Trial schedules could kill Aetna-Humana, Anthem-Cigna deals

The antitrust trials on the proposed Aetna-Humana and Anthem-Cigna mergers could begin as soon as October or as late as February 2017, depending on whether the U.S. Department of Justice or the insurers get their way.

The DOJ has requested extra time to conduct pretrial litigation, and asked in a filing to the U.S. District Court for the District of Columbia to have “a trial-ready date for both matters of Feb. 17, 2017, with consecutive trials starting as soon thereafter as permitted by the court’s schedule.”

“The scope of each of these matters is enormous,” the DOJ said. “The action challenging Aetna’s proposed $37 billion acquisition of Humana involves two products and 381 relevant markets. The action challenging Anthem’s proposed $54 billion acquisition of Cigna involves four products and 94 relevant markets, including a national market. These cases challenge the largest mergers ever proposed in the $3 trillion health-insurance industry, and threaten harm to millions of consumers across the country. Given what is at stake, this Court should allow both sides a reasonable opportunity to develop the relevant evidence in discovery and to present that evidence at trial.”

By February 2017, the Aetna-Humana merger could be dead, as their agreement contains a contractual deadline to complete the acquisition by December 31, or else Humana would be able to withdraw from the deal and collect a $1 billion break-up fee from Aetna.

In Aetna’s filing on the timing of the proceedings, it requested a trial in October, and mostly focused on why the case should be tried before the contested Anthem-Cigna deal.

“Aetna and Humana believe that this trial can be completed within a two-week period, and that commencing the trial in mid-fall would allow sufficient time for the Court to reach a decision before the parties’ contractual deadline at the end of the year,” Aetna said.

Aetna also argued its deal with Humana would be adjudicated more quickly because it affects fewer markets, and that its case should come first because it announced the merger with Humana three weeks before the Anthem and Cigna signed their merger agreement.

Anthem asked for a later, less specific time, given that its deal with Cigna won’t expire until April 30, 2017, after a “regulatory restraint” clause was activated unilaterally by Anthem. It requested a three-week trial completed no later than December 31, arguing it needs 120 days to secure approvals from state insurance regulators to complete the acquisition.

In the filing, Anthem even admitted to behind the scenes bickering between the two insurers over issues such as which company’s CEO would lead the combined insurer. If a trial delays the merger, Anthem expects Cigna would kill the deal.

“Anthem believes that the merger must close by April 30, 2017 or Cigna will declare that it is terminating the Merger Agreement the next day,” Anthem said. “If the Merger Agreement terminates and Cigna has not willfully breached certain of its obligations, Cigna may be entitled to a break-up fee of $1.85 billion.”

The DOJ countered that the trial schedules shouldn’t be determined by “self-imposed” contractual deadlines.

“Defendants fixed these option dates themselves and they can alter them with the stroke of pen,” the DOJ said.

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John Gregory, Senior Writer

John joined TriMed in 2016, focusing on healthcare policy and regulation. After graduating from Columbia College Chicago, he worked at FM News Chicago and Rivet News Radio, and worked on the state government and politics beat for the Illinois Radio Network. Outside of work, you may find him adding to his never-ending graphic novel collection.

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