Creator: Patrick Connole
‘Stop Looting’ Bill Rises, Aims to Limit SNF Investors
A bill offering new regulation of REITs in healthcare was re-introduced in Congress, which may matter a lot more if Democrats take back Congress in November.
For the fourth time in seven years, a group of Democrats backed by the nation’s largest labor unions has re-introduced the “Stop Wall Street Looting Act,” which has as one of its aims the regulation of REITs in the healthcare space, including skilled nursing.
Supporters of the legislation include Sens. Elizabeth Warren (D-Mass.), Tammy Baldwin (D-Wis.), Richard Blumenthal (D-Conn.), Ed Markey (D-Mass.), Jeff Merkley (D-Ore.), Bernie Sanders (I-Vt.), and Tina Smith (D-Minn.), along with Reps. Pramila Jayapal (D-Wash.), Mark Pocan (D-Wis.), Greg Landsman (D-Ohio), Jesús "Chuy" García (D-Ill.), Alexandria Ocasio-Cortez (D-N.Y.), Ilhan Omar (D-Minn.), Delia Ramirez (D-Ill.), Rashida Tlaib (D-Mich.), and Delegate Eleanor Holmes Norton (D-D.C.).
According to the bill’s sponsors, here are the highlights:
Private Investment Funds. Private equity firms, the firm’s general partners, and their insiders will all be on the hook for the liabilities of companies under their control—including debt, legal judgments, and pension-related obligations—to better align the incentives of private equity firms and the companies they own. Liability would not extend to the fund’s limited partners. The bill ends the tax subsidy for excessive leverage and closes the carried interest loophole.
Portfolio Companies. To give portfolio companies a shot at success, the bill limits how much money private equity firms can extract from companies and closes the loophole that private equity firms have used to hide certain assets from bankruptcy courts.
Workers, Customers, and Communities. This proposal prevents private equity firms from walking away when a company fails and protects workers and communities by:
Prioritizing workers’ pay in the bankruptcy process and amending the laws to increase the priority claims for unpaid earnings and other benefits from $10,000 to $20,000 per worker.
Creating incentives for job retention so that workers can benefit from a company’s second chance.
Ending the immunity of private equity firms from legal liability when their portfolio companies break the law.
Expanding protections for striking workers by clarifying unfair labor practices and the employer duty to bargain.
Investors. Private equity managers will be required to disclose fees, returns, and other information about their funds and the corporate loans they make so that investors can monitor their investments.
Public Funds. Firms receiving any funds from a federal or state agency must publicly disclose how the funds are used and will be prohibited from acquiring any company or making a distribution to investors for two years after receipt.
REITS. Prohibits payments from federal health programs to entities that sell assets or use assets for a loan collateral made to a REIT; repeals a rule in the Tax Code that allows taxable REIT subsidiaries to exert influence on the operations of healthcare entities; and removes the 20 percent pass-through deduction for all REIT investors.
Comments or questions? Contact Patrick Connole at pconnole@parkplacelive.com.
