(Bloomberg) — Anthem and Aetna are jockeying in a Washington court Thursday to be the first to go to trial to defend themselves against federal government challenges to their proposed takeovers of rival insurers, with Anthem urging a judge to set an early date or its deal will be in jeopardy.
Both federal lawsuits against Anthem’s $48 billion bid for Bloomfield, Connecticut-based Cigna Corp. and Aetna’s $37 billion proposed merger with Louisville, Kentucky-based Humana are before U.S. District Judge John D. Bates in Washington. The Justice Department says the tie-ups will hurt consumers by increasing prices and reducing competition.
The insurers are countering the government’s position that the cases be tried consecutively, starting in February. Anthem, which is based in Indianapolis, has asked for its trial to start Oct. 17 in order to meet its April 30 deadline to close the deal or pay Cigna a $1.85 billion breakup fee. Aetna, which is based in Hartford, Connecticut, argued it should go first, saying its deadline to close the deal is Dec. 31.
Cigna is no longer interested in “being pursued,” Anthem’s lawyer told the judge and the merger agreement can’t be extended past April 30. A trial in January would kill the deal, Anthem said. The company will do “whatever it takes” to get a ruling by the end of the year, the lawyer said.
The government urged the judge to ignore the merger deadlines in setting trial dates.
An October trial for Anthem would put it on a “very fast” schedule, Bates said.
Cigna’s shares jumped 3 percent to $128.37 at 11:01 a.m. in New York, while Humana increased 0.2 percent to $173.97. Aetna rose 0.2 percent, and Anthem declined 0.6 percent.
The companies dispute federal government’s assertions their planned mergers will result in public harm, contending lawyers for the federal government are mistaken about their market definitions. If they prevail, it will reduce the number of national carriers from five to three, including market leader UnitedHealth Group.
The federal government sued to block both mergers July 21, with 11 states and the District of Columbia joining the Anthem-Cigna case, and eight states and District of Columbia participating in the Aetna-Humana suit.
“For most Americans, health insurance is not luxury but a necessity,” Attorney General Loretta Lynch said in announcing the dual filings. “Health insurance can mean the difference between life and death. If the big five were to become the big three, not only would the bank accounts of American people suffer, but the American people themselves.”
Humana and Aetna responded to the lawsuits promising to “vigorously” fight to complete their deal. Anthem said the Justice Department’s suit is “flawed,” while Cigna said it would review its options under its agreement with Anthem.
New York’s insurance regulator sent a letter on Wednesday to Anthem saying it’ll hold a hearing on the Cigna acquisition, before deciding whether to approve the deal. The regulator said it was concerned the deal could hurt competition in New York’s market for commercial health insurance coverage. New York approved Aetna’s acquisition of Humana without a hearing.
Anthem says its tie-up with Cigna will expand access to coverage under the Affordable Care Act and reduce costs for consumers.
Aetna and Humana compete for customers seeking Medicare Advantage coverage.
The cases are U.S. v. Anthem Inc., 16-cv-1493, and U.S. v. Aetna Inc., 14-cv-1494, U.S. District Court, District of Columbia (Washington).
—With assistance from Zachary Tracer.