DOJ files lawsuit to block UnitedHealth-Amedisys deal

The US Justice Department sued Tuesday to block UnitedHealth Group Inc.’s $3.3 billion purchase of Amedisys Inc. over concerns the deal would harm competition in the market for home-health and hospice services. 

The antitrust lawsuit, filed in Maryland federal court, alleges the combination could lead to higher prices in home health care in 23 states and Washington, DC, where Amedisys is a main competitor to UnitedHealth’s LHC Group. Last year, the insurer bought LHC, which was folded into its Optum Health business. The attorneys general of Maryland, Illinois, New Jersey and New York also joined the complaint.

Amedisys and UnitedHealth had proposed selling off more than 100 clinics to VCG Luna, an affiliate of Texas home health and hospice company VitalCaring Group. But the sale wouldn’t resolve antitrust concerns in more than 100 areas across the US, the Justice Department said, and VitalCaring has lower health quality scores than either Amedisys or UnitedHealth. 

The suit is the latest example of the Biden administration’s stepped-up antitrust enforcement as a keystone of its economic policy. Antitrust officials are seeking to reverse what they view as decades of lax oversight over corporate consolidation and market power that are affecting consumers, including in health care.

“American health care is struggling,” Jonathan Kanter, the Justice Department’s antitrust head, said Tuesday during a speech at Carnegie Mellon University. “It presents the gravest, most complex challenges to competition policymakers that we have ever confronted.”

Kanter, known for the department’s cases against tech giants including Alphabet Inc.’s Google and Apple Inc., said the healthcare industry is in midst of a similar shift toward a few dominant companies controlling most of the market. “We are witnessing in real time the emergence of big health platforms and are at risk of our markets tipping to one or two platforms.”

Amedisys remains “committed to the transaction, which we believe will create more opportunities to deliver quality, compassionate and value-based care to patients and their families,” company spokeswoman Kendra Kimmons said.

United Health’s Optum unit, in a statement, said the merger will “be pro-competitive and further innovation, leading to improved patient outcomes and greater access to quality care. We will vigorously defend against the DOJ’s overreaching interpretation of the antitrust laws.”

The Justice Department said it was also seeking civil penalties from Amedisys for falsely claiming to have turned over all relevant information for the required antitrust review. The government said the company failed to produce millions of documents or disclose the deletion of other documents.

Amedisys shares fell as much as 1.8% Tuesday, after earlier declines Monday showed waning confidence among investors that the deal would go through. Shares of UnitedHealth also fell as much as 1.8%.

Bloomberg News reported earlier that the suit was expected and that antitrust officials had met with company executives last week over their concerns about the proposed deal. 

Regional Overlaps
UnitedHealth’s LHC Group and Amedisys operate in many of the same states. While the combined company would control only a small slice of home health care services nationwide, the overlaps would be significant in certain regions, including some southern states.

In its complaint, the Justice Department said “UnitedHealth’s plan to extinguish Amedisys as a competitor is the result of an intentional, sustained strategy of acquiring, rather than beating, competition.” By combining, they’ll harm the home health and hospice markets, as well as the labor market for nurses, the government said.

According to the lawsuit, former Amedisys Chief Executive Officer Paul Kusserow has said the two companies “keep each other honest and we keep driving better and better quality. And who benefits from it? Our patients.”

The department also blasted plans by the companies to sell some assets to VitalCaring, which the government said “will not replace the competitive intensity lost by the merger.” VitalCaring is an “unproven company with only three years of operational experience, poor financial performance, and potentially catastrophic legal exposure.” Chief Executive Officer April Anthony has been accused of starting VitalCaring while still employed by her former firm, which has sued her. A VitalCaring spokesperson did not immediately respond for comment.

The Justice Department’s lawsuit marks the second time the Biden administration has sued UnitedHealth over antitrust concerns. In 2022, the Justice Department unsuccessfully tried to block the insurer’s takeover of health IT firm Change Healthcare.

The Justice Department opened an in-depth probe into the deal last summer, one of several UnitedHealth acquisitions that have drawn antitrust scrutiny. In July, the insurance giant abandoned the proposed buy of Stewardship Health Inc., the physician practices of bankrupt Steward Health Care System, amid concerns from antitrust enforcers. 

UnitedHealth has combined insurance with doctors’ practices, drug benefits and other businesses to create the largest US health services company by revenue. The combination has raised concerns at the Justice Department, which is separately probing the company for alleged monopolization.

The case is US v UnitedHealth, 24-cv-3267, US District Court, District of Maryland.

(Updates with comment from companies, DOJ antitrust head, details from suit.)

© 2024 Bloomberg L.P.