Overview
- Gov. Gavin Newsom signed SB 351 on Oct. 6, 2025, with the law taking effect Jan. 1, 2026.
- Private equity groups and hedge funds are barred from influencing clinical decisions, including diagnostic testing, referrals, patient volume, hours worked, billing and coding, medical record control, hiring based on clinical competency, and payer contracting parameters.
- Contracts tied to such investors cannot include noncompete or nondisparagement clauses for clinicians, with exceptions preserved for otherwise enforceable sale‑of‑business noncompetes and confidentiality of material nonpublic information.
- The California attorney general may seek injunctive and other equitable remedies to enforce the statute and recover attorneys’ fees for violations.
- Amendments narrowed the law’s scope by excluding hospitals, hospital systems, and public agencies from the definitions of private equity and hedge funds, and legal analysts say the statute largely codifies existing corporate practice of medicine principles.