Pending California law undermines growth of Digital Health Companies and Patient Access to Virtual Care

Lexology June 20, 2024
McDermott Will & Emery

In California, pending Assembly Bill 3129 (the Act) could severely limit the ability of digital health companies to grow and operate in the state by prohibiting arrangements between physician, psychiatric, and dental practices and any entity that furnishes business or management services to providers that accept investments from private equity groups and hedge funds. The legislation’s current definition of private equity is arguably broad enough to capture venture capital funds, angel investors, family offices and even the innovation or investment arms of academic and nonprofit medical centers. The Act is part of the recent wave of scrutiny from state and federal regulators and lawmakers toward private equity’s involvement in the healthcare space.

This pending legislation continues to evolve, but as...

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