Corporate Crimes Against Health Care Act
- Bill Number
- S. 3829
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Health
- Status
- Introduced
- Latest Action
- 2026-02-11: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-03-09T14:57:44Z
AI-Generated Summary
Purpose
The Corporate Crimes Against Health Care Act aims to curb exploitative practices by private equity firms and related entities in the health care sector. It targets actions that prioritize profits over patient safety, such as financial maneuvers leading to facility closures, payment delays, or bankruptcies, by introducing penalties, clawbacks of ill-gotten gains, restrictions on real estate investment trusts (REITs), mandatory transparency reporting, and a study on profit-driven harms.
Key Provisions
- Unjust Enrichment Clawback and Penalties (Sec. 2):
- Prohibits "covered parties" (e.g., directors, officers, control persons, or private funds involved in acquiring health care companies) from retaining "covered compensation" (e.g., salaries, bonuses, fees, equity awards) obtained through unjust enrichment if their actions contribute to a "triggering event" (e.g., delaying salaries or rent for over 90 days, facility closure, loan default, or bankruptcy) that harms patients.
- Allows the U.S. Attorney General or state attorneys general to claw back such compensation from up to 10 years before or after the event.
- Imposes criminal penalties (1-6 years imprisonment) and civil penalties (up to 5 times the clawback amount), with clawed funds directed to employee benefits, pension shortfalls, or community health needs.
- Provides an affirmative defense if the covered party proves by clear and convincing evidence they could not have prevented the event.
- Ban on Federal Health Care Payments Involving REITs (Sec. 3):
- Bars individuals or entities from receiving payments from federal programs (e.g., Medicare, Medicaid) if they sell assets to or pledge them as loan collateral to a REIT after enactment, unless the pledge was agreed pre-enactment.
- Repeal of REIT Tax Rules for Health Care (Sec. 4):
- Eliminates special tax treatment for REIT subsidiaries holding health care properties, effective for taxable years after enactment.
- Elimination of REIT Dividends from Business Income Deduction (Sec. 5):
- Removes qualified REIT dividends from the qualified business income deduction under the tax code, effective for taxable years after enactment.
- Mandatory Ownership Reporting (Sec. 6):
- Requires "specified entities" (e.g., hospitals, health systems, physician practices, ambulatory centers, emergency departments, behavioral health facilities, or their controlling owners like private funds) to submit annual reports to the Secretary of Health and Human Services starting January 1, 2027, detailing mergers, ownership changes, debt levels, leases, fees, investments, and performance payments.
- Reports must include foreign controlling entities' details; avoids duplicate reporting for subsidiaries.
- HHS must post summarized data publicly (anonymizing personal info) starting January 1, 2028, conduct annual audits, and impose civil penalties up to $5 million for non-compliance or false reporting.
- Exempts these reports from Paperwork Reduction Act requirements.
- Study on Profit-Driven Practices (Sec. 7):
- Directs the HHS Inspector General to study "moral injury" in health care (e.g., harm from cost-cutting or revenue-maximizing tactics like overbilling, staff reductions, or insurance denials) within 3 years, evaluating impacts on patient care, worker well-being, federal programs, and enforcement adequacy, then report to Congress.
Significant Changes to Existing Law
- Criminal Code (18 U.S.C. Chapter 31): Adds new sections (671-674) creating specific crimes and remedies for private equity exploitation in health care, including clawbacks—a novel federal tool to recover executive pay linked to corporate failures harming patients.
- Social Security Act (42 U.S.C. § 1320a-7): Expands exclusions from federal health care payments to include REIT-related asset deals, closing a loophole for health care providers using such financing.
- Internal Revenue Code (26 U.S.C. §§ 856, 199A): Removes tax advantages for REITs in health care properties and excludes REIT dividends from business income deductions, increasing tax burdens on these structures.
- Social Security Act (New § 1150D): Introduces comprehensive, mandatory ownership transparency for health entities, with public disclosure and penalties, enhancing oversight beyond current voluntary or limited reporting.
Potential Impacts
- Government Agencies: Increases workload for the Department of Justice (enforcement of clawbacks and penalties), HHS (reporting oversight, audits, public posting), and state attorneys general (civil actions). May strain resources but improve fraud detection; clawed funds could offset costs by supporting employee benefits or community health.
- Citizens: Patients may benefit from reduced risk of facility closures or care disruptions due to exploitative financing, potentially improving access and safety in health care. Employees (e.g., health workers) gain protections via prioritized pension funding and salary shortfalls coverage. However, reporting burdens could indirectly raise operational costs, possibly affecting service affordability.
- International Relations: Minimal direct impact, though foreign-domiciled controlling entities (e.g., private funds) must disclose U.S. operations, potentially affecting cross-border investments in American health care.
Main Stakeholders Affected
- Private Equity Firms and Investors: Face clawbacks, penalties, and tax changes, limiting profit extraction (e.g., via dividends, fees) from health care acquisitions.
- Health Care Providers and Entities: Hospitals, physician practices, and facilities must comply with reporting and face payment bans if using REITs, altering business models and increasing transparency.
- Patients and Communities: Protected from harms like closures or bankruptcies, with clawed funds potentially reinvested in local health needs.
- Health Care Workers: Benefit from safeguards against salary delays and pension shortfalls, addressing "moral injury" from profit-driven cuts.
- Federal and State Governments: Gain enforcement tools but incur administrative costs; taxpayers may see reduced fraud in programs like Medicare/Medicaid.
- REITs and Taxpayers: Lose tax perks, potentially reducing REIT involvement in health care real estate and increasing overall tax revenue.
Notable Legal, Constitutional, or Political Implications
- Legal: Expands federal authority over private equity in health care, blending criminal, civil, and tax remedies; state-federal coordination (e.g., notice requirements for actions) could lead to litigation over jurisdiction. Affirmative defenses and "clear and convincing evidence" standards raise evidentiary burdens in enforcement.
- Constitutional: Clawbacks of past compensation might face Fifth Amendment challenges as potential "takings" without due process, though tied to unjust enrichment (a recognized equitable remedy). Broad definitions (e.g., "control person") could invite due process claims if applied overbroadly to passive investors.
- Political: Signals a bipartisan push (introduced by Sens. Warren et al.) against corporate influence in health care, emphasizing patient safety over profits; could fuel debates on regulation vs. innovation, with implications for future antitrust or transparency laws in consolidated industries. The moral injury study may inform broader reforms to Medicare/Medicaid fraud rules.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (4)
Sen. Blumenthal, Richard [D-CT], Sen. Markey, Edward J. [D-MA], Sen. Merkley, Jeff [D-OR], Sen. Welch, Peter [D-VT]
Recent Actions
- 2026-02-11: Read twice and referred to the Committee on Finance.
- 2026-02-11: Introduced in Senate
Bill Versions
- Corporate Crimes Against Health Care Act — issued 2026-02-11 — PDF (34 pages)