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December 20, 2018 12:00 AM

DOJ, CVS reject judge's suggestion to expand monitor's role in merger

Susannah Luthi
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    AP

    The Justice Department and CVS Health are pushing back on a federal judge's call for stricter oversight of CVS-Aetna operations while he deliberates over the $70 billion mega-merger.

    In new court filings Thursday, both parties tried to fend off a proposition from U.S. District Judge Richard Leon to charge a government-appointed monitor with making sure CVS and Aetna follow self-imposed measures to keep certain key business operations separate until Leon is finished weighing in.

    The Justice Department has continued to bristle at Leon's hold on the merger once the DOJ signed off in late November. Congress required that the courts have the final say but typically the judge's role is procedural. Leon made it clear when he took up the case that he did not want to be seen as simply a "rubber stamp" on the deal.

    In a letter to the court, attorneys for CVS said the company would give quarterly sworn statements to Leon that its commitments are being followed, but that the cost and burden of a monitor's involvement would be greater than the benefit. They warned that corporate monitors can cost millions of dollars "no matter how narrowly their charter is drawn."

    During Tuesday's hearing, an attorney for CVS said the company started implementing the measures after Leon said the companies should preserve some siloing until he has finished his review of the merger.

    The DOJ agreed with CVS.

    "In a letter submitted to the Court today, CVS has voluntarily committed to filing quarterly declarations with the Court certifying under oath that each step remains in place," Justice Department lawyers wrote.

    Exchanges between the DOJ and Leon have been testy and on Tuesday Leon reprimanded the attorneys for the tone of their filings. In one instance, the DOJ suggested that the Tunney Act that mandates court review of mergers "may be unconstitutional."

    The DOJ once again made clear that the department does not take kindly to Leon's potential hold on the merger.

    "While the United States believes that these actions and an order regarding them are unnecessary and inappropriate ... the United States has no objections to these voluntary commitments," the DOJ wrote in its letter to Leon.

    A government-appointed monitor is already in place to make sure CVS-Aetna follows the DOJ-mandated condition for the merger that Aetna fully offloads its Medicare Part D prescription drug business. Leon had suggested the same monitor could also make sure CVS and Aetna are complying with their own measures to keep some business operations separate.

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