California Bill Requires AG Approval Without Regard To Geographic Or Constitutional Limits
Tuesday, July 12, 2022

According to Vergil, Jupiter granted imperium sine fine (rule without limit) to the yet to be birthed City of Rome .  Aeneid, Book 1, line 279.  As far as I know, no divinity has made a similar bequest upon the State of California.  Nonetheless, a bill now pending in the California legislature would seemingly grant such limitless authority to the California Attorney General with respect to health care related merger and acquisition transactions.  See California Bill Would Require Prior Attorney General Approval Of These "Material" M&A Agreements.

If enacted, AB 2080 would, among other things, require a medical group, hospital or hospital system, health facility (as specified),  health plan, health insurer, or pharmacy benefit manager (except as specified) to provide written notice to, and obtain written consent of, the Attorney General  before entering into an agreement or transaction to either (i) sell, transfer, lease, exchange, option, encumber, convey, or otherwise dispose of a material amount of its assets; or (ii) transfer control, responsibility, or governance of a material amount of its assets.  

Professor Stephen Bainbridge called to my attention that such a requirement could run afoul of the Commerce Clause of the U.S. Constitution.  In Edgar v. Mite, 457 U.S. 624 (1982), the U.S. Supreme Court struck down Illinois' Business Takeover Act because it purported to regulate directly and to interdict interstate commerce, including commerce wholly outside the state of California.  Being devoid of any in-state limitation, AB 280 could face a similar constitutional attack if enacted.

 

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