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;

(J) the transaction would result in the transfer of 25 percent or more of the voting power of the members of the governing body of the veterinary services provider, including by adding or substituting one or more members or through any other type of written or oral arrangement;

(K) the transaction would vest voting rights significant enough to constitute a change in control, including supermajority rights, veto rights, exclusivity provisions, and similar provisions, even if ownership shares or representation on a governing body are less than 25 percent;

(L) the transaction is part of an agreement or series of agreements that directly or indirectly through one or more other persons transfers to another entity the ownership of or power to vote 25 percent or more of the outstanding shares of any class of voting security of a veterinary services provider;

(M) the transaction is part of an agreement or series of agreements that directly or indirectly transfers the power to exercise a controlling influence over the management or policies of a veterinary services provider; or

(N) the transaction would result in any other change of control of a veterinary services provider to, or acquisition of control of a veterinary services provider by, another entity.

(b) This subchapter does not apply to a proposed transaction if, immediately before the transaction, the private equity company that is a party to the transaction already controls all other parties to the transaction.

Sec. 15A.0052. ATTORNEY GENERAL CONSENT TO PROPOSED TRANSACTION REQUIRED. A proposed transaction to which this subchapter applies may not be completed unless the attorney general provides written approval for the transaction to be completed.

Sec. 15A.0053. NOTICE TO ATTORNEY GENERAL OF PROPOSED TRANSACTION. (a) A private equity company that is a party to a proposed transaction shall submit to the attorney general for approval under Section 15A.0052 written notice of the transaction not later than the 90th day before the transaction's anticipated closing date.

(b) A notice of a proposed transaction must contain:

(1) the name, address, federal tax identification number, contact information, and business line or segment of each party to the transaction;

(2) the anticipated closing date of the transaction;

(3) the annual revenue for the three most recent fiscal years derived from the provision of veterinary services in this state by each party to the transaction;

(4) the current geographic markets for veterinary services of each party to the transaction;

(5) for each party to the transaction, the address of each facility owned or operated for the provision of veterinary services, the number of staff for each facility, and the capacity to serve patients or the number of patients served within the preceding three years for each geographic market;

(6) a detailed description of the terms of the transaction;

(7) for each party to the transaction, the current organizational chart, including charts of any parent and subsidiary entities, and proposed charts for each entity if the transaction is completed;

(8) the current governing documents for each entity involved in the transaction, any amendments to the governing documents, and any proposed updates to the governing documents that will result from the transaction;

(9) a copy of each agreement and term sheet, with accompanying appendices and exhibits, governing or related to the transaction;

(10) any documents identifying the number of clients per geographic market for each entity involved in the transaction covering the three most recent fiscal years;

(11) the following information prepared by both internal experts and independent consultants within the three years preceding the scheduled closing date for the transaction:

(A) any financial report containing an economic analysis and impact analysis on the effects of the transaction;

(B) the results of any projections or modeling of utilization of veterinary services;

(C) the financial impacts related to the transaction; and

(D) any valuation of the assets and operations that are subject to the transaction;

(12) a copy of any materials submitted to or required in connection with the transaction by any other state or federal agency, including the United States Federal Trade Commission or the United States Department of Justice;

(13) audited financial reports or comprehensive financial statements, including details, for the following for each entity involved in the transaction covering the three most recent fiscal years:

(A) annual costs and annual receipts;

(B) realized capital gains and losses; and

(C) accumulated surplus and accumulated reserves;

(14) tax filings and any documents related to liabilities, debts, assets, balance sheets, statements of income and expenses, any accompanying footnotes, and revenue of each entity involved in the transaction covering the three most recent fiscal years;

(15) a description of services currently provided by the veterinary services provider involved in the transaction and expected post-transaction impacts on veterinary services, including:

(A) the geographic markets currently served and any post-transaction changes to those markets; and

(B) the levels and type of veterinary services currently offered and any post-transaction changes to those services;

(16) a description of any other prior mergers or acquisitions closed in the last 10 years, if applicable, that involved:

(A) other veterinary services providers; and

(B) at least one of the entities, or their parents, subsidiaries, predecessors, or successors, involved in the transaction;

(17) a description of potential post-transaction changes to ownership, governance, or operational structure, employee staffing levels, job security, retraining policies, wages, and benefits of the parties to the transaction; and

(18) any other information, including documents, the attorney general determines necessary to evaluate the transaction.

(c) The attorney general may deny approval for a proposed transaction with respect to which a private equity company submits notice under this section on the basis that the company did not submit adequate information, provided that the attorney general:

(1) notifies the company of the insufficiency; and

(2) allows the company a reasonable opportunity to remedy the insufficiency.

Sec. 15A.0054. ACKNOWLEDGEMENT OF RECEIPT OF NOTICE; COMMENCEMENT OF REVIEW PERIOD. (a) Notice of a proposed transaction submitted by a private equity company under Section 15A.0053 is considered complete on the date the attorney general provides a written acknowledgement to the company that the attorney general has received all required information. The attorney general's written acknowledgement constitutes the beginning of the review period for the transaction.

(b) The attorney general may not unreasonably withhold an acknowledgement that notice that meets the requirements of Section 15A.0053 has been submitted.

Sec. 15A.0055. REVIEW PERIOD. (a) Except as otherwise provided by this section, the attorney general, not later than the 60th day after the date the attorney general provides written acknowledgement of having received a complete notice under Section 15A.0054, shall complete a review of the proposed transaction and provide to the parties to the transaction:

(1) written approval for the transaction and the basis for that approval; or

(2) written denial of the transaction and the basis for that denial.

(b) The attorney general may stay any period specified by this section during the period of a concurrent review conducted by another state agency, a federal regulatory agency, or a court if the other entity's review may affect the attorney general's review of the proposed transaction. The attorney general shall provide notice of the stay to the parties to the transaction.

(c) The attorney general may extend the period required under Subsection (a) by an additional 30 days, in addition to any time for which the review period is stayed under Subsection (b), if additional time is necessary to complete the review of the proposed transaction. The attorney general shall provide notice of the extension to the private equity company that submitted the notice of the transaction under Section 15A.0053. If the extension is necessary to obtain additional documentation or information, the attorney general may toll the additional 30 days for any period during which the attorney general is awaiting that documentation or information.

Sec. 15A.0056. APPROVAL OR DENIAL OF PROPOSED TRANSACTION. (a) The attorney general may approve or deny a proposed transaction to which this subchapter applies based on the attorney general's determination of whether the transaction is against the public interest. The attorney general shall provide notice to the parties to the transaction of the approval or denial.

(b) In determining whether a proposed transaction with respect to which a private equity company submits notice under Section 15A.0053 is against the public interest, the attorney general shall consider whether the transaction may:

(1) lessen competition or create a monopoly in any geographic market affected by the transaction;

(2) be a part of a series of similar transactions by the private equity company that furthers a trend toward consolidation;

(3) incentivize practices by the private equity company that may:

(A) reduce quality of veterinary services;

(B) increase the total cost of veterinary services for clients or insurance payors; or

(C) generate less cost-efficient patient outcomes;

(4) require the private equity company to obtain financing collateralized by the veterinary services provider's operations or assets to meet the cost of the transaction, which will subsequently shift the burden of financial risk in ways that may undermine the financial stability or competitive effectiveness of the veterinary services provider;

(5) reduce the options of competing veterinary services providers within a geographic market that may incentivize the private equity company involved in the transaction to:

(A) increase prices for veterinary services;

(B) lower the quality at a given price for veterinary services; or

(C) provide less cost-efficient veterinary services;

(6) enable the private equity company to accrue market power that may reduce the incentive to compete or offer a comparable or better patient experience within a geographic market;

(7) entrench or extend a dominant market position of veterinary services of any entity involved in the transaction, including extending market power into related markets through vertical or cross-market mergers;

(8) reduce the delivery of veterinary services to uninsured or underinsured populations within a geographic market;

(9) reduce access to affordable and quality veterinary services within a geographic market;

(10) restrict or reduce the range of veterinary services historically offered within a geographic market;

(11) negatively affect veterinary services provider cost trends and containment of total animal care spending; or

(12) negatively affect the labor market by:

(A) lowering wages or slowing wage growth;

(B) worsening benefits or working conditions; or

(C) resulting in other degradations of workplace quality.

(c) A proposed transaction may not be presumed to be efficient for the purpose of assessing compliance with the factors of public interest.

Sec. 15A.0057. REVIEW ASSISTANCE FROM OTHER ENTITIES. (a) For purposes of evaluating a proposed transaction to determine whether to approve or deny the transaction under this subchapter, the attorney general may:

(1) contract with, consult, and receive recommendations from any state or federal agency on terms the attorney general considers appropriate; or

(2) contract with experts or consultants to help review the transaction.

(b) Notwithstanding Subsection (a), the attorney general may not incur contract costs that exceed the reasonable amount necessary for a review of the proposed transaction.

Sec. 15A.0058. REQUEST FOR RECONSIDERATION. (a) Not later than the 10th day after the date the attorney general provides notice of the attorney general's determination to deny a proposed transaction under Section 15A.0056, a party to the transaction may request that the attorney general reconsider the decision and modify, amend, or revoke the prior decision based on new or different facts, circumstances, or law.

(b) A party requesting a reconsideration under Subsection (a) shall submit to the attorney general a written affidavit stating the new or different facts, circumstances, or law the party requests to be considered.

(c) The attorney general shall grant or deny reconsideration not later than the 30th day after the date of receipt of the request under this section.

(d) If the reconsideration request is granted, the attorney general shall provide notice to the parties to the proposed transaction that is the subject of the request of the attorney general's approval or denial of the transaction following reconsideration. A decision by the attorney general under this subsection has the same force and effect as the original decision.

Sec. 15A.0059. ADMINISTRATIVE RECORD OF ATTORNEY GENERAL DETERMINATION. (a) The attorney general's determination to approve or deny a proposed transaction under Section 15A.0056 or 15A.0058 must be based on and the attorney general shall maintain an administrative record that consists of:

(1) evidence the parties to the transaction submitted;

(2) official reports made by any experts the attorney general hired or contracted with to review the transaction;

(3) evidence the attorney general obtained from the parties to the transaction or from third parties; and

(4) any other evidence or information the attorney general relied on in making the determination, including information submitted as part of the notice required by Section 15A.0053.

(b) To the extent any evidence or information is confidential, the attorney general shall take reasonable measures to ensure the confidentiality of that evidence or information in the administrative record.

Sec. 15A.0060. JUDICIAL REVIEW OF ATTORNEY GENERAL DETERMINATION. (a) Not later than the 30th day after the date the attorney general makes a final determination under Section 15A.0056 or 15A.0058 to deny approval for a proposed transaction, a party to the transaction may institute judicial review of the determination by filing a petition for judicial review in a district court in Travis County.

(b) On receipt of notice of the filing of the petition for judicial review, the attorney general shall provide to the court and the parties to the proposed transaction the original or a certified copy of the administrative record related to the transaction that the attorney general maintains under Section 15A.0059. The court may:

(1) set a deadline by which the attorney general must submit the administrative record; and

(2) require or permit later corrections or additions to the administrative record.

(c) Judicial review of the attorney general's final determination regarding a proposed transaction is under the substantial evidence rule.

(d) After a review of the records, including the administrative record and any material submitted in support of the petition, the court may grant the petition and approve the proposed transaction if the court finds that the attorney general's final determination was:

(1) arbitrary or capricious;

(2) characterized by abuse of discretion; or

(3) clearly an unwarranted exercise of discretion.

(e) Not later than the 180th day after the date the petition for judicial review was filed, the court shall issue a written decision providing the court's findings of fact and conclusions of law unless extraordinary circumstances prevent the court from issuing the decision during that period.

Sec. 15A.0061. FAILURE TO SUBMIT NOTICE: INVESTIGATION. The attorney general or a county or district attorney may conduct an investigation to determine whether a private equity company:

(1) failed to comply with Section 15A.0053 with respect to a proposed or completed transaction; and

(2) is or has been engaging in or is actively preparing to engage in an activity that constitutes a violation of Subchapter C.

Sec. 15A.0062. FAILURE TO SUBMIT NOTICE: CIVIL PENALTY. (a) A private equity company that violates Section 15A.0053 is liable to this state for a civil penalty in an amount not to exceed $2,000 for each violation.

(b) The attorney general may bring an action in a district court of Travis County to:

(1) recover the civil penalty imposed by this section;

(2) compel compliance with the requirements of Section 15A.0053; and

(3) enjoin or unwind a transaction for failure to comply with Section 15A.0053.

(c) The attorney may recover reasonable attorney's fees and other reasonable costs incurred in investigating and bringing an action under this section.

(d) The court may grant any other equitable relief the court considers appropriate in an action under this section.

SUBCHAPTER C. PROHIBITED ACTIVITIES

Sec. 15A.0101. PROHIBITED TRANSACTIONS AND OTHER ACTIVITIES. (a) A private equity company may not enter into a transaction that:

(1) will substantially lessen competition in a geographic market for veterinary services; or

(2) tends, attempts, or conspires to create a monopoly in the veterinary services market within a geographic area.

(b) A private equity company involved in any manner with a veterinary services provider doing business in this state, whether as an investor or owner of the provider's assets, may not control or direct the provider's practice of veterinary medicine, including by:

(1) influencing or entering into contracts with third parties on behalf of the provider;

(2) influencing or setting rates or fees to be charged by the provider to third parties;

(3) influencing patient admissions or referrals; or

(4) influencing the selection or use of medical supplies and pharmaceuticals.

(c) A veterinary services provider doing business in this state may not enter into an agreement or arrangement with any entity directly or indirectly owned or controlled wholly or partly by a private equity company that allows the private equity company to:

(1) arrange for the collection or sale of the provider's accounts receivable; or

(2) manage the provider's operations in exchange for:

(A) a percentage of collections or revenue; or

(B) a fee charged to the veterinary services provider or passed through to a client, owner or caretaker of an animal, or insurer covering veterinary services.

(d) A contract involving the management of a veterinary services provider by a private equity company or the sale of a veterinary services provider's real property or other assets to a private equity company may not include a provision that prohibits:

(1) a veterinarian from competing with the provider if the veterinarian leaves the provider's practice; or

(2) a veterinarian from disparaging, opining, or commenting on the provider with regard to any issues involving:

(A) quality of care;

(B) utilization of care;

(C) ethical or professional standards or guidelines; or

(D) revenue-increasing strategies employed by the company.

(e) A contract provision described by Subsection (d) is void and unenforceable as against public policy.

Sec. 15A.0102. INVESTIGATIVE AND ENFORCEMENT AUTHORITY. (a) The attorney general or, subject to Subsection (f), the appropriate district or county attorney may:

(1) investigate any activity or contemplated activity that violates or threatens to violate any of the prohibitions in this subchapter;

(2) bring an action to recover a civil penalty imposed under or other remedy authorized by Section 15A.0104 or 15A.0105; or

(3) bring an action requesting a court order under Section 15A.0103.

(b) The appropriate local prosecuting attorney may prosecute an offense under Section 15A.0106, 15A.0107, or 15A.0108.

(c) The attorney general or a district or county attorney may recover fees, expenses, and costs incurred in bringing an action under this subchapter, including court costs, reasonable attorney's fees, witness fees, and deposition fees.

(d) Venue for an action brought under this subchapter shall be in a district court of Travis County or in the district court of the county in which any part of the alleged violation of any of Section 15A.0101 occurred, is occurring, or is about to occur. Venue for prosecution of an offense under Section 15A.0106, 15A.0107, or 15A.0108, is in any county in which the violation is alleged to have occurred or to be occurring.

(e) The attorney general or, subject to Subsection (f), a district or county attorney may bring an action to recover a civil penalty under this subchapter independently or together with an action to obtain injunctive relief. The district court issuing injunctive relief retains jurisdiction in an action brought to recover a civil penalty under this subchapter. An action filed under Section 15A.0104 or 15A.0105 may not be transferred to another county except on the order of the court.

(f) A district or county attorney, with prior written notice to the attorney general, has the authority to bring an action under this subchapter, provided that not later than the fifth day after the date the attorney general receives the notice the attorney general responds that the attorney general does not intend to act with respect to that matter. On receipt of notice of a related active criminal investigation or prosecution, the attorney general shall coordinate and cooperate with the district or county attorney engaged in the investigation or prosecution to ensure that the filing of an action under this subchapter does not interfere with an ongoing criminal investigation or prosecution.

(g) A district or county attorney shall bring an action under this subchapter in the name of the state.

(h) A civil penalty collected under this subchapter by the district or county attorney shall be deposited to the credit of the general fund of the county in which the attorney brought action.

(i) The attorney general may retain a reasonable portion of a civil penalty recovered under this subchapter, not to exceed amounts specified in the General Appropriations Act, for the enforcement of this subchapter.

Sec. 15A.0103. INVESTIGATION. (a) The attorney general or a district or county attorney may conduct an investigation if the attorney general or district or county attorney has reason to believe that:

(1) a veterinary services provider or private equity company possesses information, custody, or control of documents or other evidence relevant to an investigation of any activity or contemplated activity that violates or threatens to violate Section 15A.0101;

(2) a veterinary services provider or private equity company is engaging, has engaged, or is about to engage in an act or practice that violates Section 15A.0101; or

(3) it is in the public interest to conduct an inquiry to ascertain whether a veterinary services provider or private equity company is engaging, has engaged, or is about to engage in an act or practice that violates Section 15A.0101.

(b) During an investigation under this section, the attorney general or a district or county attorney, as applicable, may:

(1) require the veterinary services provider or private equity company to file a written statement under oath or affirmation detailing all facts and circumstances concerning the alleged violation of Section 15A.0101 and any other necessary information;

(2) examine under oath any person connected to an activity or contemplated activity that may violate Section 15A.0101; and

(3) issue a civil investigative demand requiring the veterinary services provider or private equity company to produce documents, permit inspection and copying of the document, answer in writing written interrogatories, or give oral testimony.

(c) Except as provided by this section, the procedures established for the issuance of a civil investigative demand under Section 17.61 apply to the same extent and manner to the issuance of a civil investigative demand under this section.

(d) The attorney general or a district or county attorney, as applicable, may use information obtained in response to a civil investigative demand, documents obtained, or product of discovery or other record derived or created from the information as necessary to enforce this subchapter, including by presenting the information to a court.

(e) The attorney general or a district or county attorney shall bear the expense of copying documents for purposes of this section. The attorney general or a district or county attorney shall prescribe reasonable terms allowing the veterinary services provider or private equity company to substitute copies for originals of requested documents if the originals are made available for inspection. The attorney general or a district or county attorney may obtain or review information in an electronic format.

(f) A veterinary services provider or private equity company served with a civil investigative demand under this section shall comply with the terms of the demand unless a court orders otherwise. A district or county attorney who executes and serves a civil investigative demand may file a petition similar to a petition described by Section 17.61(g) in the district court of the county in which any part of the alleged violation of Section 15A.0101 occurred, is occurring, or is about to occur.

(g) Subject to Section 15A.0109, the attorney general or a district or county attorney may seek a court order to compel compliance with Subsection (b) within a period stated by court order.

Sec. 15A.0104. INJUNCTIVE RELIEF. (a) The attorney general or a district or county attorney may bring an action against a veterinary services provider or private equity company to restrain or enjoin temporarily or permanently any activity or contemplated activity of the provider or company that the attorney general or district or county attorney has reason to believe violates or threatens to violate Section 15A.0101.

(b) The court may issue a temporary restraining order or a temporary or permanent injunction. The injunctive relief shall be issued without bond.

(c) This section may not be construed to require the attorney general or a district or county attorney to notify a veterinary services provider or private equity company that court action is or may be under consideration. Except as otherwise provided by this subsection, the attorney general or district or county attorney shall, not later than the seventh day before instituting a court action, contact the provider or company to inform the provider or company in general of an alleged violation under Section 15A.0101. Cessation of an alleged violation after the prior contact may not render the court action moot under any circumstances, and the injunctive relief shall lie even if the provider or company has ceased the act or practice after prior contact. Prior contact is not required if, in the opinion of the attorney general or district or county attorney, there is good cause to believe that:

(1) the provider or company would:

(A) evade service of process if prior contact were made; or

(B) destroy relevant records if prior contact were made; or

(2) an emergency exists and immediate and irreparable injury, loss, or damage would occur as a result of a delay in obtaining a temporary restraining order.

(d) A veterinary services provider or private equity company that violates an injunction issued under this section shall forfeit and pay a civil penalty of not more than $10,000 per violation, not to exceed $50,000.

Sec. 15A.0105. CIVIL PENALTIES; ADDITIONAL ENFORCEMENT ACTIONS. (a) The attorney general or an appropriate district or county attorney may bring an action to recover a civil penalty against a veterinary services provider or private equity company that the attorney general or district or county attorney believes has violated Section 15A.0101.

(b) A civil penalty imposed under this section for a violation of Section 15A.0101(a) or (b) may not exceed:

(1) for an individual person, $300,000; or

(2) for a private equity company:

(A) $3 million, if the lesser of the company's assets or market capitalization is less than $100 million;

(B) $20 million, if the lesser of the company's assets or market capitalization is at least $100 million but less than $500 million; or

(C) $30 million, if the lesser of the company's assets or market capitalization is $500 million or more.

(c) A civil penalty imposed under this section for a violation of Section 15A.0101(c) or (d) may be in an amount not to exceed $7,500 for each violation. Each day a violation continues is a separate violation for purposes of imposing the civil penalty under this subsection.

(d) The amount of a civil penalty under Subsection (c) shall be based on:

(1) the seriousness of the violation, including the nature, circumstances, extent, and gravity of the violation;

(2) the history of previous violations;

(3) the amount necessary to deter a future violation;

(4) the economic effect of a penalty on the veterinary services provider or private equity company on which the penalty will be imposed;

(5) knowledge that the act constituted a violation of this subchapter; and

(6) efforts to correct the violation.

(e) Notwithstanding Subsection (c), if the trier of fact finds that a contract, agreement, or arrangement prohibited under Section 15A.0101(c) or (d) may have the effect of substantially lessening competition in a geographic market, the penalties and remedies prescribed by Subsections (b) and (f) apply instead of the penalty prescribed by Subsection (c).

(f) On finding a violation of Section 15A.0101(a) or (b), the court shall:

(1) order the divestiture or other disposition of any stock, share capital, assets, or interest acquired in violation of Section 15A.0101(a) or (b), as applicable; and

(2) prescribe a reasonable time, manner, and degree of the divestiture or other disposition after the court determines that divestiture is necessary:

(A) to avoid the creation or continuation of a monopoly or to avoid a likely substantial lessening of competition that results from the violation; or

(B) to restore competition for veterinary services in a geographic market that has been eliminated by the violation.

(g) In addition to the civil penalties provided under this section, the court may issue appropriate orders and judgments, including:

(1) ordering the suspension or revocation of a license, permit, or approval previously granted to a defendant by any state agency; or

(2) imposing reasonable restrictions on the future activities or investments of a defendant, including prohibiting a defendant from engaging in the same type of endeavor as the enterprise in which the defendant was engaged in conduct violating Section 15A.0101.

Sec. 15A.0106. CERTAIN PROHIBITED TRANSACTIONS AND ACTIVITIES: CRIMINAL OFFENSE. (a) A veterinary services provider or private equity company commits an offense if the provider or company violates Section 15A.0101(a) or (b).

(b) An offense under this section is a Class A misdemeanor punishable by:

(1) a fine not to exceed $5,000;

(2) confinement in jail for a term not to exceed three years; or

(3) both such fine and confinement.

Sec. 15A.0107. INTERFERENCE WITH INVESTIGATION: CRIMINAL OFFENSE. (a) A veterinary services provider or private equity company commits an offense if, after receiving actual notice that the attorney general or a district or county attorney has initiated or plans to initiate an investigation under this subchapter, the provider or company intentionally conceals, alters, destroys, or falsifies a document or record that is relevant or material to the investigation.

(b) A veterinary services provider or private equity company commits an offense if, after receiving a civil investigative demand issued under Section 15A.0103, the provider or company intentionally falsifies or withholds relevant material that is not privileged.

(c) An offense under this section is a Class A misdemeanor.

Sec. 15A.0108. DELIBERATE NONCOMPLIANCE: CRIMINAL OFFENSE. (a) A veterinary services provider or private equity company commits an offense if the provider or company, with intent to wholly or partly avoid, evade, or prevent compliance with Section 15A.0103, knowingly removes from any place, conceals, withholds, destroys, mutilates, alters, or by any other means falsifies any document or record that is relevant or material to an investigation or otherwise provides inaccurate information.

(b) An offense under this section is a Class A misdemeanor punishable by:

(1) a fine not to exceed $5,000;

(2) confinement in jail for a term not to exceed one year; or

(3) both such fine and confinement.

Sec. 15A.0109. SCOPE OF JURISDICTION; APPEAL. (a) A district court in which an action is filed in accordance with this subchapter may hear and determine the matter presented and enter any order required to implement this chapter. A final order of the court is subject to appeal.

(b) The failure of a party to an action filed under this subchapter to comply with a final order of the court is punishable by contempt.

SECTION 2. The changes in law made by this Act apply to conduct occurring on or after the effective date of this Act. Conduct occurring before that date is governed by the law in effect on the date the conduct occurred, and the former law is continued in effect for that purpose.

SECTION 3. This Act takes effect September 1, 2025.