Hinojosa Veterinary Bill Curbs Private Equity, Then Allows Percentage Deals

The text as introduced · 2,488 words

89R3057 CMO-F

By: Hinojosa of Hidalgo
S.B. No. 613

A BILL TO BE ENTITLED

AN ACT

relating to the regulation of the practice of veterinary medicine;

increasing a civil penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Section 801.002, Occupations Code, is amended by

amending Subdivisions (1) and (1-a) and adding Subdivisions (1-b)

and (1-c) to read as follows:

(1) "Affiliate" means a legal entity that directly or

indirectly controls, is controlled by, or is under common control

with another legal entity or that shares common branding with

another legal entity by means of:

(A) the ownership of, or the power to vote, more

than 25 percent of the outstanding shares or participation shares

of any class of voting security of a legal entity;

(B) the power to control in any manner the

election of a majority of the directors of, or individuals

exercising similar functions with respect to, a legal entity; or

(C) the power to exercise in any manner a

controlling influence over the management or policies of a legal

entity, including by ownership of equity or securities or by

contract.

(1-a) "Board" means the State Board of Veterinary

Medical Examiners.

(1-b) "Business entity" means an entity recognized by

law through which business for profit is conducted, including:

(A) a private equity firm, service management

organization, 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, holding

company, receivership, firm, organization, estate, association, or

other entity or successor in interest recognized by law through

which business for profit is conducted; and

(B) a wholly owned subsidiary, majority-owned

subsidiary, parent company, or affiliate of an entity or

association described by Paragraph (A).

(1-c) [ (1-a) ] "Certified veterinary assistant" means

a person who has been certified as a certified veterinary assistant

by the Texas Veterinary Medical Association and is employed by a

licensed veterinarian.

SECTION 2. Section 801.352, Occupations Code, is amended by

amending Subsection (a) and adding Subsections (c-1) and (e) to

read as follows:

(a) The professional services of a veterinarian may not be

controlled or exploited , including by contract, by a person who:

(1) is not a veterinarian; and

(2) intervenes between the veterinarian and the

veterinarian's client.

(c-1) Unless each owner, partner, or shareholder, as

appropriate, of a business entity holds a license to practice

veterinary medicine issued under this chapter:

(1) for purposes of Subsection (a), the business

entity is considered a person who is not a veterinarian; and

(2) for purposes of Subsections (b) and (c), the

business entity is considered a person who does not hold a license

to practice veterinary medicine.

(e) For purposes of this section:

(1) conduct prohibited by Section 801.506(b) is

considered to be an intervention with respect to a veterinarian's

practice of veterinary medicine; and

(2) a contract or other arrangement between a

veterinarian and another person that provides the person with a

controlling influence over the veterinarian's practice of

veterinary medicine, including by authorizing any conduct

prohibited by Section 801.506(b), is considered to be submission to

interference with the practice of veterinary medicine.

SECTION 3. Subchapter H, Chapter 801, Occupations Code, is

amended by adding Section 801.3525 to read as follows:

Sec. 801.3525. CERTAIN CONTRACTS AND CONTRACT PROVISIONS

PROHIBITED. (a) A contract between a veterinarian and a private

equity firm, or a person owned or controlled in any manner or to any

extent by a private equity firm, that involves either the

furnishing of business or management services to the veterinarian

or the purchase of property related to the veterinarian's practice

may not include a provision that prohibits the veterinarian from:

(1) competing with another veterinarian in which the

private equity firm or person has a financial interest; or

(2) disparaging or commenting on any issues involving

the quality of care, utilization of care, ethical or professional

standards or guidelines, or revenue-increasing strategies employed

or influenced by the private equity firm or person.

(b) A contract provision described by Subsection (a) is

void.

(c) A veterinarian may not enter into a contract described

by Section 801.506(b)(15) with a private equity firm or a person

owned or controlled in any manner or to any extent by a private

equity firm. A contract described by this subsection is void.

SECTION 4. Section 801.354, Occupations Code, is amended to

read as follows:

Sec. 801.354. AUTHORIZED BUSINESS PRACTICES. (a) It is not

a violation of this chapter for a veterinarian, or a business entity

authorized under this chapter to render veterinary services, to , in

connection with providing veterinary services :

(1) lease space for the purpose of providing

veterinary services;

(2) pay for franchise fees [ or other services ] on a

percentage-of-receipts basis; [ or ]

(3) sell, transfer, or assign accounts receivable to a

lending institution;

(4) repair, renovate, or replace any facility,

information system, or medical equipment owned or leased by the

veterinarian or business entity;

(5) provide accounting, financial planning, payroll,

bookkeeping, budget, investment, billing and collection, tax

compliance, or similar financial services;

(6) provide clerical, reception, secretarial,

messaging, scheduling, boarding, cleaning, or similar services;

(7) provide advertising, marketing, or public

relations services in compliance with rules adopted by the board;

(8) provide contract negotiation, drafting, or

similar legal services;

(9) assist in recruiting, training, including

continuing education, or legal and logistical peer review services;

or

(10) provide insurance, purchasing, or claims

services .

(b) The payment or receipt of consideration for services

described by Subsection (a) that is based on a percentage of gross

revenue, or a similar type of contract, is not a violation of this

chapter if the consideration is commensurate with:

(1) the value of the services provided; or

(2) the fair rental value of any space leased or

provided.

SECTION 5. Section 801.402, Occupations Code, is amended to

read as follows:

Sec. 801.402. GENERAL GROUNDS FOR LICENSE DENIAL OR

DISCIPLINARY ACTION. A person is subject to denial of a license or

to disciplinary action under Section 801.401 if the person:

(1) presents to the board dishonest or fraudulent

evidence of the person's qualifications;

(2) commits fraud or deception in the examination

process or to obtain a license;

(3) is chronically or habitually intoxicated,

chemically dependent, or addicted to drugs;

(4) engages in dishonest or illegal practices in, or

connected with, the practice of veterinary medicine or the practice

of equine dentistry;

(5) is convicted of a felony under the laws of this

state, another state, or the United States;

(6) engages in practices or conduct that violates this

chapter, a rule adopted by the board, or the board's rules of

professional conduct;

(7) permits another to use the person's license to

practice veterinary medicine or to practice equine dentistry in

this state;

(8) fraudulently issues a health certificate,

vaccination certificate, test chart, or other form used in the

practice of veterinary medicine or the practice of equine dentistry

that relates to the presence or absence of animal disease;

(9) issues a false certificate relating to the sale

for human consumption of inedible animal products;

(10) commits fraud in connection with the application

or reporting of a test of animal disease;

(11) pays or receives a kickback, rebate, bonus, or

other remuneration for treating an animal or for referring a client

to another provider of veterinary or equine dental services or

goods;

(12) performs or prescribes unnecessary or

unauthorized treatment;

(13) orders a prescription drug or controlled

substance for the treatment of an animal without first establishing

a veterinarian-client-patient relationship;

(14) refuses to admit a board representative to

inspect the person's client and patient records and business

premises during regular business hours;

(15) fails to keep the person's equipment and business

premises in a sanitary condition;

(16) commits gross malpractice or a pattern of acts

that indicate consistent malpractice, negligence, or incompetence

in the practice of veterinary medicine or the practice of equine

dentistry;

(17) is subject to disciplinary action in another

jurisdiction, including the suspension, probation, or revocation

of a license to practice veterinary medicine or to practice equine

dentistry issued by another jurisdiction;

(18) is convicted for an offense under Section 42.09,

42.091, or 42.092, Penal Code;

(19) represents the person as a veterinarian without a

license issued under this chapter;

(20) practices veterinary medicine or assists in the

practice of veterinary medicine without a license issued under this

chapter , including by directly or indirectly aiding or abetting an

unlicensed person in connection with the practice of veterinary

medicine without the appropriate license ; or

(21) violates Section 801.353 or a rule adopted by the

board related to confidentiality.

SECTION 6. Section 801.502, Occupations Code, is amended by

adding Subsections (c) and (d) to read as follows:

(c) Violation of an injunction issued under this section may

be punished as contempt. Instead of the fine authorized by Section

21.002(b), Government Code, the punishment for contempt under this

section is a fine of not more than $1,000 for each day the violation

of the injunction continues.

(d) A district or county attorney who prevails in an action

brought under this section may recover reasonable attorney's fees

and court costs.

SECTION 7. Section 801.503, Occupations Code, is amended by

amending Subsections (a) and (b) and adding Subsections (c) and (d)

to read as follows:

(a) A person not licensed under this chapter, including a

corporation, organization, business trust, estate, trust,

partnership, association, or other legal entity, who violates this

chapter or a rule adopted by the board under this chapter is subject

to a civil penalty of $5,000 [ $1,000 ] for each day of violation.

(b) The attorney general or a district or county attorney

may bring an action to recover a civil penalty authorized by this

section. At the request of the board, the attorney general shall

bring the [ an ] action [ to recover a civil penalty authorized by this

section ].

(c) The venue provisions of Section 801.502(b) apply to an

action brought against a person subject to the civil penalty under

this section.

(d) A district or county attorney who prevails in an action

brought under this section may recover reasonable attorney's fees

and court costs.

SECTION 8. Section 801.504(a), Occupations Code, is amended

to read as follows:

(a) A person, including an entity, commits an offense if the

person violates this chapter or a rule adopted by the board under

this chapter .

SECTION 9. Subchapter K, Chapter 801, Occupations Code, is

amended by adding Section 801.5045 to read as follows:

Sec. 801.5045. DUTY TO PROVIDE EVIDENCE OF CRIMINAL

OFFENSE. Notwithstanding Section 801.207, the board shall provide

to the appropriate prosecuting attorney a copy of any evidence in

the board's possession of an offense under Section 801.504.

SECTION 10. Sections 801.506(a) and (b), Occupations Code,

are amended to read as follows:

(a) A business entity [ sole proprietorship, partnership, or

corporation ] may not engage in veterinary medicine unless each

[ the ] owner, [ each ] partner, [ or each ] shareholder, director, or

officer, as appropriate, holds a license to practice veterinary

medicine issued under this chapter.

(b) A business entity [ corporation, organization, business

trust, estate, trust, partnership, association, or other legal

entity ] not owned exclusively by one or more persons licensed to

practice veterinary medicine under this chapter may not :

(1) engage in veterinary medicine ;

(2) employ a veterinarian to practice veterinary

medicine;

(3) determine the compensation of a veterinarian for

the practice of veterinary medicine;

(4) determine the fees or other amounts to be charged

by a veterinarian for the veterinarian's practice of veterinary

medicine;

(5) determine the number of patients a veterinarian

may see in a specified time or the number of hours a veterinarian

may work;

(6) determine the amount of time a veterinarian may

spend with a patient;

(7) own a drug, biologic, anesthetic, apparatus, or

other therapeutic or diagnostic substance or technique used in the

practice of veterinary medicine, unless owned in compliance with

applicable state or federal law;

(8) own or otherwise determine the content of patient

and business records of a veterinarian in violation of Section

801.355(f);

(9) mandate compliance with specific professional

standards, protocols, or practice guidelines relating to the

practice of veterinary medicine;

(10) place limitations or conditions on

communications the subject of which are primarily clinical between

a veterinarian and the veterinarian's clients;

(11) require a veterinarian to make a referral to

another provider of veterinary or equine dental services or goods

in violation of Section 801.402;

(12) reduce or delay any financial benefit owed to or

institute any adverse change to the working conditions of a

veterinarian in response to the veterinarian reporting a violation

of a law regulating the practice of veterinary medicine;

(13) require a veterinarian to violate Section 801.353

or a rule adopted by the board related to the confidential

relationship between the veterinarian and the veterinarian's

client;

(14) determine the coding and billing procedures for

the veterinarian's practice of veterinary medicine;

(15) enter into a contract with a veterinarian to

provide business or management services in exchange for a

percentage of revenue received directly or indirectly from:

(A) the performance of a veterinary service by

the veterinarian;

(B) the collection of the veterinarian's

accounts receivable; or

(C) fees or other amounts to be charged by the

veterinarian or passed through by the veterinarian directly or

indirectly to a client or insurer covering veterinary services;

(16) set conditions under which a veterinarian is

legally obligated to enter into a contract with a vendor or insurer;

(17) set conditions under which a veterinarian is

legally obligated to enter into a contract with another

veterinarian for the delivery of care; or

(18) exercise control over, exploit, be delegated the

power to approve, intervene in, or interfere with, a

veterinarian's:

(A) selection or use of a type or quality of

medical supplies, medical equipment, or pharmaceuticals in the

practice of veterinary medicine;

(B) professional medical judgment regarding the

health of an animal patient; or

(C) practice of veterinary medicine .

SECTION 11. Chapter 801, Occupations Code, as amended by

this Act, applies only to a contract entered into or renewed on or

after the effective date of this Act. A contract entered into or

renewed before the effective date of this Act is governed by the law

in effect on the date the contract was entered into or renewed, and

the former law is continued in effect for that purpose.

SECTION 12. Chapter 801, Occupations Code, as amended by

this Act, applies only to conduct that occurs on or after the

effective date of this Act. Conduct that occurs before the

effective date of this Act 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 13. This Act takes effect September 1, 2025.