Cigna's headquarters Cigna’s headquarters. (Photo: Michael Nagle/Bloomberg)

Cigna Corp.’s chief executive officer and board used “black-ops style” tactics in a covert campaign to “blow up” a $48 billion merger with rival insurer Anthem Inc., Cigna investors claim in a lawsuit.

A Massachusetts-based pension fund alleges that Cigna CEO David Cordani sought to “poison” the deal after failing to secure the top post in the merged company. He hired lawyers and public relations specialists to help in a “Trojan Horse” campaign, the fund claims. The deal, which would have created the largest U.S. health insurer, collapsed in 2017.

“The board supported his sabotage and placed Cordani’s personal interests over the best interests of the company” in order “to protect their jobs at the expense of shareholders,” according to the lawsuit, filed under seal on Nov. 17 in Delaware Chancery Court and made public on Monday.

(Related: Judge Rules Anthem, Cigna Can’t Recover Damages Over Failed Merger)

Representatives of Cigna, based in Bloomfield, Connecticut, and Indianapolis-based Anthem didn’t immediately return emails seeking comment on the suit.

‘Trojan Horse’ Campaign

The Massachusetts Laborers’ Annuity Fund is seeking unspecified damages to be returned to the company on behalf of all Cigna investors. Such derivative lawsuits, as they’re called, typically target directors for failing to properly oversee operations.

The fund claims that Cordani hired the public relations specialist Teneo, which it also names as a defendant, to scuttle the merger while making it look like Cigna was working to consummate it.

“Throughout this litigation, Cigna’s fiduciaries took pains to hide their disloyalty, such as making misleading public statements” and “proffering non-credible testimony,” according to the suit.

Teneo was tasked with making targeted leaks to news media portraying Anthem’s efforts to win antitrust clearance as bumbling, the pension fund alleges. Cordani and board members worked to keep the “Trojan Horse” campaign a secret, according to the complaint.

Representatives of Teneo didn’t immediately return calls and emails seeking comment on the lawsuit.

‘Corporate Soap Opera’

Anthem offered to buy Cigna in 2015 to bulk up and gain negotiating power, lowering reimbursement rates to health care providers. The U.S. Justice Department’s antitrust division sued the following year to block the merger, arguing it would further consolidate an already concentrated market and lead to higher costs for employers and consumers.

The deal’s collapse set off a legal battle between the two insurance giants to collect billions of dollars from each other, providing an inside look at one of the largest busted corporate deals in U.S. history and featuring competing narratives of how the transaction failed.

Read More: Anthem Abandons Battle for Cigna After Court Deals Blow to Deal

In a hearing last November, Delaware Chancery Judge Travis Laster urged the companies to end their “corporate soap opera.” In August, he rebuffed both of them, saying Cigna had breached its obligations but that the union was likely to have been blocked on antitrust grounds anyway.

“This outcome leaves the parties where they stand,” he wrote. “Neither side can recover from the other. Each must deal independently with the consequences of their costly and ill-fated attempt to merge.”

Earlier this month, Cigna, which is seeking a $1.85 billion termination fee from Anthem, asked the Delaware Supreme Court to resurrect its damage claims.

The case is In Re Anthem-Cigna Merger Litigation, 2017-0114, Delaware Chancery Court (Wilmington).

–With assistance from Christopher Yasiejko.

— Read Anthem, Cigna Clash Over Failed Dealon ThinkAdvisor.

— Connect with ThinkAdvisor Life/Health on LinkedIn and Twitter.

Copyright 2020 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.