Judge David Proctor entered an Order and Memorandum Opinion on the Filed Rate Doctrine.
Judge Amy Berman Jackson of the U.S District Court for the District of Columbia unsealed the Memorandum Opinion in United States v. Anthem (Civil Action No.: 16-1493) The opinion held that “Because the effect of Anthem’s acquisition of Cigna may be substantially to lessen competition in the market for the sale of medical health insurance to national accounts in the fourteen Anthem states and the sale of medical insurance to large group employers in the Richmond, Virginia CBSA, the Court will enjoin the merger.
Click to Read the Opinion: 523-Memorandum Opinion (Redacted)
By: Ana Radelat and CT Mirror
In a vicious legal battle laid out in court papers unsealed Friday, Cigna accuses Anthem of undermining its business by stealing confidential information and soliciting its customers.
Anthem counters in a rival filing that Cigna worked to sabotage the companies’ proposed merger after its executives were not promised the positions they wanted in the merged company.
In their blistering lawsuits, the companies blame each other for the failure to obtain regulatory approval for the merger.
In its 51-page suit filed in the Delaware Court of Chancery earlier this week, Cigna charged that Anthem “put its own interests ahead of its contractual obligations” and acted “with the intent to harm Cigna’s business.”
The Cigna lawsuit asks for an immediate end to the merger agreement, a $1.85 billion reverse breakup fee and at least $13 billion in damages.
Hostilities between the two insurers intensify days after a judge ruled the deal violated antitrust law
The Wall Street Journal
Anthem Inc. responded to a suit by Cigna Corp. with its own suit against its merger partner, escalating the hostilities between the two health insurers in the wake of a judge’s decision that their $48 billion deal violated antitrust law.
In its suit, filed like Cigna’s in the Delaware Court of Chancery, Anthem said it sought a temporary restraining order to block Cigna from ending their pact. It also sought to force Cigna to adhere to the terms of their deal and requested damages. Anthem said it was reacting to “Cigna’s campaign to sabotage the merger and to try to deflect attention from its repeated willful breaches of the merger agreement.”
Anthem’s move is a fast response to Cigna’s announcement Tuesday that it was terminating their agreement and pursuing litigation seeking a $1.85 billion breakup fee plus more than $13 billion in damages from its deal partner. Cigna had said that Anthem violated the terms of their agreement, and that its strategy had led to the rejection of the deal.
1. What did the District Court decide?
On February 8, 2017, the U.S. District Court for the District of Columbia issued an order enjoining the proposed merger between Cigna Corporation and Anthem, Inc. Judge Jackson’s decision to block the merger was based on numerous factual determinations, including:
- National Accounts: Judge Jackson found that the merger would result in a level of market concentration that would be presumptively unlawful in the market for national accounts in the 14 states where Anthem is the Blue Cross Blue Shield licensee. She also concluded that the merger would result in higher prices for the ASO insurance that Anthem and Cigna sell and that it would have other anticompetitive effects, including eliminating the two firms’ vigorous competition against each other for national accounts and diminishing the prospects for innovation in the market.
- Blue Cross Blue Shield Association: Judge Jackson found that the entities organized under the Blue Cross Blue Shield Association, including Anthem “work together to win national business” and that Anthem’s intention to “rebrand” Cigna customers as Blue customers – to ensure that Anthem did not violate restrictive rules imposed by the Blues association – could adversely impact competition. The Court additionally found that the rules of the Blue Cross Blue Shield Association give rise to “an inherent conflict of interest” vis-a-vis the transaction.
- Efficiencies: The district court rejected Anthem’s principal defense: that the anticompetitive effects of the transaction would be outweighed by efficiencies that would benefit consumers. Judge Jackson noted in her opinion that Anthem had “not pointed the Court to a single litigated case in which the merging parties were successful in overcoming the government’s case by presenting evidence of efficiencies.”
The full document can be found on the Securities and Exchange Commission website, here.
Judge David Proctor of the Northern District of Alabama issued an Order in MDL 2406 in re Blue Cross Blue Shield Antitrust Litigation denying certain defendants motion to certify the Court’s Order denying their motions to dismiss on personal jurisdiction and venue grounds.
To Read the Order: Memo Opinion
The New York Times
The ruling, by Judge Amy Berman Jackson of the Federal District Court for the District of Columbia, came two weeks after another federal judge blocked a proposed $37 billion merger between Aetna and Humana on antitrust grounds.
Judge Jackson wrote in her order that she found the Justice Department’s arguments against the deal persuasive, and that putting Anthem and Cigna together would harm customers.
“The evidence has also shown that the merger is likely to result in higher prices, and that it will have other anticompetitive effects,” the judge wrote. “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.”
Under the merger agreement’s terms, Anthem is obligated to pay Cigna a $1.85 billion breakup fee.
A representative for Cigna declined to comment. A spokeswoman for Anthem also declined to comment.
The merger process between Anthem and Cigna has been notoriously contentious. In September, the Justice Department revealed court documents that showed the two had accused each other of breaching their agreement.
The government argued that the disputes ran counter to a major defense offered by the companies — that the deal could enhance competition by creating billions of dollars in savings. The government argued that such savings required the companies to cooperate in integrating their businesses.
Medical enrollment increased by about 1.3 million members in 2016, or 3.4 percent, totaling about 39.9 million members.
By: Susan Morse
Anthem’s fourth quarter profits exceeded expectations, the insurer announced Wednesday, reporting $368.4 million, compared to $180.9 million in the last three months of 2015.
“Our fourth quarter 2016 core earnings and financial metrics tracked well versus our expectations, reflecting the efforts of all of our associates to improve affordability on behalf of our members,” said President and CEO Joseph Swedish.
Anthem also ended 2016 with better than expected enrollment, said John Gallina, executive vice president and CFO.
Medical enrollment increased by about 1.3 million members in 2016, or 3.4 percent, totaling about 39.9 million members as of the end of 2016.
For the year, Anthem reported profits of $2.46 billion, as compared to $2.56 billion in 2015.