H.R. 7537 — Corporate Crimes Against Health Care Act

This section amends 18 U.S.C. Chapter 31 by adding new sections establishing criminal and civil penalties, including clawback authority, for covered parties whose actions contribute to a triggering event (i.e., resulting in the death or injury of one or more patients under the care of a target firm). Specifically, it (1) criminalizes such prohibited conduct under new §671 with imprisonment of 1 to 6 years under §672; (2) imposes a civil penalty of up to 5 times any clawback amount under §673, with collections deposited as miscellaneous receipts in the Treasury; and (3) under §674, authorizes the Attorney General or a state attorney general to claw back all or part of covered compensation received by the covered party from the target firm during the preceding or succeeding 10 years, with clawed-back amounts deposited into a fund distributed (in the interests of justice) to cover shortfalls in target firm employee salaries, benefits, or pensions (prioritized if bankruptcy is the triggering event) or to serve the harmed community's health care needs. Enforcement includes U.S. Attorney General suits; state attorney general parens patriae actions (with 10-day notice, federal intervention rights, and limitations during pending federal actions); and an affirmative defense if the covered party proves by clear and convincing evidence inability to prevent the triggering event.

This section establishes a new mandatory exclusion from Medicare, Medicaid, and other federal health care programs under SSA section 1128(a)(5) for any individual or entity that, on or after the date of enactment, sells assets to or newly pledges assets as collateral for a loan with a real estate investment trust (REIT, as defined in IRC section 856(a)). The exclusion does not apply if the individual or entity agreed to pledge the asset as collateral prior to enactment, including with respect to any future agreement regarding that same asset.

This section repeals the special rule exempting qualified health care properties from the taxable REIT subsidiary (TRS) rent limitation and independent contractor requirements. (Thus, effective for taxable years beginning after enactment, rents from TRS interests in such properties—previously allowed without limit—will count toward the general 20% cap on TRS-derived rents and must meet independent contractor standards.)

This section eliminates qualified real estate investment trust (REIT) dividends from the combined qualified business income amount under the qualified business income deduction (IRC §199A). (As background, §199A allows an eligible individual taxpayer a deduction equal to the lesser of 20% of such amount or 20% of taxable income, where the amount previously included qualified business income from pass-through trades or businesses—subject to wage and capital limitations if taxable income exceeds specified thresholds—plus qualified REIT dividends and qualified publicly traded partnership income, which faced no such limitations; thus, REIT investors may no longer claim the up to 20% deduction on such dividends for taxable years beginning after enactment.)

This section establishes mandatory annual reporting requirements, beginning January 1, 2027 (or within 60 days of formation for new entities), for specified entities on health-related ownership and control information, including (1) mergers, acquisitions, ownership changes, and affiliations with primary reasons, control mechanisms, and voting equity percentages; (2) names, addresses, and identifiers (e.g., tax ID, NPI) of affiliated health care providers; (3) business structures, tax IDs, and details of controlling entities, affiliates, subsidiaries, and management services entities; (4) financial data such as debt-to-earnings ratios, debt amounts, real estate leases/purchases, revenue sharing, investor fees/dividends, non-profit capital gains investments and taxes, and controlling entity information; (5) value of quality or performance-based payments (e.g., shared savings under Medicare ACOs); (6) provider changes by NPI; and (7) foreign domicile and registration details for controlling entities/subsidiaries. The Secretary must post reported information publicly starting January 1, 2028 (without disclosing individual SSNs), conduct annual random-sample audits for compliance and accuracy, and impose civil monetary penalties of up to $5 million per incomplete or false report (collected like penalties under SSA §1128A). Specified entities under common control with certain private equity or investment firms report only once at the parent level; collections are exempt from the Paperwork Reduction Act. "Control" means power to vote more than 5% of voting securities or direct entity actions; a "controlling entity" is a parent or other entity that owns or controls the specified entity.

This section directs the Inspector General of the Department of Health and Human Services to conduct a study evaluating profit-driven practices (including cost-cutting and revenue-enhancing practices) in health care delivery and to submit a report to Congress describing the results not later than three years after the date of enactment. The study must include (1) an evaluation of specified practices such as overbilling or up-coding, inflated patient risk scores, revenue-based compensation, staff reductions, service mix changes to maximize revenue, insurer restrictions on access (e.g., prior authorization), and evasion of state Corporate Practice of Medicine laws; (2) an assessment of their impacts on patient care quality, safety, and outcomes; health care personnel well-being; Medicare; Medicaid; VA health care; the Federal Employees Health Benefits program; qualified health plans offered through American Health Benefit Exchanges; and group health plans and coverage; (3) an estimate of financial returns to investors and other entities; and (4) an evaluation of federal fraud and abuse policies' adequacy amid health care consolidation, including transparency, enforcement resources, and penalties.