DOJ lawsuit to block UnitedHealth-Change Healthcare’s acquisition now set for 1 August trial

March 23, 2022 | by

UnitedHealth Group isn’t giving up. Last Thursday (17 March) UHG filed with the US District Court in Washington, DC, responding to the US Department of Justice’s (DOJ) suit to stop their acquisition of Change Healthcare and folding into its Optum unit. Essentially, their argument in their public statement is that the acquisition would have multiple consumer benefits and big savings as the ‘healthcare system of the future’, including:

  • We can increase efficiency and reduce friction in health care, producing a better experience and lower costs
  • Helping health care providers and payers better serve patients by more effectively connecting and simplifying key clinical, administrative and payment processes
  • Improve the quality of health care delivery, automate claims transactions, and accelerate payment between provider and payer
  • Patients get a simplified consumer experience, lower costs, and get better point-of-care delivery due to improved adherence to best clinical evidence

In their view, it would be ‘economic suicide’ for Optum to be anti-competitive. UHG states that Optum’s business model is dependent upon their external customers, and if their competitively sensitive information is misused, they would stop using Optum’s services and turn to competitors.

The DOJ does not agree, of course. As to competition, they contend that Change is the only significant competitor to Optum in claims processing. The merger would be anti-competitive in other ways as well:

  • Change is “United’s only major rival for first-pass claims editing technology — a critical product used to efficiently process health insurance claims and save health insurers billions of dollars each year — and give United a monopoly share in the market.” It would also give UHG the ability to raise competitors’ costs for that technology.
  • Hospital data accounts for about half of all insurance claims. UHG with Change would have effective control of that ‘highway’.
  • Change is also a major EDI clearinghouse, which facilitates the transfer of electronic transactions between payers and physicians, health care professionals, or facilities. UHG would have control of the EDI clearinghouse market.
[More–TTA 25 Feb] 

It moves to the District Court and Judge Carl J. Nichols on 1 August. The trial will be 12 days–seven for DOJ, five for UHG/Change. With the delay, analyst Jailendra Singh of Credit Suisse expects Change to press UHG to sweeten the deal, such as a termination fee, versus an increase in purchase price. It’ll be an interesting summer for a bevy of lawyers! Forbes, Credit Suisse note

This Editor holds to her previous opinion that this merger is ‘one for the books–the ones marked ‘Nice Try, But No Dice’.  No matter what, Change will have to change.

CVS-Aetna merger will run off the tracks in Federal court: reports

June 13, 2019 | by

Reports emerging this past Monday after the close of last week’s DC Federal District Court hearings in indicate that the CVS-Aetna merger may be nixed by Judge Richard Leon. This may result in the full unwinding of the already-closed merger, a derailing of the settlement which involved selling the Aetna Medicare Part D business to government-plan insurer WellCare, or something in between.

The original report was in Monday’s New York Post. A source working with CVS and Aetna stated “I think Leon rules against us. If he rejects the settlement, we would have to figure out the next steps.” That settlement is significant because it represents the only major overlap between the CVS and Aetna businesses. In other words, there’s nothing left to divest or concede.

Judge Leon, based on reports, was consistently irritated with the Department of Justice, questioning everything from the Part D divestiture to the effects of adding 21 million Aetna customers to CVS’s pharmacy benefits management (PBM) business not being revealed in DOJ documents to him. Conversely, the sale of the Part D business to WellCare was batted one way–as not enough to reduce CVS’ market control and not competitive–and then the other, as WellCare remains a CVS PBM customer for 2.2 million members in its health plans. What was also clear from his selection of expert witnesses that Judge Leon was more interested in the anti-competitive effects of the merger than any of the benefits.

It is obvious both from Judge Leon’s in-court actions (such as not permitting DOJ attorneys to cross-examine any witnesses), assorted remarks, and delay for now over six months, that this merger is coming to a pre-ordained conclusion, at least by this judge. This is already a first under the Tunney Act enacted in 1974. A negative decision will certainly be appealed by CVS-Aetna and DOJ, which will drag out any finalization even if successful–and the sale of the Part D business, important to WellCare as part of its own pending acquisition by Centene–to the end of the year and possibly beyond.

With this background and oral arguments delayed until 17 July, according to Judge Leon, the legal teams on all sides won’t have much of a summer.  Also Barrons, video on NBR.