Administrative & Regulatory – Page 16

Class Action Certified Against Fintech Lender for Home Improvement Loans

In an order issued in January and made public on February 24, a judge in the United States District Court for the Northern District of California granted class certification to consumers alleging a fintech lender’s loan transaction fees were imposed unlawfully, while also granting summary judgment to the lender on claims regarding performance fees due to insufficient evidence.
The lender partnered with contractors and banks to provide point-of-sale loans to consumers for home-improvement and home-maintenance projects. The contractors used a technology platform developed by the fintech lender to offer financing offers to the consumer. The complaint alleges, among other claims, that the company violates California’s Credit Services Act, including by collecting transaction and performance fees, failing to provide specific disclosures, and failing to register with the California Department of Justice. It also alleges the company violates California’s Unfair Competition Law by violating the Credit Act and by violating the California Financing Law by not being licensed.
The court certified a class of California borrowers who took out consumer program loans of $500 or more from January 9, 2016 onward, where the loan was subject to a transaction fee of at least 1% of the principal amount. The court determined that the case met the necessary legal standards for class action status, including sufficient class size and commonality of claims.
The court also rejected the lender’s request for summary judgement on plaintiffs’ transaction fee claims, affirming that the fees may have been indirectly passed to consumers through higher project costs. The court determined that plaintiffs had provided sufficient evidence supporting these claims, allowing the case to proceed.
Conversely, the court granted summary judgment in favor of the lender on claims related to performance fees, determining that plaintiffs had failed to establish a direct financial impact on borrowers. While plaintiffs suggested that these fees contributed to increased interest rates, the court found no clear evidence supporting this assertion.
Putting It Into Practice: The case highlights the ongoing scrutiny of fintech lending models, particularly with respect to fee disclosures and cost pass-through mechanisms. Lenders should continue to monitor developments in this space; while federal enforcement agencies may step back, we expect the plaintiffs’ bar to continue to be active.
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California DFPI Reaches Settlement with Lender Over Crypto-Backed Loans

On December 23, 2024, the California Department of Financial Protection and Innovation (DFPI) announced a consent order with a lender to resolve its investigation into the company’s crypto-backed lending program, which the DFPI alleged violated multiple provisions of the California Financing Law. As part of the settlement, the lender has agreed to issue $162,800 in borrower refunds and pay $137,500 in penalties, while also implementing stricter underwriting standards, enhanced risk disclosures, and additional consumer protections.
The lender provides financial services related to crypto assets, including offering loans backed by cryptocurrency collateral. Between November 2019 and November 2022, the company issued 342 loans to 151 California residents, allowing borrowers to pledge crypto assets in exchange for fiat or crypto loans.
The DFPI found that the lender violated the California Financing Law in several ways including:

Failing to adequately assess borrowers’ ability to repay loans;
Misrepresenting annual percentage rates (APRs), leading to understated costs for consumers;
Charging undisclosed administrative fees to borrowers; and
Failing to maintain the required minimum net worth of $25,000 between October 2022 and April 2023.

Under the consent order, the lender must:

Issue refunds to eligible California borrowers and notify them via email about their refund amount and instructions for claiming it;
Send notices to California borrowers with active loans, providing information on how to close their loans; and
Comply with enhanced consumer protections, including improved underwriting and risk disclosure practices.

Putting it Into Practice: The DFPI’s action underscores increased regulatory scrutiny of crypto-backed lending programs and reinforces the expectation that crypto lenders must adhere to traditional consumer protection laws. For crypto lenders and financial institutions offering similar products, ensuring full compliance with lending regulations—including proper loan disclosures, accurate APR calculations, and borrower ability-to-repay assessments—will be critical to avoiding regulatory action. Market participants should take note of this case as a signal that state regulators are actively enforcing lending laws in the crypto space.
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EPA OIG Publishes Independent Audit of EPA’s FYs 2022 and 2021 (Restated) TSCA Service Fee Fund Financial Statements

On February 26, 2027, the U.S. Environmental Protection Agency’s (EPA) Office of Inspector General (OIG) published a report entitled Independent Audit of the EPA’s Fiscal Years 2022 and 2021 (Restated) Toxic Substances Control Act Service Fee Fund Financial Statements. Under the Toxic Substances Control Act (TSCA), as amended by the Frank R. Lautenberg Chemical Safety for the 21st Century Act, EPA is required to prepare and OIG to audit the accompanying financial statements of the TSCA Service Fee Fund. OIG rendered a qualified opinion on EPA’s fiscal years (FY) 2022 and 2021 TSCA Service Fee Fund financial statements, “meaning that, except for material errors in expenses and income from other appropriations and earned and unearned revenue, the statements were fairly presented.” OIG noted the following:

Material weaknesses: EPA materially understated TSCA income and expenses from other appropriations and EPA materially misstated TSCA earned and unearned revenue;
Significant deficiency: EPA needs to improve its financial statement preparation process; and
Noncompliance with laws and regulations: EPA did not publish an annual chemical risk evaluation plan for calendar year 2022.

OIG states that during its user fee analysis, it found that the TSCA fee structure in the fees rule for FY 2022 “appeared reasonable based on the data available when the EPA developed the fees rule.” According to OIG, the TSCA fees collected “adequately offset the actual or projected costs of administering the provisions of TSCA for the three-year period.” The fees collected in FYs 2020 – 2022 met the intent of TSCA to defray 25 percent of the specified costs of carrying out Sections 4 and 5, parts of Section 6, and Section 14.
OIG recommends that the chief financial officer:

Correct the calculation in the on-top adjustment for income and expenses from other appropriations;
Provide training for calculating the TSCA income and expenses from other appropriations on-top adjustment;
Correct the TSCA revenue balances;
Develop and implement accounting models for TSCA revenue-related activity;
Develop and implement a plan to strengthen and improve the preparation and management review of the financial statements; and
Correct other errors in the TSCA financial statements.

OIG recommends that the Assistant Administrator for Chemical Safety and Pollution Prevention develop and implement a plan to publish chemical risk evaluation plans at the beginning of each calendar year. EPA agreed with OIG’s recommendations and provided estimated completion dates for corrective actions.

Important Update – FinCEN Currently Not Issuing Fines or Penalties in Connection with CTA Reporting Deadlines (February 27, 2025 Edition)

On February 27, 2025, FinCEN issued a release providing that “it will not issue any fines or penalties or take any other enforcement actions against any companies based on any failure to file or update beneficial ownership information reports pursuant to the Corporate Transparency Act by the current [March 21, 2025] deadlines.” FinCEN further noted that “[n]o later than March 21, 2025, FinCEN intends to issue an interim final rule that extends BOI reporting deadlines [ …]”
In its release, FinCEN provides that it “intends to solicit public comment on potential revisions to existing BOI reporting requirements. FinCEN will consider those comments as part of a notice of proposed rulemaking anticipated to be issued later this year to minimize burden on small businesses while ensuring that BOI is highly useful to important national security, intelligence, and law enforcement activities [ …]”
As suggested by FinCEN, the upcoming timeline is as follows:

Now (as of February 27, 2025): FinCEN will not issue fines or penalties for failures to file, correct or update beneficial ownership information (BOI) reports by current deadlines and therefore filing, while mandatory, is at your discretion as to timing for the moment.
By March 21, 2025: FinCEN expressed its intent to issue an interim final rule extending certain, as yet undisclosed, BOI reporting deadlines.
Later in 2025: FinCEN expressed its plans to solicit public comments on potential revisions to BOI reporting requirements and issue a notice of proposed rulemaking.

Because FinCEN has committed not to enforce the CTA until after new forthcoming reporting deadlines have passed, it is necessary to pay careful attention to CTA updates as they develop.

New CFPB Director Testifies on Agency Leadership and Enforcement Approach

On February 27, new CFPB Director Jonathan McKernan testified before the Senate Banking Committee, emphasizing his commitment to enforcing the law while operating within the confines of the law. His testimony focused on his commitment to enforcing the law within the framework of the Dodd-Frank Act and maintaining the agency’s core functions while exploring ways to enhance efficiency.
During his confirmation hearing, McKernan acknowledged that the CFPB director has the authority to adjust funding levels and streamline operations, which could impact staffing and enforcement priorities. When pressed by Democrats about potential external influence from outside groups or the White House, McKernan insisted that, if confirmed, he would be the one making decisions at the agency. He also pledged to maintain its complaint database and other required offices and functions.
Shortly before McKernan’s hearing, the CFPB dismissed several enforcement actions, including one against a mortgage lender of manufactured housing (previously discussed here). These dismissals have prompted discussions about potential shifts in the agency’s regulatory approach. Democratic senators used the hearing to question how these developments might align with McKernan’s espoused leadership approach at the CFPB.
In response, McKernan stated that any enforcement decisions under his leadership would be based on legal merits and resource considerations, emphasizing his commitment to ensuring that regulatory actions remain within statutory mandates while fostering a balanced and fair approach.
Putting It Into Practice: McKernan’s regulatory agenda, particularly his views on funding and enforcement policies, could lead to significant changes for financial institutions. The recent dismissal of multiple enforcement actions (previously discussed here) underscores the possibility of a shift in the Bureau’s oversight priorities. Financial institutions should closely monitor these developments to assess how regulatory expectations and compliance obligations may evolve under McKernan’s leadership.
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APHIS Will Begin Accepting Petitions for Nonregulated Status on March 3, 2025

The U.S. Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) announced on February 27, 2025, that it will begin to accept petitions for nonregulated status according to APHIS biotechnology regulations at 7 C.F.R. Part 340 (2019) on March 3, 2025. APHIS notes that its biotechnology regulations enable developers to petition for a determination that an “article” is not regulated. The petition process applies only to plants that meet the regulatory definition of “regulated article.” APHIS states that, in general, “a regulated article is an organism or product that has been altered or produced using genetic engineering (1) that has one or more of its components derived from a plant pest or an unclassified or unknown organism; or (2) that APHIS determines is a plant pest or has reason to believe is a plant pest.” In contrast, according to APHIS, “a genome edited organism (e.g., plant, microbe, insect) that is not a plant pest or likely to be a plant pest is not subject to 7 CFR part 340 (2019), unless the organism retains DNA sourced from a plant pest. Similarly, a transgenic organism that is not a plant pest and not likely to be a plant pest and does not contain DNA sourced from a plant pest is not subject to 7 CFR part 340 (2019).”
Developers whose modified plant meets the definition of “regulated article” can petition for nonregulated status by providing relevant information, data, and publications that substantiate that the modified plant is unlikely to pose a greater plant pest risk than the unmodified plant from which it was derived. APHIS has published a February 2025 “Petition User Guide with Reference To 7 CFR Part 340 — Introduction of Organisms and Products Altered or Produced Through Genetic Engineering Which are Plant Pests or Which There is Reason to Believe are Plant Pests” that provides more information on the specific requirements and instructions on how to apply. APHIS “encourage[s] developers to request a pre-submission consultation to review the information APHIS needs to evaluate a petition and reach a decision.” Requests for a pre-submission consult may be sent to [email protected].”

The Guidance Has Arrived! More Information from the IRS on ACA Forms 1095-B and 1095-C

Takeaways

Employers may post a notice on their website instead of automatically furnishing Forms 1095-B and 1095-C to all full-time employees. The first due date for such a notice is March 3 for 2024 forms, and the notice must remain accessible until October 15.

Chinese Copyright Registrations Up 19% in 2024

Per a release (国版发函〔2025〕4号) from the National Copyright Administration of China dated February 28, 2025, the total number of copyright registrations in China for 2024 reached 10,630,610, a year-on-year increase of 19.13%. Of these, 2,827,213 registrations were for computer software copyright registrations in 2024, an increase of 13.31% year-on-year. Other copyright registrations totaled 7,802,965 in 2024, an increase of 21.39% year-on-year.

China has experienced a significant decrease in copyright pledges, where copyrights are used as collateral to secure loans. Note it is unclear if these figures represent copyright as the sole collateral or if other property was part of the collateral. A total of 432 copyright pledge registrations were completed nationwide in 2024, a year-on-year increase of 5.11%; the number of contracts involved was 287, a year-on-year decrease of 24.87%; the number of works involved was 1,934, a year-on-year decrease of 7.11%; the amount of principal debt involved was 4,677,082,500 yuan, a year-on-year decrease of 53.03%; the amount of guarantee involved was 4,101,351,700 RMB, a year-on-year decrease of 58.40%.
Of the 432 pledges, there were 267 registrations of pledges of computer software copyright, a year-on-year decrease of 26.04%; the number of contracts involved was 267, a year-on-year decrease of 26.04%; the number of software involved was 1,769, a year-on-year decrease of 12.94%; the amount of principal debt involved was 4,500,786,200 RMB, a year-on-year decrease of 50.93%; the amount of guarantee involved was 3,909,290,200 RMB, a year-on-year decrease of 56.92%.
The original release is available here (Chinese only).

The Dollars and Cents of Separation and Divorce: Understanding Post-Separation Support and Alimony in North Carolina

Before we dive into ways to prepare for your post-separation support and alimony case, it’s important to understand what these terms mean and your general eligibility for spousal support.
There are two types of spousal support in North Carolina:

Post‑separation support (PSS) is temporary financial support paid after separation and while an alimony claim is pending. If the parties are unable to agree on an amount of PSS or the supporting spouse refuses to provide financial support to the spouse in need, a spouse who needs financial support from the other spouse must request PSS from the Court. Typically, PSS continues until the parties reach an agreed upon resolution of the alimony claim or the Court rules on the spouse’s alimony claim. If the parties are unable to agree on an appropriate PSS award (typically a fixed amount paid monthly), the Court may award PSS based solely on the parties’ respective financial affidavits, discussed in more below, or the Court may conduct a hearing (review financial documents and take testimony from witnesses) before making a decision on PSS.
Alimony is financial support that continues for a period of months or years into the future. If the parties are unable to reach an agreement regarding an alimony claim, the Court will consider relevant testimony and other evidence in the context of an alimony hearing. If the North Carolina court is asked to make a decision on equitable distribution (i.e., property division) and alimony, it is not uncommon for the Court to first rule on equitable distribution issues and then make a decision on the alimony claim.

Who is eligible for Post-Separation Support and Alimony in North Carolina?
To be eligible for PSS and/or alimony, the spouse seeking PSS or alimony must show that they are a “dependent spouse” and that the other spouse is a “supporting spouse.”

A “dependent spouse” is a spouse who is currently unable to financially meet his or her own needs without the support of the other spouse or will be unable to maintain his or her accustomed standard of living, established prior to the date of separation, without financial contribution from the other spouse.
A “supporting spouse” is a spouse from whom a dependent spouse was relying upon to meet their needs during the marriage or is in need of support to currently meet their needs.

How will marital misconduct impact spousal support?
We cannot discuss your eligibility for spousal support without mentioning “illicit sexual behavior.” Committing “illicit sexual behavior” with a third party during the marriage and before the date of separation will have significant implications on your alimony case. On the other hand, for post-separation support, a court is able to use its discretion to determine whether to award PSS. Illicit sexual behavior includes almost every sexual act you can think of.

If a dependent spouse has committed acts of “illicit sexual behavior” during the marriage and prior to the date of separation, and the supporting spouse has not, then the dependent spouse is completely barred from receiving alimony.
If the supporting spouse has committed illicit sexual behavior, but the dependent spouse has not, then the court must require the supporting spouse to pay some amount of alimony.
If both spouses have committed illicit sexual behavior, then the Court can award alimony at its discretion.

There are other acts of marital misconduct, as that term is defined in N.C. Gen. Stat. 50-16.1A that can have an impact on your spousal support case, but none have the same mandatory implications as illicit sexual behavior.
With this basic understanding of PSS and alimony, let’s review several steps you can take to prepare for your post-separation support and alimony case.
Set reasonable expectations.
The amount and duration of PSS and alimony awarded in a case depends on various factors. The main factors are (1) the standard of living enjoyed by the parties on the date of separation, and (2) the length of the marriage.
We look at the lifestyle the parties enjoyed during the marriage – the neighborhoods they lived in, the vacations they took, savings and investment habits, etc. While the court will look to your standard of living established prior to the date of separation to determine an appropriate amount of spousal support, the Court must still find that the supporting spouse has the ability to pay the amount of spousal support requested by the dependent spouse. Generally, after the date of separation, a supporting spouse still earns the same amount of money as he or she did during the marriage, but you are now living in two separate households and with two separate sets of expenses.
The concept of supporting two households on the same income presents a unique dilemma for the litigants and the court. Except in cases involving very high-income spouses, it is impossible for a court to maintain, after separation, an identical standard of living to what was enjoyed during the marriage. The money must exist to provide for both households.
A supporting spouse must also set reasonable expectations, including how much a dependent spouse is actually able to earn immediately after separation and in the coming years. For example, a stay-at-home parent may need some time and job training to re-enter the workforce. In some jurisdictions, a court may find that a spouse who has been out of the workforce for twenty years doesn’t have the ability to earn income sufficient to support themselves, depending on their age.
We also look to the length of the marriage to assist us in determining an appropriate duration for the payment of spousal support. Generally speaking, the longer the marriage, the longer the period of alimony payments. Short-term marriages (lasting under five years) usually see the shortest duration of alimony payments.
Consider your court.
Setting reasonable expectations also means considering typical support orders rendered in your geographic region.
While the law remains the same throughout North Carolina, ultimately, the amount of spousal support awarded by a court, if any, is discretionary and varies between judges and districts.
Unlike for child support, there is no calculator or formula used to determine your potential post-separation support or alimony award, thus consultation with an experienced family law attorney is helpful in determining the amount of support that may be awarded.
Prepare a financial affidavit.
Regardless of whether you are a dependent or supporting spouse, your attorney will likely ask you to fill out a financial affidavit detailing your income and expenses (including expenses for minor children). A financial affidavit is basically a budget that will be used to determine your need for PSS and alimony or your ability to pay.
It is important to be as accurate as possible and capture all of your expenses by reviewing past bills, bank statements, credit card statements, and cash spending. Expenses such as utilities and food should be averaged over a period of time, usually one to three years, depending on the circumstances of your case.
Your financial affidavit should also include savings and investment contributions if you customarily contributed to these accounts during the marriage. The financial affidavit is not a wish list, but it should include all of your current and customary expenses.
It is equally important to notify your attorney of any expenses that you may incur in the future but that are currently covered by your spouse or a third party. Examples may include the imminent need for a vehicle, your own health insurance policy, or a place to live if you are temporarily living with a relative (including all expenses associated with maintaining separate housing). Financial affidavits vary by county and judicial district.
Seek employment, job training, or education.
Depending on your age, education, employment history throughout your life and during the marriage, and the ages of any minor children, a court may determine that you have the ability to be gainfully employed, and the court may expect you to seek employment.
For those who are able-bodied, working age, and capable of being employed, start inquiring into any necessary job training or educational programs that may help you secure gainful employment, including the cost of these programs, and discuss these options with your attorney.
With some exceptions, it is usually advisable to secure some sort of employment as soon as possible, as a court may impute income to a spouse if the court finds that a spouse is earning below their earning capacity in bad faith or in disregard of their duty to self-support. “Imputing income” is the court’s process of assigning income to you based on your earning potential, regardless of the amount you are actually earning. This is determined on a case-by-case basis and should be discussed with your attorney prior to taking action.
Maintain current earnings if employed.
When a supporting or dependent spouse attempts to change careers, deliberately fails to apply himself or herself to his or her business or employment, or intentionally depresses his or her income in an effort to avoid paying spousal support, a court may impute income to that spouse.
Any career change or employment change should be discussed with your attorney in advance. You should also be prepared to defend any decrease in your income occurring near or subsequent to the date of separation. This isn’t to say that you cannot change jobs or start a business during a divorce, but it is advisable to discuss life changes that will result in a change in your income with your attorney.
Seek support when necessary.
Many of our clients come to us with little experience managing finances and investments. In some cases, you may want to consider hiring a financial planner or a Certified Divorce Financial Analyst (CDFA) to help you with short and long-term financial planning, to help you with investment strategies, and tax consequences and tailor a financial plan to help you maintain and preserve your portion of the marital estate that will be distributed to you in the divorce process.

Major Regulatory Updates from the West Coast: New California and Washington Approaches to Healthcare Private Equity and MSO Regulation

State legislatures on the West Coast are intensifying their focus on private equity and management service organizations (MSOs) in healthcare, introducing new regulatory measures that could significantly reshape investment strategies, ownership structures, and operational matters in the healthcare space in these states. As state legislatures respond to growing concerns about the role of non-licensed entities in healthcare decision-making, recent proposals reflect a heightened focus on transaction scrutiny, ownership structures, and the autonomy of licensed providers.
California’s Senate Bill 351 (“SB 351”) and Assembly Bill 1415 (“AB 1415”), introduced in February 2025, seek to reinforce state oversight of healthcare investments, particularly those involving private equity, hedge funds, and MSOs. While SB 351 reinforces existing restrictions on corporate control over clinical decision-making, AB 1415 expands the authority of the California Office of Health Care Affordability (OHCA), extending its pre-transaction notice and clearance requirements to a broader range of entities. Meanwhile, Washington’s Senate Bill 5387 (“SB 5387”) is moving through committee review and proposes strict regulations that would limit lay ownership of healthcare practices and curb MSO involvement in operational control.
Below provides an overview of the key components and takeaways from these state legislative efforts.
Legislative Developments at a Glance

Legislation
Key Provisions
Status

SB 351 (California, First Read Feb. 12, 2025)
Codifies limits on private equity and hedge fund influence in clinical decision-making; bans non-competes & non-disparagement clauses; grants enforcement authority to the Attorney General.
Moving through committee review.

AB 1415 (California, Feb. 21, 2025)
Expands OHCA oversight and pre-closing transaction filing requirements to private equity, hedge funds, MSOs, health systems and other provider entities.
Assembly-Pending Referral.

SB 5387 (Washington, First Read Jan. 21 2025)
Requires healthcare providers to hold majority ownership of practices; limits roles, ownership and control among individuals and entities involved MSO-professional entity arrangements;
Moving through committee review.

California’s SB 351: Focused on Maintaining Clinical Decision-Making Autonomy
SB 351 reinforces California’s existing corporate practice of medicine (CPOM) prohibition by specifying certain restrictions on private equity firms and hedge funds in clinical decision-making. The bill enumerates specific restrictions to ensure that key medical and operational decisions remain within the control of licensed providers.
Specifically, SB 351 would codify the following restrictions:

Prohibiting investors from determining diagnostic tests, treatment options, patient volume, or referral requirements.
Restricting non-licensed entities from owning or managing patient medical records or influencing billing and coding practices.
Expanding enforcement authority, allowing the California Attorney General to seek injunctive relief for violations.
Banning non-compete and non-disparagement clauses in management contracts and asset sale agreements involving medical and dental practices.

While SB 351 strengthens the state’s CPOM framework, it does not contain a mandatory state pre-approval process for private equity-backed healthcare transactions, which was a feature of the much publicized Assembly Bill 3129 last year, which was ultimately vetoed by Governor Gavin Newsom.[i] Rather, the core provisions focus on clarifying what are generally recognized legal boundaries surrounding the corporate practice of medicine doctrine and clinical autonomy.
California’s AB 1415: Expanded OHCA Authority Over Healthcare Transactions
Concurrently, AB 1415 proposes a significant expansion of OHCA’s authority over healthcare transactions. The bill would broaden the scope of entities required to file pre-transaction notices with OHCA, including private equity groups, hedge funds, MSOs, and health system affiliates, all of which were previously outside the agency’s direct oversight.
If enacted, AB 1415 would reshape California’s healthcare transactional landscape by:

Requiring private equity firms, hedge funds, and newly formed holding entities involved in healthcare deals to submit filings to OHCA with respect to their involvement in material transactions.
Expanding the definition of “provider” to health systems and their affiliates to subject such entities to OHCA review. The definition is also reframed to include “any private or public health care provider”, as opposed to the current framework which lists out specific licensure or service line categories constituting a “provider”.
Expressly bringing management services organizations (MSOs) under OHCA authority, which were notably excluded under prior regulations, and consequently more directly impacting physician practice management models.

The proposed expansion of OHCA’s jurisdiction under AB 1415 represents a dramatic shift in California’s approach to healthcare transaction oversight. By requiring private equity groups, hedge funds, MSOs, and health systems to submit pre-transaction notices, the bill would broaden the regulatory reach of OHCA.
While AB 1415 would not grant OHCA the authority to block transactions outright (unlike the approach taken in last years’ AB 3129), its review process could delay closings involving such entities and introduce additional compliance burdens to navigate healthcare deals in California. As seen with prior legislative efforts, this bill signals a continued push for increased scrutiny of non-licensed entities and investors in healthcare. While the measure is likely to face intense lobbying efforts, it is worth reminding our readers that Governor Newsom’s veto statement specifically called out the existing OHCA authority and framework as a reason why AB 3129 was not necessary. Here, it will be interesting to see whether carving in private equity stakeholders within the OHCA framework makes this type of legislation more likely to get enacted into law.
Washington’s SB 5387: New Restrictions on Healthcare Ownership Structures
Meanwhile, Washington’s SB 5387 takes a relatively strict and targeted approach to regulating lay entity arrangements and influence over health care practices. Specifically, the bill includes the following key features:

Non-licensed individuals, corporations, or entities cannot own or control health care practices or employ licensed healthcare providers unless explicitly permitted under state law.
Whereas under existing law shareholders, officers and directors of professional service entities do not necessarily have to be licensed in Washington, this bill would require Washington-licensed healthcare providers to retain control of such entities by holding a majority of the voting shares, serving as the majority of directors, and occupying key leadership roles. The bill also adds what appears to be an active practice requirement to be an owner of a professional health care entity.
Shareholders, directors and officers of professional health care practices would be prevented from owning equity in or serving as an officer, director, employee or contractor of an MSO contracted with such practice, or receiving significant financial compensation from such MSO in return for ownership or management of the professional entity. Such shareholders, directors and officers would also not be able to transfer or relinquish control over the issuing of shares in the practice or the paying of dividends.

The provisions in SB 5387 take an approach similar to the version of California’s AB 3129 originally passed by the California State Assembly in May 2024, as well as Oregon’s HB 4130 passed by the Oregon House of Representatives in February 2024 (which ultimately failed to be enacted into law). Both prior bills called into question the viability of the “friendly” PC-MSO model commonly used by private equity and other investors, which typically involve succession agreements and similar arrangements that give certain control rights to MSOs relating to professional entities, among other features. Here, by delineating broad ownership and control requirements and restrictions involving professional entities and MSOs, it could prove to be difficult in practice to utilize such PC-MSO structures in Washington if the bill as currently drafted is enacted into law.
Looking Ahead
California and Washington are advancing significant legislative changes that would reshape the west coast healthcare investment landscape. We will continue tracking the proposed bills as they progress and provide updates on their impact on healthcare transactions in these states. For more information, contact our team for guidance on navigating these proposed changes.
FOOTNOTES
[i] See our previous blog series on California Assembly Bill 3129 pursued by CA state legislators in 2024: Update: Governor Newsom Vetoes California’s AB 3129 Targeting Healthcare Private Equity Deals | Healthcare Law Blog (sheppardhealthlaw.com), published October 2, 2024, Update: AB 3129 Passes in California Senate and Nears Finish Line | Healthcare Law Blog (sheppardhealthlaw.com), published September 6, 2024, California’s AB 3129: A New Hurdle for Private Equity Health Care Transactions on the Horizon? | Healthcare Law Blog (sheppardhealthlaw.com), published April 18, 2024, and Update: California State Assembly Passes AB 3129 Requiring State Approval of Private Equity Healthcare Deals | Healthcare Law Blog (sheppardhealthlaw.com), published May 30, 2024.
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Madam Policy: Alice Lin, Former Deputy Assistant Secretary for Legislative Affairs, US Department of the Treasury: Insights From an IRA and Tax Policy Maven {Podcast}

Tax policy expert and former Deputy Assistant Secretary for Legislative Affairs (Tax & Budget) at the US Department of the Treasury, Alice Lin joins Madam Policy host Dee Martin to discuss her journey from being a senior tax policy advisor in Congress to lead tax expert at Treasury. From helping develop the Inflation Reduction Act (IRA) during her time on the House Ways and Means Committee to working on implementation as a senior tax policy advisor for the Senate Finance Committee to helping publish over 95 pieces of guidance on the IRA at Treasury, Alice shares her view on the future of the IRA and reconciliation. Want to hear how Alice’s experience shadowing a congressional district office in high school put her on the path of public service? Listen now!

CPPA Enforces Delete Act Against Data Brokers

As part of the California Privacy Protection Agency’s (“CPPA”) investigative sweep of data broker registration compliance under California’s Delete Act, the CPPA recently announced an enforcement action against a Florida-based data broker and a settlement with a California-based data broker for failure to register as a data broker on the California Data Broker Registry (the “Registry”), as required under the Delete Act.
On February 20, 2025, the CPPA announced that it brought an enforcement action against Jerico Pictures, Inc., a Florida-based data broker doing business under the name National Public Data. The CPPA is seeking a $46,000 fine against the company for its failure to timely register as a data broker on the Registry. The CPPA has alleged that National Public Data registered as a data broker on September 18, 2024, which is 230 days after the January 31, 2024 registration deadline for data brokers that operated in 2023. The CPPA also asserted that National Public Data only registered on the Registry after the CPPA’s Enforcement Division contacted the company during an investigation. National Public Data experienced a data breach in 2024 which resulted in the 2.9 billion records being exposed, including names and Social Security numbers.
On February 27, 2025, the CPPA reached a settlement with Background Alert, Inc. (“Background Alert”), a California-based data broker for its failure to timely register on the 2025 Registry. The CPPA alleged that Background Alert created and sold profiles about individuals through the website, backgroundalert.com. In particular, the CPPA alleged that Background Alert collected billions of public records, drew inferences from those records to identify individuals who may be associated with other individuals and identified patterns to create profiles about consumers. Per the settlement, Background Alert is required to shut down its operations through 2028 or face a $50,000 fine.
As we previously reported, the CPPA adopted new data broker regulations under the Delete Act in November 2024 that amended existing data broker regulations.