SB2130 - Relating to the regulation of certain transactions and activities involving the provision of veterinary services; authorizing civil penalties; creating criminal offenses.

  89R2583 SRA-F     By: Hinojosa of Hidalgo S.B. No. 2130       A BILL TO BE ENTITLED   AN ACT   relating to the regulation of certain transactions and activities   involving the provision of veterinary services; authorizing civil   penalties; creating criminal offenses.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Title 2, Business & Commerce Code, is amended by   adding Chapter 15A to read as follows:   CHAPTER 15A. CONSOLIDATION OF VETERINARY SERVICES   SUBCHAPTER A. GENERAL PROVISIONS           Sec. 15A.0001.  DEFINITIONS. In this chapter:                 (1)     "Affiliate" means a person or entity who, directly   or indirectly through intermediaries, controls, is controlled by,   or is under common control with another entity or shares common   branding with another entity. For purposes of this subdivision,   control of an entity means having:                       (A)     ownership of or the direct or indirect   ability to vote 25 percent or more of the outstanding shares or   participation shares of any class of voting securities of the   entity;                       (B)     the ability to control in any manner the   election of the majority of the entity's directors or individuals   exercising functions similar to a director's functions; or                       (C)     the ability to directly or indirectly   exercise a controlling influence over the management or policies of   the entity through ownership of equity or securities, by contract,   or otherwise.                 (2)     "Geographic market" means a county, metropolitan   statistical area designated by the United States Office of   Management and Budget, or contiguous geographic area in this state   from which an entity draws at least 50 percent of the entity's   veterinary services clients.                 (3)     "Private equity company" means a for-profit firm,   sole proprietorship, corporation, limited or general partnership,   limited liability company, limited liability partnership, business   trust, investment asset manager, real estate investment trust,   joint venture, joint stock company, or other entity, including a   wholly-owned subsidiary, majority-owned subsidiary, parent   company, or affiliate of any of those entities, that:                       (A)     is not required to be registered or regulated   as an investment company under the Investment Company Act of 1940   (15 U.S.C. Section 80a-1 et seq.) due to the exclusion from the   definition of investment company under Section 3(c)(1) or (7) of   the Investment Company Act of 1940 (15 U.S.C. Section 80a-3(c)(1)   or (7));                       (B)     engages in collecting capital from   individuals or entities to invest, develop, or dispose of assets;   and                       (C)     limits or does not provide investors with   redemption rights in the ordinary course of business.                 (4)  "Transaction" means:                       (A)     a direct or indirect acquisition, purchase,   lease, merger, gift, encumbrance, exchange, option, receipt of a   conveyance, creation of a joint venture, or other transfer of an   interest in a veterinary services provider; or                       (B)     a change of control, wholly or partly, of a   veterinary services provider by a private equity company.                 (5)     "Veterinary medicine" has the meaning assigned by   Section 801.002, Occupations Code.                 (6)  "Veterinary services" means:                       (A)     diagnosing, treating, correcting, changing,   manipulating, relieving, providing care, advice, or guidance for,   or preventing disease, deformity, defect, injury, or other physical   or mental condition of an animal by prescribing, administering, or   dispensing to or for the animal a drug, biologic, anesthetic,   apparatus, surgery, or other therapeutic or diagnostic substance or   technique, and services provided under any other discipline or   specialty of veterinary medicine;                       (B)     representing an ability and willingness to   perform an act listed under Paragraph (A);                       (C)     using a title, a word, or letters to induce   the belief that a person is legally authorized and qualified to   perform an act listed under Paragraph (A); and                       (D)     receiving a fee from a client, including an   owner or caretaker of an animal, or insurer in exchange for   performing an act listed under Paragraph (A).                 (7)  "Veterinary services provider" means:                       (A)     a person licensed to practice veterinary   medicine under Chapter 801, Occupations Code, who provides   veterinary services; and                       (B)     a business entity owned exclusively by one or   more veterinarians as authorized by Chapter 801, Occupations Code,   that provides veterinary services.           Sec.   15A.0002.     CHANGE OF CONTROL. For purposes of this   chapter, a change of control with respect to a veterinary services   provider in this state means an agreement, association,   affiliation, partnership, joint venture, transfer, or other   arrangement or event:                 (1)     that results in a private equity company directly   or indirectly establishing a change in governance of or sharing of   control over the provision of veterinary services by the veterinary   services provider; or                 (2)     in which a private equity company wholly or partly   assumes direct or indirect control over the management, operations,   or policies of the veterinary services provider through ownership   of voting securities, by contract, or through another means of   altering voting control or responsibility for the governing body of   the veterinary services provider.           Sec.   15A.0003.     RULES; PROCEDURES; FORMS. The attorney   general may adopt rules, procedures, and forms necessary to   administer and enforce this chapter.           Sec.   15A.0004.     MULTIPLE REMEDIES ALLOWED. The application   of one civil remedy under a provision of this chapter does not   preclude the application of any other civil or criminal remedy   under this chapter or other law. Civil remedies under this chapter   are supplemental and not mutually exclusive.   SUBCHAPTER B. REVIEW OF PROPOSED TRANSACTIONS           Sec.   15A.0051.     APPLICABILITY OF SUBCHAPTER. (a)   Except as   provided by Subsection (b), this subchapter applies only to a   proposed transaction between a private equity company and a   veterinary services provider:                 (1)  that:                       (A)  involves:                             (i)     a veterinary services provider that has   an annual gross revenue of at least $400,000;                             (ii)     a private equity company that has an   annual gross revenue of at least $400,000 during the three most   recent fiscal years that is derived from veterinary services   provided in this state by the private equity company and the   company's affiliates; or                             (iii)     a veterinary services provider   located in a geographic market in which the private equity company   has a 40 percent market share of any veterinary services; or                       (B)     will result in an entity that is projected to   generate an annual gross revenue of at least $400,000 during the   five years after the transaction's closing date; and                 (2)     with respect to which at least one of the following   material circumstances exists:                       (A)     the transaction is a merger, consolidation,   amalgamation, divestiture, leveraged buyout, or interest exchange   of a veterinary services provider by or with another entity;                       (B)     the transaction is part of a series of   related transactions for the same or related veterinary services   occurring over the past 10 years involving the same entities to the   transaction or entities affiliated with the same entities to the   transaction;                       (C)     the transaction involves the acquisition of a   veterinary services provider by another entity that has consummated   a similar transaction or series of similar transactions over the   past 10 years with one or more other veterinary services providers;                       (D)     the transaction involves the formation of a   new entity, affiliation, partnership, joint venture, or parent   corporation for the provision of veterinary services in this state   that is projected to have at least $400,000 in annual revenue at   normal or stabilized levels of utilization or operation;                       (E)     the transaction involves a change of control   of assets in this state that are related to the provision of   veterinary services and valued at $400,000 or more;                       (F)     the fair market value of the transaction is   at least $400,000 and the transaction concerns the provision of   veterinary services;                       (G)     the transaction is likely to increase the   annual revenue derived in this state of any party to the transaction   by either $400,000 or more or 25 percent or more at normal or   stabilized levels of utilization or operation;                       (H)     the transaction involves the sale, transfer,   lease, exchange, option, encumbrance, granting of a security   interest, or other disposition of 25 percent or more of the total   assets or operations of the veterinary services provider to another   entity;                       (I)     the transaction is part of an agreement or   series of agreements that will result in the sharing of 25 percent   or more of the veterinary services provider's revenues with the   private equity company, that company's affiliates, or a combination   of those entities;           [Text truncated for display. 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