California Senate Passes Bill to Clamp Down on Private-Equity Health Care Deals​​​

The California state senate has passed legislation to hinder health care acquisitions by private-equity firms and hedge funds, as states seek new powers to slow the corporate consolidation of medicine, WSJ Pro Bankruptcy reported. The law, called Assembly Bill 3129, passed the senate by a vote of 49 to 14 just hours before the end of the state’s legislative session on Aug. 31. The lower chamber approved the bill in May. Now Gov. Gavin Newsom (D) has until the end of September to sign it into law. Newsom has not taken a stance on the proposal. Introduced in February by state Assemblymember Jim Wood and Attorney General Rob Bonta, the bill would require the state attorney general’s approval for any private-equity or hedge fund acquisition of a health care company that has $25 million or more in revenue, and would forbid financial investors from interfering in medical decisions. If it becomes law, the measure will be one of the nation’s strictest curbs on private-equity medical acquisitions, and it will give California one of the highest regulatory bars to health care investment, attorneys say. Health care investment in California is already subject to review by the Office of Health Care Affordability, established in 2022. The bill “adds a new layer of scrutiny” on top of an already complex process, and may ultimately reduce investment in California, said Paul Gomez, who co-chairs the behavioral health care practice at Polsinelli LLP in Los Angeles. It is also part of a nationwide trend of states seeking greater transparency and, in many cases, veto power over private-equity health care transactions. Many lawmakers are concerned that private-equity investment may be increasing medical costs, as several studies have concluded. Lawmakers are also concerned that the financial distress of health care companies that have or had the backing of private equity, such as bankrupt hospital operator Steward Health Care, can reduce the availability and quality of medical care. Read more.

The distressed health care industry will be the focus of the ABI Health Care Program, happening in Nashville, Tenn., October 8-9, 2024. To get more information and to register, click here. 
 

Subchapter V Experiences to Share? ABI Wants to Hear from You!

ABI is continuing its study of Subchapter V, and it needs your help! We are particularly interested in learning more about the real-world impact of Subchapter V. So our question is, do you have a story about a distressed business or creditor who has used or benefited from the subchapter? If so, could that case still happen under the lower debt cap for Subchapter V debtors? Any and all responses are welcome. Submit your story at https://abi.org/subvstories.
 

Seven Republican-Led States Sue to Block Biden’s Student Loan Forgiveness Plan​​​

Seven Republican-led states have sued the U.S. Department of Education to block the Biden administration from carrying out its sweeping new student loan forgiveness plan, CNBC.com reported. In the lawsuit, the states — Alabama, Arkansas, Florida, Georgia, Missouri, North Dakota and Ohio — say the department’s new effort to forgive student debt, like its previous attempts, which were blocked by the courts, is illegal. The states accuse the Biden administration of trying to “unlawfully ... mass cancel hundreds of billions of dollars of loans” without approval from Congress and allege that the Education Department already instructed its loan servicers to begin canceling the eligible loans as early as Sept. 3, which would violate timing restrictions around the rulemaking process. The Education Department is expected to publish the final rule on its debt relief sometime in October. The states say they “just uncovered documents” showing the department could act sooner, skirting federal regulations. The Biden administration began working on its updated student loan forgiveness plan after the Supreme Court blocked its first policy in June 2023. Read more.
 

CFPB Report Highlights Consumer Protection Issues in Medical and Rental Debt Collection​​​

The Consumer Financial Protection Bureau (CFPB) today issued its annual report on debt collection, which highlights aggressive and illegal practices in the collection of medical debt and rental debt. The report discusses how problems with real estate companies’ “revenue management software” can result in improperly inflated rental debt amounts. The report also focuses on debt collectors’ attempts to collect medical bills already satisfied by nonprofit hospitals’ financial assistance programs, as well as the fact that many medical bills from low-income consumers do not get addressed by financial assistance in the first place. In 2023, consumer complaints about medical debt in collections made up about 11% of all collections complaints received by the CFPB. The complaints submitted by consumers and the CFPB’s own research show that debt collectors (1) attempt to collect already paid medical bills or bills eligible for financial assistance, and (2) aggressively pursue patients for bills arising from medical payment products. Additionally, the CFPB received more than 1,700 rental debt complaints from August 2023 to the end of that year. Rental debt is estimated to be more than $9 billion, with over 4.5 million households behind on rent payments. The complaints submitted by consumers and the CFPB’s own research show that the infusion of consumer financial products and services into the rental market raises risks for renters, including improper debt collection due to illegal price-fixing and tacked-on rental fees, according to the CFPB. Click here to read the full report. Read more.
 

Weekly Jobless Claims Fall to Two-Month Low​​​

Weekly unemployment insurance claims fell to a two-month low ahead of Friday’s hotly anticipated jobs report, according to data released today, The Hill reported. Claims numbered 227,000 for the week ending Aug. 31, the Labor Department reported Thursday, generally in line with expectations of between 225,000 and 230,000. That’s the lowest level since early July. The largest jumps in initial claims for the week ending August 24 were in New York, Michigan, Georgia, North Dakota and Massachusetts, according to the Labor Department. Unemployment has been slowly rising from April of last year amid interest rate hikes by the Federal Reserve. The jobs report for August is due out tomorrow. Read more.

In related news, new data from ADP released today showed that the private sector added its fewest jobs in a month since January 2021, signaling a cooling labor market, YahooFinance.com reported. ADP's National Employment Report for August showed 99,000 jobs were added in the month, well below economists’ estimates for 145,000 and fewer than the 122,000 jobs added in July. The August data marked the fifth straight month payroll additions had slowed from the month prior. ADP chief economist Nela Richardson told Yahoo Finance on a call with reporters Thursday morning that the data shows a labor market that is “undoubtedly cooling.” But Richardson added, there are other factors to consider when assessing how weak the labor market truly is. Richardson said that when her team speaks with clients, it is still hearing that churn in the labor force — people leaving their job for another either by choice or not — remains “quite low.” Read more.
 

Analysis: The Crushing Financial Burden of Aging at Home​​​

Americans want to grow old in their own homes, but pursuing that dream has gotten harder and is putting huge financial and emotional strains on families, according to a Wall Street Journal analysis. In Nebraska, Christine Salhany spends about $240,000 a year for 24-hour in-home care for her husband, who has Alzheimer’s. In Illinois, Carolyn Brugioni’s dad exhausted his savings and took out a home-equity line of credit to pay for home health care. Traci Lamb closed her business to take care of her mom in Florida. And in California, Cheryl Orr delayed retirement to help pay for care and home modifications for her wife, who has dementia. The soaring costs of in-home care, medical advances that extend lives but require ongoing help, and the growing ranks of older baby boomers are creating new pressures. Spouses, adult children and siblings are putting their lives on hold to care for relatives, wrestling with sleep deprivation and constant worry. Families are draining savings to hire help, pay for medical care and modify homes. More than 11,000 people in the U.S. are turning 65 every day, and the vast majority — 77% of Americans age 50 and older according to an AARP survey — want to live as long as possible in their current home. At some point, many will need help. About one-fourth of those 65 and older will eventually require significant support and services for more than three years, according to the Center for Retirement Research at Boston College. (Subscription required.) Read more.
 

Due Tomorrow: International Matter of the Year Nominations!

ABI’s International Committee is accepting nominations for its Third Annual ABI International Matter of the Year Award. For criteria, eligibility and other information on the award, please click here.

All nominations must be received by tomorrow, Sept. 6.
 

Upcoming abiLIVE Webinars to Examine 2023 Asset Sale of the Year and Provide Insights on African Insolvency Regimes​​​

Two abiLIVE webinars at the end of September will feature expert panels looking at key features from the 2023 Asset Sale of the Year and facets of African insolvency regimes:

- Sept. 23: The recipients of ABI's 2023 Asset Sale of the Year award will discuss Borrego Community Health Foundation's threatened suspension by the California Medi-Cal program and the execution of a strategy that initially had led to court orders stopping the suspension, then later culminated in the sale of assets. Complimentary registration.

- Sept. 26: Discover firsthand insights into insolvency in Africa! In this webinar, the panelists will showcase their countries' approaches, followed by engaging discussions on the pivotal roles and rights of stakeholders (creditors, employees and shareholders). Complimentary registration. 
 

Access All Current ABI Titles Through ABI’s New Digital Book Subscription!​​​

One of the best collections of bankruptcy books is now available as an annual digital subscription! ABI’s bankruptcy library opens the door to a constantly evolving area of the law, and our books are continually being updated by top industry professionals. Auto-renewing annual subscriptions guarantee immediate access to this invaluable resource, which is comprised of fully searchable content that’s always available on any digital device. Convenient pricing plans for individual and institutional subscribers offer immediate and unlimited access to our entire digital library of books — more than 95 treatises! Plus, you get advanced access to new and revised books as soon as they are published — all included in your annual subscription. Learn more!

Have an Idea for a Topic for an ABI Conference Session? Submit Your Proposal via ABI’s “Call for Abstracts” Page!​​​

ABI has launched an online portal for professionals to submit proposals for educational sessions at future ABI conferences. Submitters can describe their proposed topic, outline the session’s focus and learning goals, suggest speakers, and provide contact information via the portal’s detailed form. The portal can be accessed here.

All submissions will be reviewed by an internal Education Committee, which will contact the submitter to ask questions as needed and to discuss the status of the proposal. Submissions will be reviewed on a rolling basis.

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