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Anthem Pursues Cigna Merger Up to the Supreme Court

One week after its rejected appeal to acquire Cigna, health insurer Anthem has filed to have the Supreme Court review the decision.

Anthem takes appeal verdict to supreme court

Source: Thinkstock

By Jesse Migneault

- Just seven days after a court upheld the initial ruling which blocked Anthem’s acquisition of Cigna, the nation’s second largest insurer is not giving up.   Anthem has confirmed that it is filing a writ of certiorari with the United States Supreme Court for a review of its proposed acquisition of fellow insurer Cigna.

Anthem is requesting that the high court review a recent 2-1 majority decision in a DC federal appeals court that blocked the proposed $54 billion acquisition and merger.  

The insurer cites the circuit’s split “over the consideration of efficiencies in merger analysis.”  

“Anthem urges that 1960s-era merger precedents relied upon by the courts below must be updated to reflect the modern understanding of economics and consumer benefit.”

Anthem further states the court’s actions “would limit access to high quality affordable care for millions of Americans and deny them more than $2 billion in medical cost savings annually.” The savings would come from the improved bargaining power of the new entity, according to Anthem.

Anthem reiterated comments made after last week’s appeals court decision by Judge Kavanaugh, the lone dissenting justice on the case.  In the judge’s dissent paper, she wrote, “the record decisively demonstrates that this merger would be beneficial to the employer-customers who obtain insurance services from Anthem and Cigna.”

After the appeals verdict was handed down one week ago, Anthem released a statement which said it was “disappointed by today's decision given that the demonstrated efficiencies make this a pro-competitive, consumer friendly transaction.”   

“Combining Anthem and Cigna would positively impact the health and well-being of millions of Americans and deliver significant cost savings to consumers,” the statement said. 

The federal DC district appeals court upheld a February 2017 decision which blocked the acquisition.

That original ruling cited possible negative effects on market competition as a key reason for denying the merger.  

These antitrust concerns led 11 states and the District of Columbia to join the US Justice Department Antitrust Division in the original suit, and again for the appeal.

The crux of the case against the acquisition was excessive consolidation in the health insurance industry, and particularly in some markets. The acquisition of Cigna by Anthem would have reduced the number of national health insurance carriers from four to three. 

According to Justice Department statements, it would have been the largest transaction of this type in the healthcare industry, and would have crippled competition in over 30 individual healthcare markets across the nation. 

In the original decision, Judge Amy Berman Jackson cited the effect such a merger would have on the health insurance market of Richmond, VA.  If approved the merger would give the new insurer entity a 77 percent market share in Richmond. 

Five days after the original verdict, Anthem filed an appeal and requested an expedited process. 

The American Hospital Association was among the healthcare stakeholders vehemently opposed to the merger and testified for both the original case and the appeal. 

“The trial court properly found that the lower fees Anthem characterizes as a consumer benefit will actually damage patient care, stifle innovation, and cause patients to use more health care services.”

“The market cannot rely on small players and new entrants to provide the competition needed, “the AHA wrote.

“Innovative, value-based reimbursement models frequently require large numbers of lives, making it all but impossible for new entrants to compete with the large, national players like Anthem and Cigna.”

After the merger was terminated in February 2017, Cigna demanded $13 billion from Anthem.  In response Anthem was granted a restraining order against Cigna to halt its legal opposition to the merger.  

On March 17, Cigna filed a brief reversing course and once again supporting the acquisition.   As the case moves to the Supreme Court, it remains unclear what future legal battles may loom between the two insurers.  


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