Anthem Inc. pressed Friday to salvage its proposed $54 billion acquisition of Cigna Corp., arguing before a Washington federal appeals court that the deal would drive down costs for consumers.
"This is dollars in the consumer's pocket," Anthem's lawyer, White & Case partner Christopher Curran, told the U.S. Court of Appeals for the D.C. Circuit.
The hearing unfolded in a crowded courtroom in downtown Washington as lawmakers and White House officials scrambled, blocks away, to change the Affordable Care Act. The Justice Department has argued the merger would hurt competition for consumers who receive health insurance through the ACA's public exchanges, along with millions of others who receive insurance from their employers.
Anthem and the Justice Department made their arguments six weeks after a Washington federal trial judge struck down the proposed acquisition on the grounds it would hurt competition. The Justice Department in July sued to block the Anthem-Cigna tie-up and Aetna's proposed $37 billion acquisition of Humana, alleging the deals would amount to an "unprecedented consolidation" in the health insurance industry.
Aetna and Humana abandoned their deal after a judge granted a preliminary injunction in January. But Anthem has continued onward, even as it faces a lawsuit from Cigna in the Delaware Court of Chancery seeking a $1.85 billion termination fee and an additional $13 billion in damages.
Several trade groups, including the American Hospital Association, have urged the D.C. Circuit to keep in place the injunction against the Anthem-Cigna deal. "Permitting an acquisition that will reduce the market for national insurers from four to three will lessen the incentive of all players in the market to innovate—to the detriment of patients," the association said in a friend-of-the-court brief.
Cigna was something of an unwilling merger partner. U.S. District Judge Amy Berman Jackson of the District of Columbia, in her decision striking down the deal, noted that a lawyer for Cigna, Charles Rule of Paul, Weiss, Rifkind, Wharton & Garrison, cross-examined a defense expert and undermined Anthem's forecasts for future savings from the acquisition.
Jackson described the discord between the two companies as the "elephant in the room." The tension between the companies wasn't raised at Friday's hearing.
D.C. Circuit Judge Brett Kavanaugh questioned why the Justice Department challenged the deal even as the two sides agreed it would lower insurance rates.
Scott Westrich of the Justice Department said the deal would hurt competition and, perhaps, the quality of health care. Cigna, he said, has proven itself an innovator in the insurance industry with wellness programs. Westrich questioned whether Anthem—with its strategy of using buying power to win favorable terms—would be able to incorporate the more cooperative approach Cigna has taken.
"Competition is not being enhanced in any way" with the deal, Westrich said.
