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The Short Answer: Regulators Now Drive the Deal Calendar
If you are buying or selling a behavioral health platform in 2026, your deal timeline is a regulatory timeline, not a banker’s timeline. Five sets of regulators decide when (and whether) you close: the DOJ Civil Division, HHS-OIG, state Medicaid Fraud Control Units, state licensing agencies (Florida AHCA and DCF, Colorado BHA, and others), and the FTC. They do not coordinate with each other. They do not move on your banker’s calendar.
On March 5, 2024, the FTC, the DOJ Antitrust Division, and HHS jointly launched a cross-government public inquiry into private-equity and other corporations’ increasing control over health care. The agencies specifically requested comment on transactions involving behavioral health providers, and on deals that would not otherwise be reported under the Hart-Scott-Rodino Antitrust Improvements Act. FTC Chair Lina M. Khan said the agency would continue “scrutinizing private equity roll-ups, strip-and-flip tactics, and other financial plays” in health care. That was not a press release. It was a flare.
Since the RFI, my team at Atlantic Health Strategies has watched diligence on behavioral health platform deals in the $40M to $80M EBITDA-adjacent range stretch from roughly 60 days to well past 120. Repricing happens. LOIs get pulled. Buyers who close are the ones whose counsel ran a chart-level clinical and compliance review on top of the Quality of Earnings, not instead of one.
Who Is Actually Looking at Your Deal
The DOJ Civil Division and the relevant U.S. Attorney’s Office handle False Claims Act exposure the buyer inherits. On January 15, 2025, DOJ published its FY 2024 FCA recovery report. Recoveries exceeded $2.9 billion, with roughly $1.67 billion tied to the health care industry, and the government has now collected over $78 billion under the FCA since the 1986 amendments. Whistleblowers drove most of it.
- The 979 qui tam lawsuits filed in FY 2024 were the highest ever recorded in a single year, up from 713 in FY 2023.
- Qui tam cases accounted for over 83% of recoveries (approximately $2.4 billion).
- DOJ paid whistleblowers more than $400 million in relator shares in FY 2024 alone.
If you think an insider is not sitting on your target’s payroll right now, you have not been paying attention.
HHS-OIG manages exclusion checks and Corporate Integrity Agreement obligations. State Medicaid Fraud Control Units run parallel investigations and frequently settle alongside the federal government. The Acadia Healthcare resolution announced September 26, 2024 is the current benchmark. Acadia paid $16.66 million to the federal government for false billing under Medicare, Medicaid, and TRICARE, and $3.19 million to Florida, Georgia, Michigan, and Nevada to resolve state law claims. DOJ alleged Acadia billed for inpatient behavioral health services that were not medically necessary and failed to provide adequate treatment plans between 2014 and 2017. The federal government and four states moved on the same conduct. Read that sentence twice.
Then the licensing agencies. In Florida, both DCF and AHCA have to bless a change of ownership for SUD and mental health licenses. Florida AHCA requires a licensure application, fee, and supporting forms at least 60 days prior to the change of ownership, and the Agency will not transfer the license to the proposed owner prior to the actual date of sale. My team has watched Florida CHOWs run past 90 days when the seller had open complaints or Level II background-screening issues on principals. That delay alone can trigger MAC clauses or financing re-trades. Colorado BHA is newer and less predictable. Buyers and sellers should build the deal around the regulatory calendar, or absorb the cost of pretending otherwise.
Where Diligence Actually Breaks Down
The diligence failures my team gets called in to clean up after close fall into a small number of buckets: facilities billing for levels of care they were not actually delivering at the documented intensity; utilization review notes that do not support the ASAM Criteria, 4th Edition placement billed; lab arrangements that look fine on a slide deck and very different when you pull the requisitions; and marketing relationships that violate the Eliminating Kickbacks in Recovery Act.
EKRA, codified at 18 U.S.C. § 220, makes it a federal crime to pay or receive remuneration for referrals to recovery homes, clinical treatment facilities, or laboratories. Unlike the Anti-Kickback Statute (AKS), EKRA applies to any health care benefit program, including private insurance and cash-pay patients, not only federal health plans. DOJ’s view of EKRA’s scope is expanding, not contracting.
On July 11, 2025, the Ninth Circuit affirmed the criminal conviction of laboratory operator Mark Schena in United States v. Schena. Schena was sentenced to 96 months in prison and ordered to pay more than $24 million in restitution. Writing for the panel, Judge Daniel A. Bress held that EKRA “covers marketing intermediaries who interface with those who do the referrals,” confirming the statute reaches marketing intermediaries even when they never touch a patient. Percentage-based compensation to marketers, standing alone, is not per se illegal, but it crosses the line when marketers are directed to unduly influence referring providers through false or misleading representations. If your target’s marketing stack includes percentage-based commissions to outside call centers or lead vendors, price that risk before you sign.
A clean Quality of Earnings report does not protect you from any of this. Last year a buyer’s accounting diligence cleared a Tennessee platform at roughly $12M EBITDA. Our clinical and compliance review found that approximately 18% of Level 2.5 partial hospitalization days (an outpatient level of care under the ASAM Criteria, 4th Edition) were billed without group attendance documentation that would survive a payer SIU audit. The buyer used the finding to negotiate an indemnity escrow and a working capital adjustment. They still closed. They closed with eyes open. If your diligence does not include a chart-level review against the ASAM Criteria, 4th Edition and against state-specific documentation rules, you are not doing diligence. You are doing accounting.
Post-Close: The First 180 Days Are the Risk Window
Most enforcement actions tied to acquired behavioral health entities surface 12 to 36 months after close. The conduct that triggers them usually happened in the first 180 days, when the integration team was rebadging staff and the compliance program was, charitably, in transition.
Acadia is the useful benchmark. DOJ alleged Acadia falsely billed Medicare, Medicaid, and TRICARE for inpatient behavioral health services between 2014 and 2017, with the settlement announced in September 2024. Seven to ten years between conduct and resolution is normal in this space.
Where operators get hit in that window: license effective dates slip. Credentialing lapses. Someone keeps billing under the seller’s TIN past the effective date because payer enrollment did not come through. That last one is a False Claims Act problem, not a paperwork problem.
Operators have to be disciplined:
- Run a mock survey within 60 days of close.
- Re-paper UM and clinical policies against the ASAM Criteria, 4th Edition.
- Lock down EMR access on day one for any terminated staff.
- Confirm payer enrollment effective dates in writing before billing a single claim under the new TIN.
- Document everything.
If HHS-OIG knocks in 2028, the file the buyer builds in 2026 is the file that defends the buyer.
What This Means for Sellers and for Sponsors Holding Assets
Founders considering a sale in 2026 should know: the buyers who can actually close are the ones who have already absorbed the new diligence reality. They will pay fair multiples. They will not pay for problems. Sellers should get their charts, licensing file, and payer contracts in order 12 months before going to market, not 60 days before. The delta between a clean process and a messy one in this market is easily 1.5 to 2 turns of EBITDA.
Sponsors holding a platform through a longer hold than originally planned should focus operator attention on the four levers that survive a soft exit market: census discipline, payer readiness, accreditation status, and clinical leadership stability.
Investors should also pay attention to the qui tam trend line. The 979 qui tam lawsuits filed in FY 2024 were the highest number ever recorded, and relators increasingly name the private equity sponsor alongside the portfolio company. Active sponsor involvement in operations post-close can open the door to direct FCA exposure. Even a $19.85 million federal-and-state recovery, as with Acadia, generated immediate equity-value impact for a publicly traded behavioral health platform. Privately held platforms feel the same shock. It just shows up in the next term sheet rather than the next earnings call.
Allison, Benjamin, Leah and I are happy to talk through transaction, turnaround, or hold-period operations questions in detail. If you are working a deal right now and want a second set of eyes on the diligence file, reach out.
Frequently asked questions
How long does a behavioral health change of ownership (CHOW) actually take in Florida?
Florida AHCA rules require the CHOW application, fee, and supporting forms at least 60 days before the change of ownership, and AHCA will not transfer the license to the proposed owner prior to the actual date of sale. A bill of sale or closing document showing the effective date must be received before the application can be approved. Clean files close near that 60-day floor. Files with open complaints, ownership-disclosure gaps, or Level II background-screening issues on principals routinely stretch to 90 days or longer. For SUD and mental health facilities, DCF licensure runs on its own track and must be coordinated in parallel.
What did the March 2024 FTC, DOJ, and HHS joint inquiry actually do?
On March 5, 2024, the three agencies launched a cross-government public inquiry into private-equity and corporate ownership in healthcare, issuing a Request for Information that named behavioral health providers among the transaction types under review. FTC Chair Lina M. Khan committed the agency to continued scrutiny of roll-ups and strip-and-flip tactics. The RFI specifically requested comment on transactions below the Hart-Scott-Rodino reporting threshold, signaling coordinated federal scrutiny of smaller roll-up deals that historically avoided antitrust review. Buyer counsel started treating behavioral health diligence differently within months of the announcement.
What are the EKRA risks for marketing or referral arrangements after the Ninth Circuit’s Schena decision?
EKRA, codified at 18 U.S.C. § 220, applies to all payors including private insurance, not just federal programs. In United States v. Schena (July 11, 2025), the Ninth Circuit affirmed a 96-month prison sentence and more than $24 million in restitution against a laboratory operator, holding that EKRA reaches payments to marketing intermediaries who influence referring providers even when those intermediaries never interact with patients. Percentage-based commission arrangements are not per se illegal, but they cross the line when paired with deceptive or misleading pitches that unduly influence a referring provider’s clinical judgment. Buyer diligence should pull every marketing, call-center, and lead-vendor agreement and price the exposure before signing.
How much did the federal government recover under the False Claims Act in FY 2024, and how much of it came from whistleblowers?
DOJ reported total FCA recoveries exceeding $2.9 billion for FY 2024, with roughly $1.67 billion tied to the health care industry. Whistleblowers filed 979 qui tam suits, the highest single-year total on record, and qui tam cases accounted for over 83% of recoveries (approximately $2.4 billion). DOJ paid whistleblower relators more than $400 million in FY 2024. Total FCA recoveries since the 1986 amendments now exceed $78 billion.
References
- FTC, DOJ Antitrust Division, and HHS, Joint Cross-Government Inquiry on Impact of Corporate Ownership in Health Care (March 5, 2024)
- U.S. Department of Justice, False Claims Act Settlements and Judgments Exceed $2.9 Billion in Fiscal Year 2024 (January 15, 2025)
- HHS-OIG, Acadia Healthcare Company Inc. To Pay $19.85M to Settle Allegations Relating to Medically Unnecessary Inpatient Behavioral Health Services (September 26, 2024)
- United States v. Schena, No. 23-2989 (9th Cir. July 11, 2025) (published opinion)
- Florida Agency for Health Care Administration, Licensure Requirements (Change of Ownership)
- Morgan Lewis, Ninth Circuit Ruling Confirms Strength of the Eliminating Kickbacks in Recovery Act (August 2025)