Private Equity Needs Attorney General Approval To Buy Vet Practices

The text as introduced · 6,541 words

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.