UnitedHealth Group Inc. will gain access to "vast amounts of data" on how rival insurers do business if its proposed acquisition of Change Healthcare Inc. goes through, the Justice Department said opening arguments in a trial challenging the deal.
UnitedHealth countered that it already has data on competitors through its Optum services unit and has a track record of treating the information appropriately. The company is contesting the case and plans to call top executives from both UnitedHealth and its Optum Insight health information technology unit to testify.
As the Justice Department's trial seeking to block the $7.8 billion deal got underway Monday in federal court in Washington, prosecutor Eric Welsh said UnitedHealth's proposal to divest some of Change's business and wall off the competitively sensitive information isn't enough.
Change's data is "the prize in the merger," said Welsh. It would give UnitedHealth a "one-way look" into moves by its rivals. The deal could harm competition due to UnitedHealth's financial ability and incentives, Welsh added.
UnitedHealth's lawyer Craig Primis called the government's case a "novel and unprecedented legal theory" that rests on a "daisy chain of speculation."
Dealmaking in Focus
The trial is a test of the Biden administration's more aggressive antitrust policies and the first challenge to a health-care merger to go to trial under the new approach.
A verdict to block the deal could have implications for dealmaking in other industries where sensitive data would change hands as the result of an acquisition, while a win for the companies would mark a setback in a cornerstone of Biden's economic policy.
Change operates the largest electronic data clearinghouse that connects doctors, hospitals, dentists and pharmacies with insurance companies to obtain reimbursement, handling about 1.7 billion in insurance claims each year.
No other clearinghouse works with as many insurers and health-care providers as Change, though United's Optum unit is its next biggest rival, Welsh said.
The deal also would give United a "near monopoly" on certain types of claims reimbursements, Welsh said.
TPG Capital
United has proposed a narrow divestiture to private equity firm TPG Capital LP, which he added has no experience in this aspect of health care.
