DOJ intentionally delaying Anthem-Cigna trial in effort to end deal, Anthem says
29 July 2016. By Liz Crampton.
The US Department of Justice is seeking to usurp the authority of the federal court and kill Anthem’s proposed merger with Cigna by stalling the deal until it falls apart, Anthem charged in a recent court filing.
The DOJ challenge must be adjudicated by the end of the year if the deal is to be completed, Anthem said in a document filed late Thursday in federal court in Washington, DC.
To that end, Anthem said it has assured the Justice Department that it will not make a settlement offer that would complicate the case. “We currently intend to litigate the merger as is, with no fix,” Anthem lawyer Mark Gidley said in an e-mail sent to DOJ lawyers that was filed with the court.
‘Litigating the fix’ is when parties restructure a deal after a government challenge so that the court can evaluate the fix rather than the original deal. Justice Department Antitrust Division lawyer Jon B. Jacobs had told Gidley that the schedule needed to take into account the possibility “that Anthem may propose a remedy to the merger between now and trial, which would mean that we would be litigating a remedy as well.”
At least five states have halted their regulatory consideration of the deal while the court case is pending, Anthem said, and despite the DOJ’s assertion that the companies could extend the deadline, Anthem said it “has no right — or expectation — to extend the agreement beyond April 30, 2017.”
To give the states time to review the deal, the court case must be completed by the end of the year, Anthem said.
The DOJ declined to comment.
The emails indicate escalating tensions between Anthem and the government. The insurer was rushing to provide the DOJ with necessary pretrial documents in order to schedule an initial status hearing with a judge, which will formally kick off proceedings. Meanwhile, the DOJ was insisting the complexity of the case warrants a longer timeline before the parties are ready to appear in front of a judge.
US District Judge John D. Bates, who is overseeing both cases, on Friday scheduled a joint status conference for August 4 with counsel for Aetna and Humana — whose proposed merger is also being challenged — appearing as well. At the hearing, the parties in both deals will discuss the timing of the proceedings and whether the trials should be conducted together or separately.*
“In our phone call Friday, you proposed a 3-week trial in this matter starting on October 17, 2016,” Jacobs said in an email to Anthem lawyers. “You also suggested that we call Judge Bates’s chambers this morning to talk to him about scheduling the trial. We disagree with your proposal for such an early trial date and believe that contacting chambers now is premature. Give the scope of the issues in the case, we think a schedule with only 88 days from the filing of the Complaint to trial is unrealistic.”
According to the emails, Anthem told the DOJ at least five states have suspended their reviews since the lawsuit, including Connecticut, where Cigna is headquartered. The states will require 120 days to act after the judge rules, Anthem said.
“We are skeptical of those claims,” Jacobs said in an email. “But at any rate, given the scope and importance of this case, the Court should not be asked to compromise its own review to accommodate separate regulatory proceedings.”
A representative of the Connecticut Insurance Department did not return a call seeking comment. The other four states that have suspended their reviews weren’t disclosed in the filing.
Gidley, the Anthem lawyer, on Monday informed the DOJ that the company had filed its answer to the complaint, “which you apparently considered a pre-requisite for holding a Rule 26(f) conference.” Gidley asked that the conference be held that afternoon, which the DOJ refused “given the short notice.”
Scott Fitzgerald, another DOJ lawyer, then said the DOJ would like to see both parties’ answers to the complaint, including Cigna’s, before the conference happens.
“We don’t agree to hold up the Rule 26(f) conference until Cigna answers the Antitrust Division’s complaint,” Gidley responded. “Anthem has already filed its Answer, and in any event, the filing of an answer is not an excuse for Plaintiffs to further drag their feet in producing critical discovery that they can begin producing immediately.”
On Thursday, Fitzgerald told defense counsel: “As for the Rule 26(f) conference, we remain willing to move expeditiously, but your demands for conferences on very short notice are unnecessary and unacceptable.”
Fitzgerald then said the DOJ is reviewing Anthem’s comments on the proposed protective order that would protect disclosure of confidential information. He said the DOJ has proposed an identical order to Aetna and Humana and once the government has received feedback from all the merging parties and conferred with the state plaintiffs, the DOJ will schedule a conference, he said.
The government’s delay tactics effectively amount to a “self-help injunction” that “essentially usurps this Court’s authority under the Clayton Act” and eliminates any need for it to act quickly in order to obtain a formal injunction from the court, Anthem said in the motion on Thursday.
“Anthem does not wish for the Plaintiff’s delaying tactics to nullify this Court’s review,” the company said.