Anthem opens merger trial arguing Cigna purchase would improve rates

The antitrust trial between the U.S. Department of Justice (DOJ) and Anthem over its proposed $54 billion acquisition of Cigna began Nov. 21, with both sides offering conflicting visions of insurance competition if the deal were allowed to go through.

In his opening statement, Anthem attorney Chris Curran argued the combined insurer would be better positioned against national rivals UnitedHealth and Aetna, which is fighting the same antitrust claims against the DOJ over its proposed deal with Humana. The consolidation would lead to savings, not higher prices, for some of the nation’s largest companies, according to Curran.

“The notion that these Fortune 500 companies will be victimized here is not realistic,” he said, according to the National Law Journal. “It’s a menu selection that these companies make. There’s a variety of alternatives.”

The DOJ’s opening statement included the same arguments made when it filed the lawsuit in July: the merger would drive up prices by taking away one of Anthem’s key competitors and efficiencies created by the deal were highly unlikely to end up benefitting policyholders or providers.

“It is Anthem’s burden to quantify efficiencies, and they won’t be able to,” said DOJ attorney Jon Jacobs.

The testimony on the first day of the trial included comments from Anthem CEO Joseph Swedish. He was questioned by the DOJ about topics like whether Anthem will use the Cigna brand to compete against Blue Cross Blue Shield Association insurers which Anthem had helped in the past. Swedish pushed back when, according to the Wall Street Journal, he was asked if an insurer pushing for lower rates on services would be “dropping the hammer” on hospitals and physicians.

“That’s not words I would use,” Swedish said.

The trial will split into two phases, with this first part focusing on the deal’s potential effects on national insurance markets and wrapping up by Dec. 2. Before delving into local markets, the trial will break until Dec. 12, during which time U.S. District Judge Amy Jackson Berman may issue a preliminary ruling.

A final ruling should come no later than the end of January, according to Berman. The timing matters, as Anthem has suggested Cigna will opt out of the deal if it’s not completed before a April 30 deadline, forcing Anthem to pay $1.85 billion break-up fee in the process.

The separate trial on the Aetna-Humana merger is set to begin Dec. 5.