The $54 billion marriage between health insurance behemoths Anthem and Cigna is still off after a federal appeals court denied Anthem’s efforts to overturn a previous court order blocking the mega-merger.
In a 2-1 ruling [PDF] the U.S. Court of Appeals for the District of Columbia Circuit upheld a federal judge’s ruling from February that blocked the merger on grounds that the deal would not benefit consumers.
Anthem and Cigna, who are now suing each other over the merger, appealed the February decision [PDF] claiming that the court improperly declined to consider the claimed billions of dollars in medical savings.
According to Anthem, the merger’s efficiencies would benefit customers directly by reducing the costs of customer medical claims through lower provider rates, without harm to the providers.
However, the court — along with the Department of Justice and several states that sued to prevent the merger — point out that medical cost savings claims were “not verified, not specific to the merger, and not even real efficiencies.”
“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects,” D.C. District Court Judge Amy Berman Jackson said in the initial order blocking the merger. “It will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future, and diminish the prospects for innovation in the market.”
As such, the appeals court found that the district court did not abuse its discretion in blocking the merger based on Anthem’s failure to show that savings from the deal was enough to offset anticompetitive effect of removing Cigna from the marketplace.
New York Attorney General Eric Schneiderman, who was part of the group that filed a lawsuit against the merger, applauded the appeals court decision.
“Today’s decision is a win for consumers in New York and across the country,” he said in a statement. “We are very pleased that the Court of Appeals agreed with the District Court’s finding that this merger would violate antitrust laws by substantially lessening competition in commercial health insurance markets, likely leading to increased health insurance premiums and reduced quality and innovation.“
How We Got Here
Anthem and Cigna announced their intention to live in corporate merged bliss back in 2015.
A year later, however, the Department of Justice and 14 several states filed suit to block the deal, arguing that the merger would “fundamentally reshape the health insurance industry,” reduce health care access, competition, and options for tens of millions of Americans.
The DOJ argued that the mergers would reduce competition in three key places: for individuals buying health insurance on the exchange marketplace, for employers buying group plans for employees, and for Medicare recipients seeking supplemental care.
Since the February decision, Cigna has given up its dreams of a merger with Anthem, suing the company not only for its $1.85 billion “break-up fee” but for other damages totaling $13 billion. Cigna claims that Anthem violated the terms of their agreement, and that its strategy was the deal’s downfall.
Anthem wasn’t ready to let go, however, and quickly shot back with a lawsuit of its own, seeking a temporary restraining order to block Cigna from ending their agreement.
Anthem said the lawsuit is a reaction to “Cigna’s campaign to sabotage the merger and to try to deflect attention from its repeated willful breaches of the merger agreement.”
While these legal matters are in realm of their own, the two companies likely won’t have much to argue about soon, as the appeal’s court ruling Friday effectively kills the merger bid.
by Ashlee Kieler via Consumerist
Comments
Post a Comment