The Justice Department’s decision to decline prosecution of Hamilton, N.J.-based Campus Eye Management Holdings, while separately indicting its founder, turned a spotlight on a corporate structure that has become the default architecture for private equity-backed provider roll-ups.
That case ran on an Anti-Kickback Statute theory where a management service organization’s revenue was tied to referral volume it couldn’t legally control.
A separate, earlier state case out of California shows regulators pursuing the same basic structure on control rather than kickbacks. And a handful of other recent settlements suggest both theories are now converging well outside ophthalmology.
Meanwhile, the Federal Trade Commission’s case against U.S. Anesthesia Partners and its private equity backer suggests an emergent third theory of prosecution that takes aim at the roll-up strategy itself, arguing that a string of small, individually unremarkable acquisitions can add up to illegal market power.
Here are nine things to know.
1. Two distinct enforcement theories are aimed at the same corporate structure. Campus Eye was a fraud-and-kickback case wherein prosecutors alleged the MSO’s compensation was tied to referral-generating activity, which sits close to the AntiKickback Statute’s core prohibition, according to a blog post from law firm Ruskin Moscou Faltischek. The state of California’s case against Carbon Health Technologies is a corporate-practice-of-medicine case where the allegation isn’t that money changed hands improperly, but that the MSO exercised control a management company was never supposed to have.
1. PE-backed provider platforms are now exposed to three distinct enforcement theories, and they’re not all the same mechanism. The Campus Eye and Carbon Health cases trace back to the same structural choice with an MSO holding the economics while a physician holds the license. The FTC’s case against U.S. Anesthesia Partners is a different animal: an antitrust case alleging that serial acquisitions, each too small to draw scrutiny on its own, built a dominant regional provider, regardless of how any single practice underneath was structured. Three regulators, three statutes, three mechanisms, and increasingly, the same PE-backed platforms carrying all three exposures at once.
2. California’s Carbon Health settlement centers on control. Attorney General Rob Bonta announced a proposed settlement alleging Carbon Health’s “friendly professional corporation” model gave its MSO contractual rights beyond the traditional management role, including the power to replace physician owners and restrict physicians from terminating the MSO relationship without risking their practice ownership. The complaint also alleged the MSO and its unlicensed officers directed staffing, advertising and insurance negotiations, amounting to non-physician interference with clinical judgment. Carbon Health denied liability, but if approved, the settlement requires the company to restructure its California operations, revise its billing, contracting and advertising practices, and pay roughly $4.4 million in civil penalties. Its former CEO agreed to pay an additional $100,000.
3. California isn’t stopping at one company. Weeks before the Carbon Health settlement, the state attorney general reached a $2 million settlement with Aspen Dental over alleged violations of California’s corporate practice of dentistry rules tied to advertising and contracting practices, according to the attorney general’s office and Dykema. The attorney general’s office has also filed an amicus brief in Art Center Holdings vs. WCE CA Art, a case pitting a physician practice owner against a PE-backed MSO, according to law firm Foley & Lardner, who expects more enforcement to follow.
4. The kickback theory is showing up outside ophthalmology too. Maryland’s attorney general and the Justice Department this year secured a $4 million False Claims Act settlement from CVR Management, the MSO behind the Center for Vein Restoration, over allegations it billed Medicare, Medicaid and TriCare for medically unnecessary vein procedures, according to the Maryland attorney general’s office. It’s the same fact pattern as Campus Eye — volume and billing concentrated inside an MSO-managed platform — applied to a different specialty.
5. The common thread is the split between who owns the license and who owns the economics. Most states bar corporate ownership of a medical practice under the corporate practice of medicine doctrine, according to a report from Holland & Knight, so PE firms buy the MSO instead. The MSO is the entity that owns the billing, real estate, equipment, staffing and often the ASC, while a nominally independent physician or optometrist owns the professional practice on paper, according to a report published in the Thomson Reuters Health Law Handbook. Whether regulators come at that split through the Anti-Kickback Statute or a state’s CPOM law, the exposure traces back to the same design choice.
6. What diligence should look like. For health systems, physicians and investors evaluating an MSO-backed practice or ASC acquisition, historical billing and coding practices are a standard fraud-and-abuse diligence item, not just a valuation input, according to a report from Mintz. Campus Eye showed that the Justice Department will look backward past a change of ownership when that diligence gets skipped. Carbon Health and Aspen Dental show diligence also needs to cover governance mechanics, including termination rights, staffing and advertising control, and who actually has authority over clinical decisions on paper versus in practice.
7. The FTC just showed what the antitrust theory looks like in practice. U.S. Anesthesia Partners and the FTC reached an agreement in principle April 23 to resolve a case accusing USAP, built by private equity firm Welsh, Carson, Anderson and Stowe, of buying up nearly every large anesthesia practice in Texas to create a single dominant provider able to demand higher prices. Beyond the acquisitions themselves, the FTC alleged USAP struck price-setting arrangements with remaining independent anesthesia groups and a market-allocation deal to sideline a competitor. A federal court paused the case May 26 while USAP implements the required relief over 180 days; the terms remain confidential, and USAP isn’t required to admit wrongdoing, but the FTC has said it will relitigate if USAP doesn’t comply.
8. Regulators are now calling this pattern “stealth” or “serial” consolidation, and it’s not unique to anesthesia. Because smaller deals often fall below federal antitrust reporting thresholds, a platform can be built acquisition by acquisition with limited visibility to regulators, and by the time a larger transaction draws review, the market has often already shifted, according to a report from the Private Equity Stakeholder Project.
“Many economically important industries are highly segmented, meaning each consumer is served by a small number of producers. In these cases, even minor mergers can produce major changes in market structure, competition, price, and quality,” a 2023 article in Chicago Booth Review noted.
The same roll-up template has appeared GI, dermatology, ophthalmology and orthopedics, and the USAP settlement signals the FTC is willing to pursue it retroactively — even after acquisitions have closed and market positions are already established.
9. None of this is limited to eye care, dentistry, anesthesia or vein clinics. Dental support organizations, dermatology platforms, orthopedic and spine ASC networks and GI roll-ups are largely built on the same MSO-over-practice architecture, and private equity’s corporatization of healthcare services is drawing increasing federal and state attention, with academic institutions and physician trade groups warning that unlicensed parties are putting “profits over patients,” according to a report on the American College of Physicians’ recent position paper.
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