Anthem hopes Trump’s DOJ will help settle Cigna merger case

20 March 2017 1:27pm

16 February 2017. By Curtis Eichelberger.

Anthem's $54.2 billion merger with health insurance rival Cigna has been frustrated by the courts, but Anthem says it has at least one more card to play: the Trump card.

Transcripts from a court hearing in Wilmington, Delaware, Wednesday show that the company's appeal is at least in part an effort to buy time so it can work out a settlement with a pro-business Republican administration led by US President Donald Trump.

Anthem attorney Glenn Kurtz explained the company's strategy for saving what would be the biggest health insurance merger in US history.

"I think it's important for the Court to understand that there are at least two pathways to a closing here," Kurtz said. "One is through appeal and the other is through resolution with a new Department of Justice.

"There's reasons that we believe the merger is still able to clear. Notably, now-Vice President [Mike] Pence was supportive of the transaction as the governor of Indiana. The merger would allow Anthem to expand into nine new states under the Affordable Care Act. That seems particularly important now, as Aetna has pulled out of certain states and it's mulling over whether to reduce its presence further.

"And today," he continued, referring to new events on Wednesday, "timely enough, Humana announced a decision to pull out of the exchanges altogether. Looking at new rules, this is a way to sort of help with that as well."

Kurtz said that if Anthem can get the merger cleared through a "settlement or through an appeal," everybody wins.

Kurtz said Anthem was keeping the deal alive to preserve the opportunity to negotiate a settlement with the DOJ. "We can't go and negotiate a settlement, with or without divestitures, with new DOJ if DOJ says, well, you don't have a merger to negotiate around," he said.

MLex asked the Department of Justice if the White House, or Pence specifically, had instructed the DOJ to alter its prosecution of the case. The agency declined to comment beyond what's in the DOJ's response, filed Wednesday, to Aetna's expedition motion.

Members of the antitrust bar expressed concern about the potential for the administration to meddle in antitrust affairs after the president-elect publicized his meetings with executives from companies going through antitrust review.

If Trump is willing to cut deals with companies who promise to build new plants or hire more workers — or perhaps participate in national healthcare exchanges — in a tradeoff for antitrust approval, it would arguably be malpractice not to go straight to the White House.

Trump's power gives him wide latitude to craft antitrust policy on a case-by-case basis, especially in cases involving the Department of Justice, which isn't an independent agency like the Federal Trade Commission.

Congress confirmed Jeff Sessions as Attorney General on Feb. 8, but has yet to name an assistant attorney general to oversee the antitrust division. That person will have considerable influence in determining what cases to pursue and to settle.

Cigna attorney, Williams Savitt, dismissed Anthem's talk of a "new DOJ."

"To the extent there is an argument regarding whether Vice President Pence thinks that the merger ought to be approved, well, it's not in any papers as far as we can tell," Savitt said.

"Their arguments regarding new DOJ, the fact is there is no new DOJ. There is only old DOJ. No new DOJ personnel (have) been appointed or approved. And the idea that we are doing anything on the Cigna side of things to impair any discussions there is without any basis, as is the suggestion that there is some new DOJ to talk to," he said.

Sessions and the White House didn't respond to requests for comment. A DOJ representative declined to discuss whether the White House or Pence had raised the matter with the agency.

Anthem's attorney said the company has spent $520 million to gain regulatory approval and is willing to fight until the end.

"And here we are, later in the game, and we're fighting for it," Kurtz told the judge. "And we're reaching out to DOJ, which is new, by the way. There is a confirmed attorney general, Sessions."

Anthem rebuts DOJ argument

Anthem filed a brief Thursday to support its motion asking the US Court of Appeals for the DC Circuit to expedite its appeal.

Anthem had previously said that once the federal court case is resolved, the company would need at least 120 days to get state approvals. On Thursday, however, it said the timetable had shortened, and that it had already received approvals from 13 of the 26 states needed. The 13 states are: Alabama, Arizona, Florida, Indiana, Kentucky, Maryland, Montana, Nevada, New Jersey, North Carolina, South Carolina, Tennessee and Wisconsin.

Anthem said the district court's decision can be overturned because the court undervalued the benefits of the deal, ignoring the $2.4 billon Anthem argues would be saved by consumers in medical costs.

The company said it believes that if it wins the appeal based on the benefits of the merger, it won't be necessary to remand the case back to the district court because the efficiencies victory will carry the day over other issues that the lower court didn't address.

FTC - Qualcomm Trial