Appeals court upholds decision to block Anthem bid for Cigna


Anthem Inc. failed to overturn a court ruling that blocked its planned takeover of rival Cigna Corp., capping a almost two-year battle to complete a combination of two of the biggest health insurers in the U.S.

Barring an appeal to the U.S. Supreme Court, today's decision concludes a successful campaign by the AMA and 17 state medical societies - on behalf of patients and physicians - to stop the Anthem-Cigna merger.

In dissent, Judge Brett Kavanaugh said a merger would allow the larger company to negotiate lower provider rates and mean cost-savings for consumers.

Using claims data from Anthem and Cigna, defense expert Mark Israel calculated that the merger would generate $2.4 billion in medical cost savings through improved discount rates, 98 percent of which he predicted would be passed through to customers, the court said.

The Cigna takeover was one of two insurer deals that the Justice Department's antitrust division stopped earlier this year to prevent the industry's biggest players from consolidating.

Anthem was granted a temporary restraining order against Cigna shortly thereafter.

Fiona the premature hippo born at the Cincinnati Zoo & Botanical Garden earlier this year
Fiona the premature hippo born at the Cincinnati Zoo & Botanical Garden earlier this year

The companies still have the option of another appeal to try to save the deal.

Anthem's purchase of Cigna would create the largest US health insurer. The court said Anthem failed "to show the kind of extraordinary efficiencies necessary to offset the conceded anticompetitive effect of the merger". Anthem faults Cigna Chief Executive Officer David Cordani, claiming he sabotaged the deal. We are very pleased that the Court of Appeals agreed with the District Court's finding that this merger would violate antitrust laws by substantially lessening competition in commercial health insurance markets, likely leading to increased health insurance premiums and reduced quality and innovation.

"Anthem has not explained why these projected savings would even exist", Judge Judith Rogers wrote in the opinion. Cigna is seeking a $1.85 billion breakup fee guaranteed in the merger agreement. "The problem for this merger, if there is one, is in its effects in the upstream market - namely, in its effects on hospitals and doctors as a result of Anthem-Cigna's enhanced negotiating power", he wrote. He said he would send the case back to the lower court for further deliberations.

In addition, Cigna continues to work through the litigation process in the pending Delaware Court of Chancery matter involving Cigna and Anthem, including the preliminary injunction hearing scheduled for May 8, 2017.

Anthem, a member of the Blue Cross Blue Shield Association, is the second biggest seller of medical insurance to big USA companies.

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