The Department of Justice is pushing for February trial dates for its looming challenges to Aetna and Anthem's massive health insurance merger deals, and the companies' self-imposed deadlines shouldn't speed up the process.
In preparation for a hearing on Thursday, federal prosecutors told U.S. District Judge John Bates that they'll need more than 200 days to compile their cases against Aetna's $37 billion acquisition of Humana and Anthem's $53 billion deal for Cigna Corp., setting the stage for separate trials starting in February 2017.
Although the insurers are pushing for trials in September or October in hopes that the challenges can be wrapped up by the end of 2016, the DOJ says that's “unworkable” given the complexity of the cases.
“Proceeding any faster would require a significant narrowing of the issues in dispute,” DOJ said.
According to the terms of the mergers, Humana could walk away from Aetna's proposed deal on Dec. 31 and score a $1 billion break-up fee, and Cigna could receive $1.8 billion if the Anthem merger hasn't closed by April 30, 2017. Anthem said in its own filing to the federal court that it's concerned Cigna will abandon the deal, as the merger talks have been contentious from the start.
But that isn't DOJ's problem, prosecutors say, maintaining the companies could easily delay these option dates if it was in their best interest.
“Defendants fixed these option dates themselves and they can alter them with the stroke of a pen,” DOJ said.
DOJ has proposed managing its pretrial efforts for both deals jointly, and all parties have asked Judge Bates to grant separate trials, given the differences between the proposed mergers.
Aetna and Humana have requested a two-week trial that will run before the Anthem-Cigna challenge, saying their merger was proposed first and the case will involve fewer issues and markets than the Anthem case.
Anthem and Cigna also want a resolution by the end of the year in order to gain the necessary state regulatory approvals before the April 30 deadline. It blasted DOJ's proposed timeline as “cynical” and said allowing a February trial would kill the merger.
“The plaintiffs cannot fault Anthem for the current logistical predicament; in fact, it is largely of the plaintiffs' own making,” Anthem said.
Federal and state prosecutors sued last month to prevent the two mergers over concerns that the consolidated markets would fundamentally reshape the health insurance industry. Aetna on Tuesday said that it is re-evaluating its participation in several state exchanges and may pull back.