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AMA letter warns against new DOJ's 'political influence' on Anthem-Cigna deal

por Thomas Dworetzky, Contributing Reporter | March 03, 2017
Business Affairs Insurance
In another twist to the Cigna-Anthem megamerger, a new letter from the American Medical Association highlights the impact Trump administration appointments at the Justice Department may have on reviving that deal.

The letter that the association made public was addressed to Brent Snyder, acting assistant U.S. attorney general.

“Recent statements by Anthem, made in the Delaware Court of Chancery, asserting that the company expects to close its merger transaction with CIGNA through “resolution with a new DOJ” (emphasis added),” stated the letter, signed by AMA CEO Dr. James L. Madara. It added that “an Anthem attorney stated in open court that [Anthem] believes its prospects for a timely closing are enhanced by a ‘supportive’ Vice President Mike Pence.”

Madara went on to note that, “there have also been press reports of settlement negotiations.”

No comment was made to Forbes by Anthem on the letter or any possible deal talks, although in February, the company did state that it hoped the new administration would help its “value-creating merger either through a successful appeal or through settlement with the new leadership at the Department of Justice,” according to the magazine.

So far there have been no news reports that the DOJ would change its position against the deal.

The AMA expressed its ongoing opposition to the deal, stating, “we find it implausible that the U.S. Department of Justice (DOJ), eleven states, and the District of Columbia — that have diligently and successfully prosecuted this antitrust merger case — could now be swayed to allow this merger to close, pursuant to politically-driven settlement negotiations as Anthem has suggested.”

Madara added that the impact of the merger would be potentially profound, stating that reversing course “would cause irreparable harm to the integrity of the federal courts to adjudicate anticompetitive behavior in a fair and impartial manner, leaving consumers at risk. We strongly believe that political influence should play no role in the enforcement of the antitrust laws and urge you to vigorously defend Judge Jackson’s ruling.”

In February, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia ruled against the merger, over antitrust issues.

“The merger of Anthem and CIGNA — presently the nation’s second and third largest health insurer carriers — would have created the single largest seller of health insurance to large commercial accounts in a market in which there are only four national carriers remaining,” the AMA advised.

When the courts blocked the merger, Anthem said it wanted to give the deal another try. On January 18, 2017, Anthem extended its merger agreement with Cigna through April 30, 2017. Under the terms of the merger agreement, Cigna does not have a right to terminate the agreement.

Cigna appeared to want out of the deal at that time, claiming a $1.85 billion termination fee, and another $13 billion in damages, according to the Washington Post.

"These additional damages include the amount of premium that Cigna shareholders did not realize as a result of the failed merger process," the company said, according to the paper. "The company believes strongly in the merits of its case and hopes that this matter is rapidly resolved."

Anthem disputed the breakup. Its spokeswoman Jill Becher fired to the Post that "Anthem will continue to enforce its rights under the merger agreement."

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