U.S. Department of Justice's Antitrust Division Has Yet to Weigh In on Anthem/Cigna Mega-Merger Given the Go-Ahead by Shareholders
Monday, December 7, 2015
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health LawOn Thursday, December 3, 2015, shareholders of Anthem Inc. (Anthem) and Cigna Corp. (Cigna) approved a previously announced $54 billion mega-merger in an overwhelming 99 percent favorable vote. The pending acquisition of Cigna by Anthem would cover approximately 53 million medical members resulting in the formation of the nation's largest health insurance company. The transaction is expected to close in late 2016. However, shareholders' support alone is not sufficient to complete the merger. The insurers still await the final approval of antitrust regulators for the U.S. Department of Justice's (DOJ) Antitrust Division. Anthem and Cigna must meet several customary closing conditions including the receipt of certain state regulatory approvals. They must also toll the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act ("Act") prior to final corporate consolidation.The Act amended the Clayton Act by requiring companies to file premerger notifications with the Federal Trade Commission (FTC) and the DOJ Antitrust Division. The Act further establishes waiting periods that must elapse prior to final acquisitions. It authorizes enforcement agencies to stay the waiting periods until companies provide certain additional information as requested about the proposed transaction. For more information about the Act, click here to read the full law at Section 18a, 15 United States Code.
Not Everyone is Enthusiastic About the Deal.The American Medical Association (AMA) and the American Hospital Association (AHA) both expressed concerns regarding the health insurance mega-merger. The AMA made its nay-say position known by way of letter to the DOJ's Antitrust Division demanding the merger be blocked. The AHA stopped short of making demands to the DOJ, but did make its opposition to the consolidation known. In a recent Yale Law School conference about competition in the health care industry, Assistant Attorney General, Bill Baer, head of the DOJ's Antitrust Division, seemed to repeatedly reference the mega-merger and his distaste for the proposed consolidation. Along with the proposed Aetna and Humana merger, Baer voiced his skepticism on the benefits of consolidation in the health insurance industry.Baer also cited the DOJ's long-standing history of challenging insurer consolidations in an effort to protect consumers. He acknowledged that the department has blocked approximately seven proposed health insurance mergers in the last 15 years. Click here to read more about Baer's comments at the Yale Law School conference in my previous blog post.
DOJ's Authority to Stay the Waiting Period Until it is Satisfied.The DOJ's approval of the pending deal is not a sure thing just yet. Aetna Inc. (Aetna) and Humana Inc. (Humana) shareholders approved the insurers' proposed merger in October, just weeks after the DOJ requested more information related to its review of the $37 billion acquisition. This was the DOJ's second request for information made at the tail-end of the required waiting period which was extended another 30 days after Aetna refiled its premerger notification with the FTC. For more information on the premerger notification program by the FTC, click here. In any case, there is yet to be seen a resolution to the Aetna-Humana mega-merger, which would form the nation's second largest health insurance company with more than 33 million medical members. It seems Anthem and Cigna may have to endure a bit more scrutiny as well before engaging in an official celebration. However, according to reports, Anthem President and CEO, Joseph R. Swedish, appreciatively celebrated its shareholder support for the pending merger. Swedish was reported as stating, "For more than 75 years, Anthem has played a leadership role in helping individuals to access and finance high-quality health care...The combination of Anthem and Cigna will continue this long history of leadership..."
Comments?Is your health practice currently involved in or negotiating a merger or acquisition?
Contact Health Law Attorneys Experienced in Business Transactions and Contracts.At the Health Law Firm we provide legal services for all health care providers and professionals. This includes physicians, nurses, dentists, psychologists, psychiatrists, mental health counselors, Durable Medical Equipment suppliers, medical students and interns, hospitals, ambulatory surgical centers, pain management clinics, nursing homes, and any other health care provider. We represent facilities, individuals, groups and institutions in contracts, sales, mergers and acquisitions.The services we provide include disputes with health insurers, defense of audits, litigation of overpayment demands, reviewing and negotiating contracts, business transactions, professional license defense, representation in investigations, credential defense, representation in peer review and clinical privileges hearings, Medicare and Medicaid audits, commercial litigation, and administrative hearings. Our attorneys litigate in state courts, federal courts, state administrative hearings and federal administrative hearings. We represent plaintiffs and defendants in complex litigation matters.To contact The Health Law Firm, please call (407) 331-6620 and visit our website at www.TheHealthLawFirm.com.
Sources:Eslinger, Bonnie. "Shareholders OK Anthem-Cigna Merger; Antitrust Check Ahead." Law360. Portfolio Media Inc.: 3 Dec. 2015. Web. 4 Dec. 2015."Hart-Scott-Rodino Antitrust Improvements Act of 1976." Federal Trade Commission. Web. 4 Dec. 2015.
About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law. He is the President and Managing Partner of The Health Law Firm, which has a national practice. Its main office is in the Orlando, Florida area. www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.
Keywords: Florida health attorney, antitrust lawyer, health law attorney, Florida health lawyer, The Health Law Firm, health care antitrust, health law defense lawyer, complex business litigation attorney, contract negotiations, health mergers and acquisitions, health insurance merger, health insurers mega-merger, health professional attorney, DOJ Antitrust Division lawyer, antitrust attorney, health insurer rate negotiations, health care litigation attorney, complex litigation lawyer, health care competition, American Medical Association (AMA), Affordable Care Act (ACA), Hart-Scott-Rodino Antitrust Improvements Act, corporate consolidation attorney, health care business transactions, health care contracts, contract negotiations lawyer, complex business litigation lawyer
“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999. Copyright © 1996-2015 The Health Law Firm. All rights reserved.
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