Overview
We represent buyers and sellers in M&A transactions in the highly-regulated and continuously evolving health care environment. We understand how the health care industry’s complex regulatory structure affects corporate and securities transactions. Our attorneys include deal lawyers who represent health care companies in all phases of merger, acquisition, divestiture and other business combination and change of control transactions. In addition, our attorneys are often selected as special regulatory counsel to assist purchasers with health care-specific due diligence and to represent the interests of purchasers and sellers in state and federal government hearings and proceedings required by the change of ownership of regulated companies.
Our representative transactions include health care providers and facilities, managed care companies, accident and health insurers, third party administrators (TPAs), pharmacy benefit management companies (PBMs), as well as other health care industry participants.
Our experience includes:
- Public and private offerings of securities
- Public finance and bond issues
- Directing due diligence efforts in complex transactions
- Preparing and negotiating acquisition and divestiture agreements and ancillary transaction documents
- Managing multi-state regulatory approvals
- Counseling clients on post-transaction integration planning
Our representative projects include:
- Representation of private equity funds and investment partnerships in acquiring various health care providers across the country.
- Representation of developer/operator of senior assisted-living facilities, including negotiation/closing of purchases of land/facilities.
- Representation of national physician practice management company in structuring, negotiating and closing acquisitions of large physician practices and negotiating closing and implementing strategic alliances.
- Representation of bond issuer to a hospital district for an approximately $69 million refinancing and new money bond issue for its hospitals and medical office buildings.
- Representation of real estate developer in several regions of the country in financing, developing and syndicating health care facilities and medical office buildings.
- Representation of company in the acquisition of home health care company in Texas and financings related thereto, including a senior term and revolving loan from a health care lender and a subordinated term loan from a mezzanine lender.
- Representation of purchaser in the acquisition of a managed care enterprise comprised of HMOs, life and health insurers, TPAs and management companies operating in multiple states and U.S. territories in a merger transaction.
- Representation of national dental products distributor in acquisition of a manufacturer and international distributor of dental products and negotiation of related licensing agreements.
- Representation of purchaser in the acquisition of a TPA’s disability business in a stock transaction.
- Representation of national PPO company in the acquisition of a regional PPO in a merger transaction.
- Representation of regional PBM in the acquisition of a national PBM in a merger transaction.
Private Equity
We have comprehensive experience in all aspects of the private equity business. We regularly advise private equity funds, institutional private equity groups, investors portfolio companies and the recipients of private equity funds.
Our representative experience includes:
- Representation of a private equity firm and its partners in obtaining change of ownership regulatory approvals in connection with their investment in a California Medicare HMO.
- Representation of numerous portfolio companies in equity raising transactions ranging from $3 million to $100 million.
- Representation of private equity group in connection with a financing for a hospital in Alabama, including construction of a 70-bed hospital.
- Representation of the sponsor in the formation of a mezzanine fund targeting aggregate commitments between $75 - $100 million.
- Representation of international private equity group in multiple add-on acquisitions to its master portfolio company.
- Representation of a pension fund in negotiation of various investments in private equity funds.
Tax
We represent 501(c)(3) entities, hospital service districts and governmental entities in analyzing, negotiating and resolving organizational, board composition, acquisition, reorganization and recapitalization issues that directly affect for-profit and not-for-profit tax status.
Our attorneys help establish for-profit subsidiaries of tax-exempt entities and address the issues involving unrelated business interests. We handle physician group acquisitions and leasing, contracting and joint venture arrangements between health care organizations. We manage tax controversies at the audit, administrative and court levels—including matters involving intermediate sanctions and revocation of tax-exempt status. Our counsel also includes the review of private inurement and private benefit matters.
Our representative experience includes:
- Formation and development of non-profit primary care clinics for underserved populations.
- Defense of nonprofit hospital in connection with charitable tax exemption controversies with state and local authorities.
- Defense of class actions and consumer fraud claims filed against nonprofit hospitals and systems by uninsured patients.
- Conduct due diligence reviews of tax-exempt hospitals to verify ongoing qualification for tax-exempt status and compliance with operational requirements.
- Analyze investments by and joint ventures with tax-exempt hospitals to ensure that income is not taxable as unrelated business taxable income.
- Preparation of applications for recognition of exempt status on behalf of non-profit primary care clinics and correspondence and negotiation with Internal Revenue Service throughout the application process.
Insolvency
Locke Lord’s health care team advises clients and creditors in the health care regulatory aspects of insolvency, Medicare and Medicaid overpayment issues and anti-assignment provisions. We offer counsel on the implications of creditor’s rights as they apply to the assets of a state and federally regulated health care provider.
Locke Lord’s health care team also advises clients and creditors in the acquisition of or purchase of assets from troubled financial entities on the verge of filing bankruptcy proceedings. Locke Lord’s health care team has assisted clients in filing the necessary motions and/or plans to acquire bankrupt health care entities and/or assets.
- Representation of a former owner/seller/second lienholder of a chain of nursing homes in bankruptcy.
- Representation of a large national bank as Indenture Trustee for bonds issued by a group of hospitals and clinics in bankruptcy.
- Representation of a hospital system regarding leasing to a new potentially bankrupt operator creating issues under lessor’s bonds.
- Representation of a Chapter 7 Bankruptcy Trustee for doctor-owned hospital and its affiliated entities in prosecuting litigation against the former officers, directors and general counsel of the hospital and its affiliated entities for failure of corporate governance, waste, breaches of fiduciary duty, negligence, deepening insolvency, and related theories of recovery.
Lending & Real Estate
Our attorneys have particular experience in the regulatory requirements involving real property owned or leased by health care organizations. In addition to handling all operational issues involving medical office buildings, hospitals, assisted living centers and similar facilities, we help real estate and health care industry clients comply with the regulatory hurdles unique to the health care industry, including zoning, permitting and environmental law and long-term care facility regulation.
Our representative experience includes:
- Representation of a national underwriter in the refinancing of a bond issue for a non-profit hospital, secured by revenues of the hospital and a mortgage on and security interest in the hospital’s property.
- Representation of a hospital authority in connection with $114 million secured floating rate taxable bond.
- Representation of lender hospital in connection with eight loans in the aggregate amount of $85 million to a borrower, which refinanced Seniors Housing Facilities composed of independent living/congregate care units, assisted living residences, Alzheimer’s units and skilled nursing units, in various counties in Pennsylvania.
- Representation of agent in connection with $75 million syndicated revolving credit facility for a home health care company, secured by personal property and subsidiary equity interests.
- Various representation of lenders in connection with loans to providers, medical technology companies and other companies.
- Representation of health care provider in connection with $25 million loan from an asset based lender, secured by all personal property, including health care receivables.
- Representation of mortgage company in connection with $46 million credit facility for the acquisition and refinancing of five senior housing facilities in several states.
- Representation of lender in connection with numerous hospital financings under Section 242 of the National Housing Act, aggregating approximately $600 million.
- Representation of real estate investment specialty fund on all tax and legal aspects of acquisition of hospital faculties and medical office buildings of major metropolitan non-profit general hospital out of bankruptcy and lease to physician-owned operating entity.
Strategic Ventures & Outsourcing
Our attorneys assist health industry clients in developing innovative business ventures, including alliances formed as a result of IT and business process outsourcing transactions. We draw from our health care industry and business experiences to counsel clients on the regulatory and other legal implications raised by these novel business relationships. We counsel our clients in the development of appropriate business structures suited to meet their objectives, contracts to memorialize their strategic relationships as well as standard operating contracts to commercialize the resulting new products, services or technologies. Our experience includes:
- Joint ventures
- Health care start-ups
- Private label and co-branding relationships
- Online and traditional sponsorship agreements
- Marketing alliances
- Distribution channels for health care and consumer products and services
- Business process and IT outsourcing
- Model operating contracts for new products and services
Our representative projects include:
- E-Prescribing Contract Development: Developed strategic relationships and standard operating contracts for use by start-up client developing e-prescribing technology, including pilot program agreements for use of this technology with physician groups.
- Products and Services Supporting Seniors: Developed a contractual model to offer to a health plan client’s enrollees on a fee-for-service basis supportive counseling and other resources to assist in caring for the enrollees’ elderly or homebound relatives; and developed a contractual model for health plan enrollees to access on-line discounts for over-the-counter health aids and products frequently used by seniors with chronic conditions.
- Disease Management Transition and Outsourcing: Developed a series of inter-related contracts to (i) transition disease management contracts, services and functions from a large health plan to an experienced disease management vendor and (ii) establish the business process outsourcing arrangement pursuant to which the disease management vendor would support the health plan’s disease management programs as prime contractor.
- Pharmacy Benefit Contracting Services Organization: Developed a group purchasing organization (GPO) structure that also provides managed care services to support the appropriate utilization of drugs and other health products for the GPO’s clients; and the standard operating contracts for use by this GPO with its customers, vendor-customers and other vendors (e.g., pharmaceutical manufacturers).
- Marketing Alliances: Developed a marketing alliance agreement for use by two regional health plan organizations which desired to cross-market the other’s products to purchasers seeking a broader choice of health plan options packaged at a single point of contact.