A federal lawsuit filed by a provider-sponsored managed-care organization has derailed WellPoint Health Networks' $86.7 million acquisition of John Hancock Mutual Life Insurance Co.'s group health business.
A federal judge in Detroit granted Troy, Mich.-based SelectCare a preliminary injunction blocking the deal, which SelectCare claims would violate its agreements with Hancock.
SelectCare, which is sponsored by five hospitals, serves more than 400,000 enrollees through an HMO, a PPO and a point-of-service plan.
Hancock and WellPoint agreed to extend their agreement-set to close on Jan. 31-until March 1. But a WellPoint spokeswoman said that before going ahead, the Woodland Hills, Calif.-based HMO had to examine the impact of the SelectCare-Hancock contracts on WellPoint's plans.
WellPoint is pursuing a strategy of acquiring the group health units of insurers and converting them to managed care. Last year, WellPoint acquired the health business of Massachusetts Mutual Life Insurance Co.
SelectCare and John Hancock jointly have provided healthcare services to employers in southeast Michigan, including Ford Motor Co., for a number of years through a contractual arrangement.
"Under these contracts SelectCare has the right to approve the assignment of contractual obligations and the disclosure of confidential information to other parties," SelectCare said in a statement.
The company felt the injunction was the only way to protect that right, SelectCare said.