	475	law unless extraordinary circumstances prevent the court from
476	476	issuing the decision during that period.
477	477	Sec. 15A.0061. FAILURE TO SUBMIT NOTICE: INVESTIGATION.
478	478	The attorney general or a county or district attorney may conduct an
479	479	investigation to determine whether a private equity company:
480	480	(1) failed to comply with Section 15A.0053 with
481	481	respect to a proposed or completed transaction; and
482	482	(2) is or has been engaging in or is actively preparing
483	483	to engage in an activity that constitutes a violation of Subchapter
484	484	C.
485	485	Sec. 15A.0062. FAILURE TO SUBMIT NOTICE: CIVIL PENALTY.
486	486	(a) A private equity company that violates Section 15A.0053 is
487	487	liable to this state for a civil penalty in an amount not to exceed
488	488	$2,000 for each violation.
489	489	(b) The attorney general may bring an action in a district
490	490	court of Travis County to:
491	491	(1) recover the civil penalty imposed by this section;
492	492	(2) compel compliance with the requirements of Section
493	493	15A.0053; and
494	494	(3) enjoin or unwind a transaction for failure to
495	495	comply with Section 15A.0053.
496	496	(c) The attorney may recover reasonable attorney's fees and
497	497	other reasonable costs incurred in investigating and bringing an
498	498	action under this section.
499	499	(d) The court may grant any other equitable relief the court
500	500	considers appropriate in an action under this section.
501	501	SUBCHAPTER C. PROHIBITED ACTIVITIES
502	502	Sec. 15A.0101. PROHIBITED TRANSACTIONS AND OTHER
503	503	ACTIVITIES. (a) A private equity company may not enter into a
504	504	transaction that:
505	505	(1) will substantially lessen competition in a
506	506	geographic market for veterinary services; or
507	507	(2) tends, attempts, or conspires to create a monopoly
508	508	in the veterinary services market within a geographic area.
509	509	(b) A private equity company involved in any manner with a
510	510	veterinary services provider doing business in this state, whether
511	511	as an investor or owner of the provider's assets, may not control or
512	512	direct the provider's practice of veterinary medicine, including
513	513	by:
514	514	(1) influencing or entering into contracts with third
515	515	parties on behalf of the provider;
516	516	(2) influencing or setting rates or fees to be charged
517	517	by the provider to third parties;
518	518	(3) influencing patient admissions or referrals; or
519	519	(4) influencing the selection or use of medical
520	520	supplies and pharmaceuticals.
521	521	(c) A veterinary services provider doing business in this
522	522	state may not enter into an agreement or arrangement with any entity
523	523	directly or indirectly owned or controlled wholly or partly by a
524	524	private equity company that allows the private equity company to:
525	525	(1) arrange for the collection or sale of the
526	526	provider's accounts receivable; or
527	527	(2) manage the provider's operations in exchange for:
528	528	(A) a percentage of collections or revenue; or
529	529	(B) a fee charged to the veterinary services
530	530	provider or passed through to a client, owner or caretaker of an
531	531	animal, or insurer covering veterinary services.
532	532	(d) A contract involving the management of a veterinary
533	533	services provider by a private equity company or the sale of a
534	534	veterinary services provider's real property or other assets to a
535	535	private equity company may not include a provision that prohibits:
536	536	(1) a veterinarian from competing with the provider if
537	537	the veterinarian leaves the provider's practice; or
538	538	(2) a veterinarian from disparaging, opining, or
539	539	commenting on the provider with regard to any issues involving:
540	540	(A) quality of care;
541	541	(B) utilization of care;
542	542	(C) ethical or professional standards or
543	543	guidelines; or
544	544	(D) revenue-increasing strategies employed by
545	545	the company.
546	546	(e) A contract provision described by Subsection (d) is void
547	547	and unenforceable as against public policy.
548	548	Sec. 15A.0102. INVESTIGATIVE AND ENFORCEMENT AUTHORITY.
549	549	(a) The attorney general or, subject to Subsection (f), the
550	550	appropriate district or county attorney may:
551	551	(1) investigate any activity or contemplated activity
552	552	that violates or threatens to violate any of the prohibitions in
553	553	this subchapter;
554	554	(2) bring an action to recover a civil penalty imposed
555	555	under or other remedy authorized by Section 15A.0104 or 15A.0105;
556	556	or
557	557	(3) bring an action requesting a court order under
558	558	Section 15A.0103.
559	559	(b) The appropriate local prosecuting attorney may
560	560	prosecute an offense under Section 15A.0106, 15A.0107, or 15A.0108.
561	561	(c) The attorney general or a district or county attorney
562	562	may recover fees, expenses, and costs incurred in bringing an
563	563	action under this subchapter, including court costs, reasonable
564	564	attorney's fees, witness fees, and deposition fees.
565	565	(d) Venue for an action brought under this subchapter shall
566	566	be in a district court of Travis County or in the district court of
567	567	the county in which any part of the alleged violation of any of
568	568	Section 15A.0101 occurred, is occurring, or is about to occur.
569	569	Venue for prosecution of an offense under Section 15A.0106,
570	570	15A.0107, or 15A.0108, is in any county in which the violation is
571	571	alleged to have occurred or to be occurring.
572	572	(e) The attorney general or, subject to Subsection (f), a
573	573	district or county attorney may bring an action to recover a civil
574	574	penalty under this subchapter independently or together with an
575	575	action to obtain injunctive relief. The district court issuing
576	576	injunctive relief retains jurisdiction in an action brought to
577	577	recover a civil penalty under this subchapter. An action filed
578	578	under Section 15A.0104 or 15A.0105 may not be transferred to
579	579	another county except on the order of the court.
580	580	(f) A district or county attorney, with prior written notice
581	581	to the attorney general, has the authority to bring an action under
582	582	this subchapter, provided that not later than the fifth day after
583	583	the date the attorney general receives the notice the attorney
584	584	general responds that the attorney general does not intend to act
585	585	with respect to that matter. On receipt of notice of a related
586	586	active criminal investigation or prosecution, the attorney general
587	587	shall coordinate and cooperate with the district or county attorney
588	588	engaged in the investigation or prosecution to ensure that the
589	589	filing of an action under this subchapter does not interfere with an
590	590	ongoing criminal investigation or prosecution.
591	591	(g) A district or county attorney shall bring an action
592	592	under this subchapter in the name of the state.
593	593	(h) A civil penalty collected under this subchapter by the
594	594	district or county attorney shall be deposited to the credit of the
595	595	general fund of the county in which the attorney brought action.
596	596	(i) The attorney general may retain a reasonable portion of
597	597	a civil penalty recovered under this subchapter, not to exceed
598	598	amounts specified in the General Appropriations Act, for the
599	599	enforcement of this subchapter.
600	600	Sec. 15A.0103. INVESTIGATION. (a) The attorney general or
601	601	a district or county attorney may conduct an investigation if the
602	602	attorney general or district or county attorney has reason to
603	603	believe that:
604	604	(1) a veterinary services provider or private equity
605	605	company possesses information, custody, or control of documents or
606	606	other evidence relevant to an investigation of any activity or
607	607	contemplated activity that violates or threatens to violate Section
608	608	15A.0101;
609	609	(2) a veterinary services provider or private equity
610	610	company is engaging, has engaged, or is about to engage in an act or
611	611	practice that violates Section 15A.0101; or
612	612	(3) it is in the public interest to conduct an inquiry
613	613	to ascertain whether a veterinary services provider or private
614	614	equity company is engaging, has engaged, or is about to engage in an
615	615	act or practice that violates Section 15A.0101.
616	616	(b) During an investigation under this section, the
617	617	attorney general or a district or county attorney, as applicable,
618	618	may:
619	619	(1) require the veterinary services provider or
620	620	private equity company to file a written statement under oath or
621	621	affirmation detailing all facts and circumstances concerning the
622	622	alleged violation of Section 15A.0101 and any other necessary
623	623	information;
624	624	(2) examine under oath any person connected to an
625	625	activity or contemplated activity that may violate Section
626	626	15A.0101; and
627	627	(3) issue a civil investigative demand requiring the
628	628	veterinary services provider or private equity company to produce
629	629	documents, permit inspection and copying of the document, answer in
630	630	writing written interrogatories, or give oral testimony.
631	631	(c) Except as provided by this section, the procedures
632	632	established for the issuance of a civil investigative demand under
633	633	Section 17.61 apply to the same extent and manner to the issuance of
634	634	a civil investigative demand under this section.
635	635	(d) The attorney general or a district or county attorney,
636	636	as applicable, may use information obtained in response to a civil
637	637	investigative demand, documents obtained, or product of discovery
638	638	or other record derived or created from the information as
639	639	necessary to enforce this subchapter, including by presenting the
640	640	information to a court.
641	641	(e) The attorney general or a district or county attorney
642	642	shall bear the expense of copying documents for purposes of this
643	643	section. The attorney general or a district or county attorney
644	644	shall prescribe reasonable terms allowing the veterinary services
645	645	provider or private equity company to substitute copies for
646	646	originals of requested documents if the originals are made
647	647	available for inspection. The attorney general or a district or
648	648	county attorney may obtain or review information in an electronic
649	649	format.
650	650	(f) A veterinary services provider or private equity
651	651	company served with a civil investigative demand under this section
652	652	shall comply with the terms of the demand unless a court orders
653	653	otherwise. A district or county attorney who executes and serves a
654	654	civil investigative demand may file a petition similar to a
655	655	petition described by Section 17.61(g) in the district court of the
656	656	county in which any part of the alleged violation of Section
657	657	15A.0101 occurred, is occurring, or is about to occur.
658	658	(g) Subject to Section 15A.0109, the attorney general or a
659	659	district or county attorney may seek a court order to compel
660	660	compliance with Subsection (b) within a period stated by court
661	661	order.
662	662	Sec. 15A.0104. INJUNCTIVE RELIEF. (a) The attorney
663	663	general or a district or county attorney may bring an action against
664	664	a veterinary services provider or private equity company to
665	665	restrain or enjoin temporarily or permanently any activity or
666	666	contemplated activity of the provider or company that the attorney
667	667	general or district or county attorney has reason to believe
668	668	violates or threatens to violate Section 15A.0101.
669	669	(b) The court may issue a temporary restraining order or a
670	670	temporary or permanent injunction. The injunctive relief shall be
671	671	issued without bond.
672	672	(c) This section may not be construed to require the
673	673	attorney general or a district or county attorney to notify a
674	674	veterinary services provider or private equity company that court
675	675	action is or may be under consideration. Except as otherwise
676	676	provided by this subsection, the attorney general or district or
677	677	county attorney shall, not later than the seventh day before
678	678	instituting a court action, contact the provider or company to
679	679	inform the provider or company in general of an alleged violation
680	680	under Section 15A.0101. Cessation of an alleged violation after
681	681	the prior contact may not render the court action moot under any
682	682	circumstances, and the injunctive relief shall lie even if the
683	683	provider or company has ceased the act or practice after prior
684	684	contact. Prior contact is not required if, in the opinion of the
685	685	attorney general or district or county attorney, there is good
686	686	cause to believe that:
687	687	(1) the provider or company would:
688	688	(A) evade service of process if prior contact
689	689	were made; or
690	690	(B) destroy relevant records if prior contact
691	691	were made; or
692	692	(2) an emergency exists and immediate and irreparable
693	693	injury, loss, or damage would occur as a result of a delay in
694	694	obtaining a temporary restraining order.
695	695	(d) A veterinary services provider or private equity
696	696	company that violates an injunction issued under this section shall
697	697	forfeit and pay a civil penalty of not more than $10,000 per
698	698	violation, not to exceed $50,000.
699	699	Sec. 15A.0105. CIVIL PENALTIES; ADDITIONAL ENFORCEMENT
700	700	ACTIONS. (a) The attorney general or an appropriate district or
701	701	county attorney may bring an action to recover a civil penalty
702	702	against a veterinary services provider or private equity company
703	703	that the attorney general or district or county attorney believes
704	704	has violated Section 15A.0101.
705	705	(b) A civil penalty imposed under this section for a
706	706	violation of Section 15A.0101(a) or (b) may not exceed:
707	707	(1) for an individual person, $300,000; or
708	708	(2) for a private equity company:
709	709	(A) $3 million, if the lesser of the company's
710	710	assets or market capitalization is less than $100 million;
711	711	(B) $20 million, if the lesser of the company's
712	712	assets or market capitalization is at least $100 million but less
713	713	than $500 million; or
714	714	(C) $30 million, if the lesser of the company's
715	715	assets or market capitalization is $500 million or more.
716	716	(c) A civil penalty imposed under this section for a
717	717	violation of Section 15A.0101(c) or (d) may be in an amount not to
718	718	exceed $7,500 for each violation. Each day a violation continues is
719	719	a separate violation for purposes of imposing the civil penalty
720	720	under this subsection.
721	721	(d) The amount of a civil penalty under Subsection (c) shall
722	722	be based on:
723	723	(1) the seriousness of the violation, including the
724	724	nature, circumstances, extent, and gravity of the violation;
725	725	(2) the history of previous violations;
726	726	(3) the amount necessary to deter a future violation;
727	727	(4) the economic effect of a penalty on the veterinary
728	728	services provider or private equity company on which the penalty
729	729	will be imposed;
730	730	(5) knowledge that the act constituted a violation of
731	731	this subchapter; and
732	732	(6) efforts to correct the violation.
733	733	(e) Notwithstanding Subsection (c), if the trier of fact
734	734	finds that a contract, agreement, or arrangement prohibited under
735	735	Section 15A.0101(c) or (d) may have the effect of substantially
736	736	lessening competition in a geographic market, the penalties and
737	737	remedies prescribed by Subsections (b) and (f) apply instead of the
738	738	penalty prescribed by Subsection (c).
739	739	(f) On finding a violation of Section 15A.0101(a) or (b),
740	740	the court shall:
741	741	(1) order the divestiture or other disposition of any
742	742	stock, share capital, assets, or interest acquired in violation of
743	743	Section 15A.0101(a) or (b), as applicable; and
744	744	(2) prescribe a reasonable time, manner, and degree of
745	745	the divestiture or other disposition after the court determines
746	746	that divestiture is necessary:
747	747	(A) to avoid the creation or continuation of a
748	748	monopoly or to avoid a likely substantial lessening of competition
749	749	that results from the violation; or
750	750	(B) to restore competition for veterinary
751	751	services in a geographic market that has been eliminated by the
752	752	violation.
753	753	(g) In addition to the civil penalties provided under this
754	754	section, the court may issue appropriate orders and judgments,
755	755	including:
756	756	(1) ordering the suspension or revocation of a
757	757	license, permit, or approval previously granted to a defendant by
758	758	any state agency; or
759	759	(2) imposing reasonable restrictions on the future
760	760	activities or investments of a defendant, including prohibiting a
761	761	defendant from engaging in the same type of endeavor as the
762	762	enterprise in which the defendant was engaged in conduct violating
763	763	Section 15A.0101.
764	764	Sec. 15A.0106. CERTAIN PROHIBITED TRANSACTIONS AND
765	765	ACTIVITIES: CRIMINAL OFFENSE. (a) A veterinary services provider
766	766	or private equity company commits an offense if the provider or
767	767	company violates Section 15A.0101(a) or (b).
768	768	(b) An offense under this section is a Class A misdemeanor
769	769	punishable by:
770	770	(1) a fine not to exceed $5,000;
771	771	(2) confinement in jail for a term not to exceed three
772	772	years; or
773	773	(3) both such fine and confinement.
774	774	Sec. 15A.0107. INTERFERENCE WITH INVESTIGATION: CRIMINAL
775	775	OFFENSE. (a) A veterinary services provider or private equity
776	776	company commits an offense if, after receiving actual notice that
777	777	the attorney general or a district or county attorney has initiated
778	778	or plans to initiate an investigation under this subchapter, the
779	779	provider or company intentionally conceals, alters, destroys, or
780	780	falsifies a document or record that is relevant or material to the
781	781	investigation.
782	782	(b) A veterinary services provider or private equity
783	783	company commits an offense if, after receiving a civil
784	784	investigative demand issued under Section 15A.0103, the provider or
785	785	company intentionally falsifies or withholds relevant material
786	786	that is not privileged.
787	787	(c) An offense under this section is a Class A misdemeanor.
788	788	Sec. 15A.0108. DELIBERATE NONCOMPLIANCE: CRIMINAL OFFENSE.
789	789	(a) A veterinary services provider or private equity company
790	790	commits an offense if the provider or company, with intent to wholly
791	791	or partly avoid, evade, or prevent compliance with Section
792	792	15A.0103, knowingly removes from any place, conceals, withholds,
793	793	destroys, mutilates, alters, or by any other means falsifies any
794	794	document or record that is relevant or material to an investigation
795	795	or otherwise provides inaccurate information.
796	796	(b) An offense under this section is a Class A misdemeanor
797	797	punishable by:
798	798	(1) a fine not to exceed $5,000;
799	799	(2) confinement in jail for a term not to exceed one
800	800	year; or
801	801	(3) both such fine and confinement.
802	802	Sec. 15A.0109. SCOPE OF JURISDICTION; APPEAL. (a) A
803	803	district court in which an action is filed in accordance with this
804	804	subchapter may hear and determine the matter presented and enter
805	805	any order required to implement this chapter. A final order of the
806	806	court is subject to appeal.
807	807	(b) The failure of a party to an action filed under this
808	808	subchapter to comply with a final order of the court is punishable
809	809	by contempt.
810	810	SECTION 2. The changes in law made by this Act apply to
811	811	conduct occurring on or after the effective date of this Act.
812	812	Conduct occurring before that date is governed by the law in effect
813	813	on the date the conduct occurred, and the former law is continued in
814	814	effect for that purpose.
815	815	SECTION 3. This Act takes effect September 1, 2025.