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Anthem and Cigna Accuse Each Other of Merger Breach

September 22, 2016

Health Insurance Provider Anthem Blue Cross To Hike RatesHealth Insurance Provider Anthem Blue Cross To Hike Rates
The Anthem Blue Cross headquarters is seen after the health insurer began informing its individual policyholders of rate hikes up to 39% to take effect at the beginning of March, on Feb. 9, 2010 in Woodland Hills, California. David McNew/ Getty Images

The U.S. government, which is suing to stop Anthem‘s (ANTM) proposed purchase of Cigna (CI), is pressing the health insurers to provide letters in which each of them accused the other of breaching the merger agreement, according to court documents filed on Wednesday.

Anthem and Cigna agreed last year to merge in a $45 billion deal that would create the largest U.S. health insurer, but disagreements became public in the spring.

The Justice Department sued in July to block the deal, saying it would stifle competition. Trial has been set for Nov. 21, with a decision expected in January.

In the documents, the Justice Department said it had asked a special master, a court official who manages cases, to force the insurers to produce letters between their attorneys related to the alleged breaches of the merger agreement.

The department said the letters were relevant because they “reveal the current state of hostility between defendants,” and the companies argued that the merger would create efficiencies that save consumers money.

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Anthem spokeswoman Bonnie Jacobs said in an email that “Anthem remains firmly committed and focused on defending the litigation.”

During a pre-trial hearing held in August, Anthem‘s lawyer, Christopher Curran, said the companies had such a contentious relationship that Anthem would be unlikely to convince Cignato extend merger deadlines, as often happens in antitrust cases.

In July, the Justice Department also filed a lawsuit to block Aetna‘s (AET) $33 billion planned acquisition of Humana (HUM). The trial on the Aetna deal is set for Dec. 5.

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The Justice Department has argued that the proposed Anthem–Cigna and Aetna-Humana mergers would raise prices for consumers and stifle innovation by reducing the number of large national insurers from five to three.

If both mergers went through, No. 1 U.S. insurer UnitedHealth Group (UNH) would rank second after Anthem. Aetna would be No. 3.