Corporate Crimes Against Health Care Act
- Bill Number
- H.R. 7537
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Health
- Status
- Introduced
- Latest Action
- 2026-02-12: Referred to the Committee on Ways and Means, and in addition to the Committees on the Judiciary, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Last Updated
- 2026-03-09T14:57:52Z
AI-Generated Summary
Purpose of the Legislation
The Corporate Crimes Against Health Care Act (H.R. 7537) aims to curb exploitative financial practices by private equity firms and related entities in the health care sector. It targets actions that prioritize profits over patient safety and care quality, such as loading companies with debt or extracting excessive fees, which can lead to facility closures, delayed payments, or patient harm. The goal is to hold accountable those who profit from such practices through penalties, clawbacks (recovering ill-gotten gains), and increased transparency.
Key Provisions
- Unjust Enrichment Clawback and Penalties (Sections 671-674 of 18 U.S.C.):
- Prohibits "covered parties" (e.g., private equity executives, directors, or funds) from retaining "covered compensation" (e.g., salaries, bonuses, fees, or profits from asset sales) obtained through unjust enrichment if a "triggering event" occurs at a "target firm" (a health care company acquired by private equity).
- Triggering events include delayed salary payments to over 25% of staff for more than 90 days, facility closure, rent or loan defaults over 90 days, or bankruptcy.
- Unjust enrichment is established if compensation stems from practices like dividend recapitalizations (borrowing against company assets to pay dividends), sale-leasebacks (selling property and leasing it back at high rates), excessive fees, or when the company lacks sufficient earnings to cover interest (over 100% interest coverage ratio).
- Allows the U.S. Attorney General or state attorneys general to recover compensation from the 10 years before or after the event; provides an affirmative defense if the party proves they couldn't prevent the event.
- Criminal penalty: 1-6 years imprisonment for violations.
- Civil penalty: Up to 5 times the clawed-back amount, deposited into the U.S. Treasury.
- Recovered funds go to a special account to cover employee shortfalls (e.g., salaries, pensions, benefits) or support community health needs; prioritizes pensions in bankruptcy cases.
- Prohibition on Federal Health Care Payments Involving REITs (Amendment to Social Security Act §1128(a)):
- Bars Medicare, Medicaid, and other federal health programs from paying individuals or entities that sell assets to or pledge them as loan collateral to a real estate investment trust (REIT, a company that owns income-producing real estate) after enactment.
- Exception for pre-existing agreements.
- Repeal of REIT Tax Rules for Health Care Property (Amendments to Internal Revenue Code §856):
- Removes special tax benefits for REIT subsidiaries holding "qualified health care property" (e.g., hospitals or nursing homes), treating them like other properties to limit tax advantages for health care real estate deals.
- Elimination of REIT Dividends from Business Income Deduction (Amendment to Internal Revenue Code §199A):
- Excludes dividends from REITs from the 20% qualified business income deduction available to pass-through businesses (e.g., partnerships), reducing tax incentives for REIT investments in health care.
- Mandatory Ownership and Financial Reporting (New Social Security Act §1150D):
- Requires "specified entities" (e.g., hospitals, health systems, physician practices owned by private equity or corporations, ambulatory centers, nursing homes) to report annually starting January 1, 2027, on ownership changes, mergers, debt levels, fees, leases, investor dividends, and control structures (including foreign entities).
- Reports must include details like debt-to-earnings ratios, real estate deals, and quality payment values; avoids duplicate reporting for subsidiaries.
- HHS Secretary must publish non-sensitive data (e.g., no Social Security numbers) on a public website starting January 1, 2028, and conduct random audits.
- Penalty for non-compliance or false reporting: Up to $5 million per violation.
- Study on Moral Injury in Health Care (Section 7):
- Directs the HHS Inspector General to study profit-driven practices (e.g., overbilling, staff cuts, insurance denials) within 3 years and report to Congress on their impacts on patient care, worker well-being, federal programs (e.g., Medicare, Medicaid, VA health), financial gains for investors, and adequacy of anti-fraud laws.
Significant Changes to Existing Law
- Introduces new federal crimes and civil remedies in criminal code (18 U.S.C. Chapter 31) specifically for private equity's role in health care failures, expanding beyond general fraud statutes.
- Amends exclusion rules under the Social Security Act to block federal payments for post-enactment REIT deals, closing a loophole that allowed health care providers to monetize assets via real estate firms.
- Alters tax code provisions (Internal Revenue Code §§856, 199A) to eliminate favorable treatments for REITs in health care, shifting how these entities are taxed and incentivized.
- Adds comprehensive ownership transparency requirements to the Social Security Act, previously limited to basic provider enrollment data, with public disclosure and audits not subject to paperwork reduction limits.
- No prior federal mandate existed for such detailed financial reporting on private equity in health care or a focused IG study on "moral injury" (ethical distress from profit-over-care practices).
Potential Impacts
- Government Agencies: Increases workload for the Department of Justice (enforcement of clawbacks and penalties), HHS (reporting oversight, audits, public data management), and state attorneys general (coordinated actions). Could generate revenue from penalties for Treasury and fund employee/community support. The IG study may inform future regulations or enforcement priorities.
- Citizens: Protects patients by deterring practices leading to closures or care disruptions; recovered funds could stabilize jobs and pensions for health workers, indirectly improving access to care. Enhanced transparency may empower consumers and watchdogs to scrutinize ownership. However, higher compliance costs could raise health care prices if passed on.
- International Relations: Minimal direct impact, though reporting on foreign-domiciled controlling entities (e.g., non-U.S. private funds) could affect cross-border investments in U.S. health care without broader diplomatic effects.
Main Stakeholders Affected
- Private Equity Firms and Investors: Face new liabilities, clawbacks, and reporting burdens; lose tax advantages for REIT deals, potentially reducing profitability in health care acquisitions.
- Health Care Providers: Hospitals, physician practices, nursing homes, and systems must comply with reporting and face payment restrictions if involved in REIT transactions; may benefit from stabilized finances via clawed-back funds.
- Patients and Communities: Gain protections from harmful practices; public data could highlight risks in local facilities.
- Health Care Workers: Protected through prioritized fund distributions for salaries, benefits, and pensions; study addresses well-being impacts from cost-cutting.
- Federal and State Governments: DOJ and HHS gain enforcement tools; states can sue on behalf of residents but are limited during federal actions.
- Insurers and REITs: Insurers face scrutiny in the IG study for denial practices; REITs lose tax perks and deal opportunities in health care real estate.
Notable Legal, Constitutional, or Political Implications
- Legal: Expands prosecutorial powers with retroactive clawbacks (up to 10 years prior), potentially leading to complex litigation over "unjust enrichment" proof and affirmative defenses. State-federal coordination includes notice requirements and intervention rights, reducing forum-shopping but raising preemption concerns. Penalties align with existing civil monetary penalty frameworks for consistency.
- Constitutional: Clawbacks of compensation could face challenges under the Takings Clause (Fifth Amendment) if viewed as seizing private property without just compensation, or due process claims if applied retroactively. Reporting mandates might invoke privacy rights, though exemptions for sensitive data mitigate this.
- Political: Signals a push against corporate consolidation in health care, appealing to advocates for affordability and equity but criticized by business groups as overreach that stifles investment. The focus on private equity and REITs could fuel debates on regulating "Wall Street" influence in essential services, influencing future bipartisan health reform efforts.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Goodlander, Maggie [D-NH-2]
Recent Actions
- 2026-02-12: Referred to the Committee on Ways and Means, and in addition to the Committees on the Judiciary, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-02-12: Referred to the Committee on Ways and Means, and in addition to the Committees on the Judiciary, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-02-12: Referred to the Committee on Ways and Means, and in addition to the Committees on the Judiciary, and Energy and Commerce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2026-02-12: Introduced in House
- 2026-02-12: Introduced in House
Bill Versions
- Corporate Crimes Against Health Care Act — issued 2026-02-12 — PDF (34 pages)