Cigna submitted a brief with the U.S. Court of Appeals on the day of Thursday in which it deferred to the conclusion in Anthem’s appellate brief that the court ruling that blocked their $54 billion merger should be modified and reversed. Cigna modifies the course and claims Anthem merger should be given approval.
The health insurance giant’s merger contract needs Anthem to be “responsible for establishing and leading the antitrust strategy, among other things” so it “controlled the development and presentation to the district court of the evidence and argument supporting the legality of the merger,” the filing claims.
The brief of Cigna comes after the Appeals Court granted Anthem’s motion to expedite the appeal procedure.
The decision of Cigna to side with Anthem again and appeal that the court blocking of the deal be overturned is somewhat surprising considering that both companies filed lawsuits against each other some weeks ago. Cigna tried to put an end to the deal and its lawsuit argued for Anthem to announce the contract had been “lawfully terminated” and to pay more than $14 billion in damages. In response, Anthem appealed a temporary restraining order against Cigna to stop it from terminating the merger. A Delaware court granted the request of Anthem merger.
After turning down the offer of Anthem to extend the contractual deadline again, trying to terminate the deal and filing a lawsuit against Anthem merger, why Cigna has now changed its mind is unclear. But how much of a difference Cigna’s new brief will make in the Court of Appeal’s consideration of the companies’ appeal could be observed in the coming weeks. The oral argument is set to start on the day of March 24. The contractual deadline of company is April 30.
The companies proposed their policies to merger in the year of 2015 but have confronted scrutiny from state and federal government, involving the Department of Justice (DOJ), which submitted the lawsuit in July 2016 seeking to block the deal. A federal judge ruled in favor of the DOJ previous month, summarizing that the deal would likely result in increased charges for customers, eliminated “competition against each other for national accounts,” and hindered innovation attempts in the insurance market, though Anthem merger contended that any anticompetitive impacts of the combined company would be offset by the efficiencies it would create. In accordance to Anthem, the federal judge “made serious mistakes of law, fact, and logic” and Cigna now agrees. Merging the 2 companies would develop the largest payer in the U.S.
Previously this week, the American Medical Association, which has been opposed to the deal from the start because of the anticompetition problems, sent a letter to acting Assistant U.S. Attorney General Brent Snyder expressing its concerns with Anthem’s recent statements in the Delaware court. “We find it implausible that the U.S. Department of Justice (DOJ), 11 states and the District of Columbia—that have diligently and victoriously prosecuted this antitrust merger case—could now be swayed to permit this merger to close pursuant to politically driven settlement negotiations as Anthem has recommended,” AMA CEO Dr. James Madara wrote. “To do so would cause irreparable harm to the integrity of the federal courts to adjudicate anticompetitive behavior in a fair and impartial manner, leaving consumers at risk,” Madara added. “We strongly consider that political impact should play no role in the enforcement of the antitrust laws and compel you to vigorously defend Judge Jackson’s ruling.”
The other 2 health insurance giants that had proposed plans to merger – Aetna and Humana – also had their deal blocked in court in the antitrust case also brought on by the DOJ previous summer. They then mutually accepted to end their plans to merge. Although, the 2 cases have some differences. “Antitrust is fact-specific,” Martin Gaynor, a professor of economics and health policy at Carnegie Mellon University Heinz College, told. “Each case is decided deployed on the particular facts of that case,” he stated. “If the facts for Anthem-Cigna look very different than they did for Anthem-Humana, then the decision could go the other way.”
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