A federal judge in Washington warned CVS Health Corp. and Aetna Inc. not to integrate operations after learning CVS closed its acquisition of the health insurer before obtaining court approval of an antitrust settlement the companies reached with the government.
U.S. District Judge Richard Leon blasted the companies and the Justice Department at a court hearing Thursday for treating him like a “rubber stamp.” He complained he was “being kept in the dark, kind of like a mushroom.”
“You need to slow this down,” Leon told Justice Department lawyer Jay Owen. “You’re like a freight train out of control. And you’re operating as if this is just some rubber-stamp operation. It is not, and it will not be.”
(Related: CVS Health Now Owns Aetna)
CVS closed the $68 billion Aetna acquisition on Wednesday after receiving final regulatory approvals. The combination will create a health care giant with a hand in insurance, prescription-drug benefits and drugstores across the U.S.
The Justice Department cleared the deal in October after requiring the sale of Aetna’s Medicare prescription-drug plans to WellCare Health Plans Inc. The sale is intended to address the government’s concerns that the merger would otherwise harm competition between CVS and Aetna.
CVS, based in Woonsocket, Rhode Island, said in a statement the closing of the deal was done with the “full knowledge and consent” of the Justice Department and was in compliance with the federal law governing court approvals of merger settlements, known as the Tunney Act.
Merger settlements negotiated between the Justice Department and companies require court approval. The process can take months, and it’s routine for merging companies to close their deals before a judge signs off.
Nonetheless, the move irked Leon, who has previously taken issue with companies that treat their merger as a fait accompli. He said he probably won’t consider final approval to the settlement until the summer, at which point the companies will be far along in their integration. That will make it difficult to unwind the merger if he doesn’t approve the settlement, he said.
“The risk is on the public that I can unwind it and that we can recoup whatever negative consequences there were on the public in that interim seven months, and that’s going to be a big problem for me, if it should come out that way,” he said.
It’s not the first time the Justice Department’s antitrust division has faced Leon’s wrath. Leon oversaw the division’s unsuccessful challenge to AT&T Inc.’s takeover of Time Warner. During the trial, he criticized the government’s lawyers for their handling of the case.
— Read Hartford to Acquire Aetna Group Life and Disability Unit, on ThinkAdvisor.