Proposed Transaction Notice Requirements May Impact Medical Groups In Rhode Island

As part of a broader initiative aimed at providing "immediate relief and long-term solutions for Rhode Island's failing health care system," Rhode Island Attorney General (AG) Peter Neronha recently announced a series of healthcare-related proposals. Among these initiatives was a proposed regulation to require premerger notification of certain material corporate transactions involving "medical-practice groups" (i.e., medical groups in any corporate form), including transactions with private equity firms.

Premerger Notification

Pursuant to the proposed rule, medical-practice groups would be required to notify the AG of certain "material changes" at least 60 days prior to closing. A material change is deemed to occur under specific conditions, including when:

1. a medical-practice group merges, consolidates, is acquired or otherwise combines with another medical-practice group, and the transaction results in a group of eight or more physicians, physician assistants and/or nurse practitioners
2. a medical-practice group merges, consolidates, is acquired or otherwise combines with a hospital or hospital system
3. there is a formation of a partnership, joint venture, accountable care organization, parent corporation, management services organization or other organization created for administering contracts with health insurance carriers or third-party administrators or current or future contracting on behalf of one or more medical-practice groups, or
4. there is a transaction involving a significant equity investor that results in a change of ownership or control of a medical-practice group

AG Disclosure Form

The parties to a material change transaction can comply with the rule by submitting a form provided by the AG that discloses the following information:

1. the parties to the transaction and their contact information
2. a description of the nature and purpose of the transaction
3. the services and locations where each party currently provides healthcare services
4. identification of any new locations or services contemplated as a result of the transaction
5. anticipated effective data for the transaction

Background

Additional documentation accompanying the proposed rulemaking supports its underlying rationale. Notably, the statement of need for the proposed rule stresses that the AG must be aware of non-hospital healthcare transactions in order to fully and effectively exercise its antitrust authority (Rhode Island's Hospital Conversions Act already requires AG approval prior to hospital conversions or consolidations).

Penalties

The penalty for failing to provide the required notice under the proposed rule is $200 per day (starting on the 59th day prior to a material change) and $100,000 if notice is not provided prior to closing. The AG may also pursue injunctive relief to pause the closing of any proposed transaction until the parties comply with the rule.

Next Steps

This proposed rule was open for public comment until July 23, 2025, following a public hearing on July 8, 2025. The AG's office has reported that it is in the process of reviewing the public comments and working on finalizing the regulation.

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