Dive Brief:
- The U.S. Justice Department, in the process of suing Anthem and Cigna to block their $48 billion merger, revealed this week in court documents that the two large health insurers consistently have been accusing each other of breaching their merger agreement, according to The New York Times.
- The Times reports that just over a month ago, Cigna’s counsel told the court’s special master that the insurers’ inhouse lawyers had exchanged letters “accusing each other of breaching the merger agreement,” according to a filing Wednesday in the District Court for the District of Columbia.
- In the case, the government requested that the insurers produce documents that discuss any breaches but both refused, saying their correspondence is privileged, according to The Times, which noted that on Wednesday the government asked the court to compel them to turn over the letters.
Dive Insight:
The fact that there is hostility between the two mega-health insurers is not new. Going back to May, the Wall Street Journal reported that the courting phase of the merger was not going well. With this latest development, the government argued that the relationship between the companies ran counter to their defense in the case — that the merger would be good for competition in the healthcare sector because of billions of dollars’ in cost savings, mainly by eliminating redundancies (the typical merger promise).
For employers who are either Anthem or Cigna customers, the tug of war between the two entities, along with the government lawsuit, is no doubt creating some concerns. From a strictly financial perspective, should the merger fall apart (or be blocked by the federal government), The Times reports that Anthem would need to pay Cigna a $1.85 billion breakup fee, according to their merger agreement. If it does eventually become reality, the deal would create the largest U.S. health insurer by members (more than 54 million) and $117 billion in annual revenue.