By: Aaron R. Claxton

California is expanding regulatory oversight of healthcare transactions affecting cost, access, equity, and competition. Deal parties should evaluate early whether notice or filing obligations arise under the Office of Health Care Affordability (“OHCA”), the California Department of Insurance (“DOI”), or the California Department of Managed Health Care (“DMHC”).

Office of Health Care Affordability

OHCA now has authority to receive notice of certain material healthcare transactions involving entities doing business in California and, in some cases, to conduct a cost and market impact review (“CMIR”).

Covered transactions include mergers, acquisitions, affiliations, joint ventures, asset transfers, governance changes, and other arrangements involving a transfer of control or material operational change. Depending on the transaction’s size and nature, OHCA may require only a pre-transaction notice or may conduct a more extensive CMIR.

Covered transactions require at least 90 days’ advance written notice before closing. Filing obligations are triggered when a healthcare entity with $25 million or more in annual California revenues is involved, with additional thresholds depending on transaction type. The review process can materially affect timelines, create execution risk, require substantial document production, and influence closing conditions, outside dates, and regulatory cooperation covenants. Parties should assess early whether a may trigger a CMIR.

OHCA’s jurisdictional analysis is highly fact-specific. Whether a particular entity qualifies as a covered healthcare entity, or whether an arrangement constitutes a material transaction, may require detailed review of organizational structure, revenue, licensure, service lines, and control rights. OHCA analysis should now be a standard part of diligence for California healthcare transactions.

When Are DOI or DMHC Filings Required?

DOI filings may be triggered where the transaction involves an insurance-licensed entity, a health insurer holding company, or a change of control of an insurer. DMHC filings may arise where the transaction involves a licensed healthcare service plan or an entity regulated under the Knox-Keene Act, including transactions affecting plan operations, governance, provider networks, or the assumption of risk.

For both agencies, parties should not assume a transaction escapes regulatory review merely because the regulated entity is not the direct target. Upstream ownership changes, restructurings, intercompany transactions, and affiliated-party dealings may all trigger filing requirements depending on control concepts and materiality thresholds.

DOI and DMHC review can substantially affect deal timing and closing mechanics. Filings may require detailed disclosures on ownership, governance, financial condition, business plans, and competitive effects, and may involve waiting periods, supplemental inquiries, or formal approval requirements. Where DMHC is involved, the regulator may also focus on operational continuity, enrollee protections, solvency, and network adequacy under the Knox-Keene Act. Counsel should coordinate early with regulatory specialists to determine filing requirements and align transaction documents with expected review timelines.

What Additional Issues Arise When DMHC-Licensed Plans Are Involved?

Where a DMHC-licensed healthcare service plan is involved, DMHC may scrutinize the transaction’s effect on plan administration, provider contracting, utilization management, and delegated functions.

DMHC filing requirements can also arise in management agreements, delegated arrangements, and transactions involving risk-bearing organizations (RBOs), which may not be immediately apparent from the deal’s corporate structure alone.

Even when a deal is structured as a corporate transaction, DMHC may examine its practical effect on downstream regulated plan operations and delegated arrangements, which can shape both the filing’s substance and the regulator’s review timeline.

What Should Healthcare Dealmakers Do Now?

Against this backdrop, healthcare transaction parties should approach California deals with a more integrated regulatory strategy. Early-stage diligence should evaluate not only corporate, licensure, reimbursement, fraud and abuse, and antitrust issues, but also whether the proposed transaction triggers OHCA notice requirements or requires DOI or DMHC filings.

This analysis should begin before a letter of intent is finalized. Among other things, parties should assess: the identity and licensure status of relevant entities; whether control is changing directly or indirectly; whether management, governance, or contracting rights could confer control; whether risk-bearing or payer functions are implicated; and whether the anticipated timeline accounts for pre-closing notice, review, or regulatory approval periods.

California’s evolving oversight of healthcare business transactions reflects a broader policy trend toward increased review of deals that may affect affordability, competition, and access to care. The new OHCA notice requirements, together with existing DOI and DMHC filing regimes, make early regulatory assessment more important than ever. Stakeholders in California healthcare transactions should work closely with counsel to evaluate how existing and emerging requirements apply to proposed structures and strategic objectives.

Aaron R. Claxton leads the Wilke Fleury LLP healthcare team, advising health plans, insurers, and providers on complex legal, regulatory, compliance, and business matters in California.