HF 2771

as introduced - 94th Legislature (2025 - 2026) Posted on 03/26/2025 12:37pm

A bill for an act
relating to health care facilities; regulating private equity company acquisitions
of nursing homes and assisted living facilities; requiring a study; appropriating
money; amending Minnesota Statutes 2024, sections 144A.01, subdivision 4;
144G.08, subdivision 15; proposing coding for new law in Minnesota Statutes,
chapter 145D.

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

Section 1.

Minnesota Statutes 2024, section 144A.01, subdivision 4, is amended to read:

Subd. 4.

Controlling person.

(a) "Controlling person" means an owner and the following
individuals and entities, if applicable:

(1) each officer of the organization, including the chief executive officer and the chief
financial officer;

(2) the nursing home administrator; deleted text begin and
deleted text end

(3) any managerial official deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) if no individual has at least a five percent ownership interest, every individual with
an ownership interest in a privately held corporation, limited liability company, or other
business entity, including a business entity that is publicly traded or nonpublicly traded,
that collects capital investments from individuals or entities.
new text end

(b) "Controlling person" also means any entity or natural person who has any direct or
indirect ownership interest in:

(1) any corporation, partnership or other business association which is a controlling
person;

(2) the land on which a nursing home is located;

(3) the structure in which a nursing home is located;

(4) any entity with at least a five percent mortgage, contract for deed, deed of trust, or
other security interest in the land or structure comprising a nursing home; or

(5) any lease or sublease of the land, structure, or facilities comprising a nursing home.

(c) "Controlling person" does not include:

(1) a bank, savings bank, trust company, savings association, credit union, industrial
loan and thrift company, investment banking firm, or insurance company unless the entity
directly or through a subsidiary operates a nursing home;

(2) government and government-sponsored entities such as the United States Department
of Housing and Urban Development, Ginnie Mae, Fannie Mae, Freddie Mac, and the
Minnesota Housing Finance Agency which provide loans, financing, and insurance products
for housing sites;

(3) an individual who is a state or federal official, a state or federal employee, or a
member or employee of the governing body of a political subdivision of the state or federal
government that operates one or more nursing homes, unless the individual is also an officer,
owner, or managerial official of the nursing home, receives any remuneration from a nursing
home, or who is a controlling person not otherwise excluded in this subdivision;

(4) a natural person who is a member of a tax-exempt organization under section 290.05,
subdivision 2, unless the individual is also a controlling person not otherwise excluded in
this subdivision; and

(5) a natural person who owns less than five percent of the outstanding common shares
of a corporation:

(i) whose securities are exempt by virtue of section 80A.45, clause (6); or

(ii) whose transactions are exempt by virtue of section 80A.46, clause (7).

Sec. 2.

Minnesota Statutes 2024, section 144G.08, subdivision 15, is amended to read:

Subd. 15.

Controlling individual.

(a) "Controlling individual" means an owner and the
following individuals and entities, if applicable:

(1) each officer of the organization, including the chief executive officer and chief
financial officer;

(2) each managerial official; deleted text begin and
deleted text end

(3) any entity with at least a five percent mortgage, deed of trust, or other security interest
in the facility deleted text begin . deleted text end new text begin ; and
new text end

new text begin (4) if no individual has at least a five percent ownership interest, every individual with
an ownership interest in a privately held corporation, limited liability company, or other
business entity, including a business entity that is publicly traded or nonpublicly traded,
that collects capital investments from individuals or entities.
new text end

new text begin (b) "Controlling individual" also means any entity or natural person who has any direct
or indirect ownership interest in:
new text end

new text begin (1) any corporation, partnership, or other business association such as a limited liability
company that is a controlling individual;
new text end

new text begin (2) the land on which an assisted living facility is located; or
new text end

new text begin (3) the structure in which an assisted living facility is located.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end Controlling individual does not include:

(1) a bank, savings bank, trust company, savings association, credit union, industrial
loan and thrift company, investment banking firm, or insurance company unless the entity
operates a program directly or through a subsidiary;

(2) government and government-sponsored entities such as the U.S. Department of
Housing and Urban Development, Ginnie Mae, Fannie Mae, Freddie Mac, and the Minnesota
Housing Finance Agency which provide loans, financing, and insurance products for housing
sites;

(3) an individual who is a state or federal official, a state or federal employee, or a
member or employee of the governing body of a political subdivision of the state or federal
government that operates one or more facilities, unless the individual is also an officer,
owner, or managerial official of the facility, receives remuneration from the facility, or
owns any of the beneficial interests not excluded in this subdivision;

(4) an individual who owns less than five percent of the outstanding common shares of
a corporation:

(i) whose securities are exempt under section 80A.45, clause (6); or

(ii) whose transactions are exempt under section 80A.46, clause (2);

(5) an individual who is a member of an organization exempt from taxation under section
290.05, unless the individual is also an officer, owner, or managerial official of the license
or owns any of the beneficial interests not excluded in this subdivision. This clause does
not exclude from the definition of controlling individual an organization that is exempt from
taxation; or

(6) an employee stock ownership plan trust, or a participant or board member of an
employee stock ownership plan, unless the participant or board member is a controlling
individual.

Sec. 3.

new text begin [145D.40] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Application. new text end

new text begin For purposes of sections 145D.40 to 145D.44, the following
terms have the meanings given.
new text end

new text begin Subd. 2. new text end

new text begin Assisted living facility. new text end

new text begin "Assisted living facility" has the meaning given in
section 144G.08, subdivision 7. Assisted living facility includes an assisted living facility
with dementia care as defined in section 144G.08, subdivision 8.
new text end

new text begin Subd. 3. new text end

new text begin Health care professional. new text end

new text begin "Health care professional" means an individual who
is licensed or registered by the state to provide health care services within the professional's
scope of practice and in accordance with state law.
new text end

new text begin Subd. 4. new text end

new text begin Nursing home. new text end

new text begin "Nursing home" means a facility licensed as a nursing home
under chapter 144A.
new text end

new text begin Subd. 5. new text end

new text begin Ownership or control. new text end

new text begin "Ownership or control" means the assumption of
governance or the acquisition of an ownership interest or direct or indirect control by a
private equity company over the operations of a nursing home or an assisted living facility
through any means, including but not limited to a purchase, lease, transfer, exchange, option,
conveyance, creation of a joint venture, or other manner of acquisition of assets, governance,
an ownership interest, or direct or indirect control of a nursing home or an assisted living
facility.
new text end

new text begin Subd. 6. new text end

new text begin Private equity company or company. new text end

new text begin "Private equity company" or "company"
means a publicly traded or nonpublicly traded entity that collects capital investments from
individuals or entities. Private equity company includes but is not limited to:
new text end

new text begin (1) a hedge fund;
new text end

new text begin (2) an individual or investment partnership that operates a private equity fund to acquire
ownership or control of business entities;
new text end

new text begin (3) a venture capital fund as defined in Code of Federal Regulations, title 17, section
275.203(l)-1;
new text end

new text begin (4) a sovereign wealth fund; and
new text end

new text begin (5) any affiliated company or person that directly or through an affiliate acts as a control
person.
new text end

new text begin Subd. 7. new text end

new text begin Real estate investment trust. new text end

new text begin "Real estate investment trust" has the meaning
given in United States Code, title 26, section 856.
new text end

Sec. 4.

new text begin [145D.41] NOTICE, INFORMATION, AND AFFIDAVIT REQUIRED.
new text end

new text begin Subdivision 1. new text end

new text begin Notice and information. new text end

new text begin (a) At least 120 days prior to the transfer of
ownership or control of a nursing home or assisted living facility to a private equity company,
the nursing home or assisted living facility must provide written notice to the attorney
general, the commissioner of health, and the commissioner of human services of its intent
to transfer ownership or control to a private equity company.
new text end

new text begin (b) Together with the notice, the private equity company seeking to acquire ownership
or control of the nursing home or assisted living facility must provide the following
information to the attorney general:
new text end

new text begin (1) the names of each individual with an interest in the company and the percentage of
interest each individual holds in the company;
new text end

new text begin (2) a complete and detailed description of the company's corporate structure;
new text end

new text begin (3) the names of each individual holding an interest in, and the percentage of interest
held in, any affiliate, subsidiary, or otherwise related entity that the company has a contract
to provide goods or services for the operation or maintenance of the nursing home or assisted
living facility or has a contract for goods and services to be provided to residents, including
any real estate investment trusts if permitted under section 145D.44, subdivision 1;
new text end

new text begin (4) for the previous five years, any filings required to be made to any federal or state
agency;
new text end

new text begin (5) the company's current balance sheet;
new text end

new text begin (6) all application materials required under section 144A.03 or 144G.12, as applicable;
new text end

new text begin (7) a description of the condition of the buildings the company seeks to acquire or
manage, identifying any cooling problems, electric medical devices present, recent exterior
additions and replacements, external building conditions, recent flush toilet breakdowns,
foreclosure status in the last 12 months, heat risk, heating problems, indoor air quality,
recent interior additions and replacements, and mold, as those terms are defined and described
in Appendix A of the American Housing Survey for the United States: 2023;
new text end

new text begin (8) an affidavit and evidence as required under subdivision 2; and
new text end

new text begin (9) other information required by the attorney general.
new text end

new text begin Subd. 2. new text end

new text begin Affidavit and evidence. new text end

new text begin In addition to the notice required under subdivision
1, a private equity company seeking to acquire ownership or control of a nursing home or
assisted living facility must submit to the attorney general an affidavit and evidence sufficient
to demonstrate that:
new text end

new text begin (1) the private equity company has the financial, managerial, and operational ability to
operate or manage the nursing home or assisted living facility consistent with the
requirements of (i) for a nursing home, sections 144A.01 to 144A.1888, chapter 256R, and
Minnesota Rules, chapter 4658; or (ii) for an assisted living facility, chapter 144G and
Minnesota Rules, chapter 4659;
new text end

new text begin (2) neither the private equity company nor any of its owners, managerial officials, or
managers have committed a crime listed in, or been found civilly liable for an offense listed
in section 144A.03, subdivision 1, clause (13), or 144G.12, subdivision 1, clause (13), as
applicable;
new text end

new text begin (3) in the preceding ten years, there have been no judgments and no filed, pending, or
completed public or private litigations, tax liens, written complaints, administrative actions,
or investigations by a government agency against the private equity company or any of its
owners, managerial officials, or managers;
new text end

new text begin (4) in the preceding ten years, the company has not defaulted in the payment of money
collected for others and has not discharged debts through bankruptcy proceedings;
new text end

new text begin (5) the private equity company will invest sufficient capital in the nursing home or
assisted living facility to maintain or improve the facility's infrastructure and staffing;
new text end

new text begin (6)(i) housing costs or costs for services in a nursing home or assisted living facility in
the United States over which the private equity company acquired ownership or control
have not increased by more than the increase in the Consumer Price Index for all urban
consumers published by the federal Bureau of Labor Statistics for the 12 months preceding
the month in which the increase became effective; or (ii) if housing costs or costs for services
in the nursing home or assisted living facility increased by more than the increase in the
Consumer Price Index as described in item (i), the increase was justified;
new text end

new text begin (7) within five years after acquiring ownership or control of any other nursing home or
assisted living facility in the United States, the private equity company did not sell or
otherwise transfer ownership or control of the nursing home or assisted living facility to
another person; and
new text end

new text begin (8) after acquiring ownership or control of another nursing home in the United States,
that nursing home, with respect to the Centers for Medicare and Medicaid Services rating
system:
new text end

new text begin (i) maintained or improved the nursing home's rating if upon acquisition of ownership
or control the rating was three or more stars; or
new text end

new text begin (ii) improved the nursing home's rating to at least three stars if upon acquisition of
ownership or control the rating was one or two stars.
new text end

Sec. 5.

new text begin [145D.42] ATTORNEY GENERAL APPROVAL.
new text end

new text begin Subdivision 1. new text end

new text begin Approval required. new text end

new text begin A private equity company is prohibited from
acquiring ownership or control of a nursing home or assisted living facility unless, after
consultation with the commissioners of health and human services, the attorney general
approves the acquisition. In order to approve the acquisition, the attorney general must find
that the transfer:
new text end

new text begin (1) will not result in an adverse impact on the health, safety, and well-being of the
residents of the nursing home or assisted living facility;
new text end

new text begin (2) will not lead to unaffordable increases in resident housing costs;
new text end

new text begin (3) will not lead to a reduction in the quality of services provided to the residents;
new text end

new text begin (4) will not lead to reduced maintenance or a deterioration in the operations and
infrastructure of the nursing home or assisted living facility;
new text end

new text begin (5) will not lead to staffing cuts unrelated to a reduction in the resident population or
reductions in staffing ratios; and
new text end

new text begin (6) for a nursing home:
new text end

new text begin (i) will lead to an improvement in the Centers for Medicare and Medicaid Services rating
if the nursing home's current rating is one or two stars; or
new text end

new text begin (ii) will not lead to a decline in the Centers for Medicare and Medicaid Services rating
if the nursing home's current rating is at least three stars.
new text end

new text begin Subd. 2. new text end

new text begin Timeline for approval or denial. new text end

new text begin (a) Except as provided in paragraph (b), if
the attorney general does not approve or deny the acquisition of ownership or control within
120 days after receiving the notice, information, affidavit, and evidence required under
section 145D.41, the attorney general is deemed to have approved the acquisition and the
acquisition may occur.
new text end

new text begin (b) If the attorney general determines that the notice, information, affidavit, or evidence
provided to the attorney general under section 145D.41 is incomplete or if the attorney
general requests additional information from the private equity company, the attorney general
may extend the consideration period for an additional 60 days and require the nursing home,
assisted living facility, or private equity firm to provide the missing information. If the
attorney general does not approve or deny the acquisition of ownership or control within
the extended time period, the attorney general is deemed to have approved the acquisition
and the acquisition may occur.
new text end

new text begin Subd. 3. new text end

new text begin Additional requirements. new text end

new text begin In addition to the requirements under this section
for approval of the acquisition, the attorney general may impose other requirements deemed
necessary to protect facility residents or protect the public interest.
new text end

new text begin Subd. 4. new text end

new text begin Conditional approval. new text end

new text begin (a) The attorney general may waive the notice period
in section 145D.41, subdivision 1, and issue an immediate, conditional approval of an
acquisition of ownership or control if:
new text end

new text begin (1) the health, safety, and well-being of the nursing home's or assisted living facility's
residents are in immediate jeopardy if the acquisition of ownership or control is not
immediately effectuated; or
new text end

new text begin (2) the nursing home or assisted living facility demonstrates a substantial likelihood that,
absent a waiver of the notice period, the facility will have to file for bankruptcy under
chapter 11 of the Bankruptcy Act, United States Code, title 11, sections 1101 et seq., or that
the facility is at imminent risk of liquidation under chapter 7 of the Bankruptcy Act, United
States Code, title 11, sections 701 et seq.
new text end

new text begin (b) Within 90 days after issuing a conditional approval under this subdivision, the attorney
general must determine whether to permanently approve the acquisition or withdraw approval
for the acquisition. If approval is withdrawn for acquisition of ownership or control of a
nursing home, the commissioner of health must appoint a receiver for the nursing home in
accordance with sections 144A.15 and 256R.52. If approval is withdrawn for acquisition
of ownership or control of an assisted living facility, the attorney general must appoint a
receiver for the assisted living facility and apply to the district court in the county in which
the assisted living facility is located for confirmation of the appointment. The district court
has exclusive jurisdiction in all matters related to the receivership. If a private receiver is
appointed, chapter 576 applies.
new text end

new text begin Subd. 5. new text end

new text begin Appeals. new text end

new text begin Within 30 days after receiving notice of the denial, a private equity
company that is denied approval to acquire ownership or control of a nursing home or
assisted living facility may file an appeal with the Office of Administrative Hearings. Upon
receiving an appeal under this subdivision, the Office of Administrative Hearings must, at
the discretion of the chief administrative law judge, conduct a hearing or refer the matter
for a contested case proceeding under chapter 14.
new text end

Sec. 6.

new text begin [145D.43] PROHIBITED PRACTICES.
new text end

new text begin A private equity company that acquires ownership or control of a nursing home or
assisted living facility is prohibited from:
new text end

new text begin (1) interfering with the professional judgment of a health care professional providing
care in the nursing home or assisted living facility or with a health care professional's
diagnosis or treatment of residents in the nursing home or assisted living facility;
new text end

new text begin (2) providing unequal treatment with regard to charges for housing or services based on
whether the resident pays for housing or services with private funds or through a public
program; or
new text end

new text begin (3) engaging in any act, practice, or course of business that would strip an asset from an
acquired nursing home or assisted living facility or that would otherwise undermine the
quality of, safety of, or access to care and services provided by the nursing home or assisted
living facility.
new text end

Sec. 7.

new text begin [145D.44] REQUIREMENTS FOLLOWING ACQUISITION OF
OWNERSHIP OR CONTROL.
new text end

new text begin Subdivision 1. new text end

new text begin Limitation on the use of real estate investment trust. new text end

new text begin An arrangement
between a real estate investment trust and a private equity company that acquired ownership
or control of a nursing home or assisted living facility that is related to the acquired nursing
home or assisted living facility must be approved by the attorney general before the
arrangement is entered into. In order for the arrangement to be approved, the private equity
company must demonstrate to the attorney general that:
new text end

new text begin (1) any increase in housing costs to residents does not exceed the average increase in
market rent for residential multifamily properties in the market area in which the nursing
home or assisted living facility is located; and
new text end

new text begin (2) the arrangement does not cause hardship to residents of the nursing home or assisted
living facility or impair the residents' ability to afford housing.
new text end

new text begin Subd. 2. new text end

new text begin Spending on direct care. new text end

new text begin A private equity company with ownership or control
of a nursing home or assisted living facility must spend at least 75 percent of the funds
received by the nursing home or assisted living facility from public programs and state
appropriations on the direct care of residents.
new text end

new text begin Subd. 3. new text end

new text begin Severance pay; employee layoffs. new text end

new text begin (a) A private equity company with ownership
or control of a nursing home or assisted living facility must offer severance pay of no less
than four weeks' salary for each year of employment at the nursing home or assisted living
facility to all nursing home or assisted living facility employees who are laid off.
new text end

new text begin (b) Paragraph (a) does not apply if the layoff is related to a reduction in the number of
residents at the nursing home or assisted living facility.
new text end

new text begin Subd. 4. new text end

new text begin Reports required. new text end

new text begin A private equity company with ownership or control of a
nursing home or assisted living facility must submit reports to the attorney general and the
commissioners of health and human services on:
new text end

new text begin (1) the private equity company's current financial status;
new text end

new text begin (2) impacts and outcomes of the private equity company's ownership or control on the
quality of resident care, resident safety, and the ability of residents to afford housing and
care;
new text end

new text begin (3) impacts of the private equity company's ownership or control on the number of staff
serving facility residents, the types of staff serving facility residents, and compensation paid
to staff serving facility residents;
new text end

new text begin (4) any filings the private equity company must make to any federal agency;
new text end

new text begin (5) the private equity company's annual balance sheet;
new text end

new text begin (6) the total dollar amount of all fees and expenses collected by the private equity
company and related parties, categorized by fee type and purpose;
new text end

new text begin (7) any management services agreements or sales and leaseback arrangements between
the private equity company and any affiliated or nonaffiliated companies, and an itemization
by category and amount of the fees paid under the agreement or arrangement;
new text end

new text begin (8) any services procured by the private equity company from any other entity owned
by or affiliated with the private equity company;
new text end

new text begin (9) all political spending by the private equity company, including contributions and
lobbying spending to members of or candidates for the Minnesota legislature and the United
States Congress with respect to health care issues;
new text end

new text begin (10) the number of nursing home or assisted living facility staff by position; information
on staff retention; changes, if any, in staff salaries by position; and staffing ratios; and
new text end

new text begin (11) the total number of nursing homes and assisted living facilities in the United States
owned or controlled by the private equity company and the location of each facility.
new text end

new text begin A report must be submitted 13 months after the private equity company acquires ownership
or control of a nursing home or assisted living facility and every 12 months thereafter while
the private equity company has ownership or control of the nursing home or assisted living
facility.
new text end

Sec. 8. new text begin ATTORNEY GENERAL INVESTIGATION.
new text end

new text begin (a) For purposes of this section, "private equity company" has the meaning given in
Minnesota Statutes, section 145D.40, subdivision 6.
new text end

new text begin (b) The attorney general must investigate the impacts on the state, nursing home residents,
and assisted living facility residents of the acquisition of ownership or control by private
equity companies of nursing homes and assisted living facilities. In the investigation, the
attorney general must:
new text end

new text begin (1) conduct interviews with nursing home residents, assisted living facility residents,
and families of these residents;
new text end

new text begin (2) identify the number of acquisitions that have occurred in the past ten years, the private
equity companies that acquired ownership or control of a nursing home or assisted living
facility during this time period, and the principals of each of these private equity companies;
and
new text end

new text begin (3) evaluate the impact of the acquisitions on:
new text end

new text begin (i) costs of housing and services at acquired nursing homes and assisted living facilities;
new text end

new text begin (ii) quality of care provided at acquired nursing homes and assisted living facilities;
new text end

new text begin (iii) staffing levels of acquired nursing homes and assisted living facilities, including
staff additions and staff layoffs, and any resulting changes to resident health, safety, and
well-being, and to the quality of care provided to residents;
new text end

new text begin (iv) maintenance, physical condition, resiliency, energy efficiency, and other indicators
of a sound building infrastructure of the properties acquired or leased by private equity
companies as part of their acquisitions of nursing homes and assisted living facilities;
new text end

new text begin (v) capital improvements made to acquired nursing homes and assisted living facilities;
new text end

new text begin (vi) the financial health of acquired nursing homes and assisted living facilities;
new text end

new text begin (vii) the percentage of revenue acquired nursing homes and assisted living facilities
spent on marketing and advertising; and
new text end

new text begin (viii) the percentage of revenue acquired nursing homes and assisted living facilities
spent on direct care.
new text end

new text begin (c) The attorney general must report the findings of this investigation to the chairs and
ranking minority members of the legislative committees with jurisdiction over health care
by February 15, 2026.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective the day following final enactment.
new text end

Sec. 9. new text begin APPROPRIATION; INVESTIGATION OF IMPACTS OF PRIVATE
EQUITY FIRM ACQUISITIONS OF NURSING HOMES AND ASSISTED LIVING
FACILITIES.
new text end

new text begin $....... in fiscal year 2026 is appropriated from the general fund to the attorney general
for an investigation into the impacts on residents and the state of private equity firm
acquisitions of nursing homes and assisted living facilities.
new text end