Anthem files for expedited appeal of decision blocking Cigna merger

Anthem is asking the D.C. Circuit Court of Appeals to rush the appeals process as it tries to reverse a lower court’s ruling blocking its $54 million of acquisition of Cigna.

The proposed merger, which would create the largest commercial health insurer in the U.S., was blocked on antitrust grounds by U.S. District Judge Amy Jackson Berman on Feb. 8. She said the deal violated federal merger guidelines by eliminating competition, reducing the number of national insurance carriers and diminishing “the prospects for innovation in the market.”

Berman had also dismissed Anthem’s argument that the deal would be beneficial to customers by reducing medical expenditures by $2 billion, saying documents in the case showed Anthem was discussing ways to capture those savings for itself.

In its motion for an expedited appeal, Anthem’s lawyers argued that just because the merged firm would benefit doesn’t mean consumers won’t as well.  

“Massive consumer benefits should not be tossed aside because merging parties—capitalists after all—stand to make a modest profit for their shareholders. Moreover, to do so ignores competition’s intended beneficiaries: consumers,” Anthem said in its appellant brief.

Anthem’s merger agreement with Cigna is set to expire April 30, according to Anthem. Unless the appeal is fast-tracked, Anthem said the merger could be terminated before any resolution is reached in court, as Cigna has indicated it wouldn’t extend the deal past the April 30 date, and could collect a $1.85 billion break-up fee in the process.

“Anthem disputes that Cigna has a right to terminate at all, but Cigna disagrees,” Anthem said in its request for an expedited appeal. “Having the appeal decided in time to close by April 30 will avoid risk and litigation on that subject.”

Without a quicker path through the appeals process, Anthem said it may not be able to secure additional financing to cover the costs of negotiating an extension of the merger agreement.

“Of course, even with expedition and a ruling that allowed the Merger to proceed, there is no guarantee that the Merger would be consummated. Anthem still requires certain state insurance regulatory clearances,” the company said in its appeal request. “Nonetheless, Anthem believes that a favorable ruling by this court prior to the “Termination Date” of April 30 will allow the clearances to be obtained and the merger to close.”

In challenging the ruling, Anthem is taking a different approach from rival Aetna after its similarly rejected acquisition of Humana. Those insurers announced Feb. 14 they were mutually ending their agreement, with Humana due to be paid a $1 billion break-up fee.