Aetna-Humana Merger Trial Scheduled for December 5th

August 10, 2016

 

This morning the U.S. Circuit Court for the District of Columbia held the scheduling conference for the proposed health insurance merger of Aetna and Humana. Judge John D. Bates decided that the merger trial will begin on December 5th, 2016, and last for thirteen days. He will do his best to render a decision as quickly as possible, but he could not promise that the case will be decided before the parties’ self imposed deadline at the end of the year.

 

Judge Bates began the conference by laying out a proposed schedule where the trial began on November 5th, and asked both the merging companies and the Department of Justice for their feedback and advice. He noted that this schedule gave 110 days from the filing of DOJ’s lawsuit against the mergers to the beginning of the trial, and asked why this wasn’t enough time. DOJ responded that any trial date before January 5th, 2016 would harm their efforts to fully present their case. While the Aetna-Humana merger was announced over a year ago, government antitrust lawyers have really only had four months with the relevant documents. They also need to conduct depositions, acquire information, investigate efficiencies to determine if they are merger-specific or realistic, and examine the proposed remedy for the merger. The remedy issue is especially crucial and typically an investigation of a proposed remedy can take months as the government tries to determine whether a remedy can fully restore competition. DOJ also repeated that the court should not be influenced by Aetna and Humana’s self imposed December 31st, 2016 deadline for the merger’s completion, and that the companies could extend the deadline at any time.

 

Aetna then urged the court to begin the merger trial as quickly as possible, ideally in October. Judge Bates asked why the trial should be held so early and why the December 31st merger deadline could not be extended. The witnesses responded that a lot of work had been invested in setting their deadline and laying plans around it, and that if it were extended, the merger of Anthem and Cigna could be difficult to hold together. Bates wondered if “what you’re ultimately saying is that the merging parties’ agreement should trump all other concerns.” Aetna quickly backpedaled and said that was not their intention at all; they simply believed that a fair merger trial could be held before the end of the year.

 

Finally, Judge Bates announced that the merger trial would begin on December 5th and run for thirteen days until December 21st. He said that some of DOJ’s concerns were valid and weighed on him, and that he would take steps to ensure that they could fairly and thoroughly present their case against the merger. Bates also was struck by the inability and failure of Aetna and Humana to specify what harm would be caused if the ruling were delayed until 2017, and he said their deadline “lacks legitimacy.” While he will do his best to rule on the case as soon as possible, Bates made no promises that it would be finished by December 31st. For a realistic and fair decision, the ruling will likely come in early or mid-January.

 

It’s important to remember what is at stake in this trial.  Hundreds of thousands of Medicare Advantage beneficiaries receive the robust benefits of competition between Aetna and Humana.  The Center for American Progress found that in Medicare Advantage markets where Aetna and Humana compete for consumers, Aetna’s annual premiums are lower by up to $302 and Humana’s annual premiums by $43. And the risks of the effectiveness of any remedy are substantial – most Medicare Advantage remedies have failed.   And that risk would be borne by vulnerable elderly and disabled Medicare Advantage beneficiaries.  That’s a gamble no one should take.

 

The scheduling conference for the Anthem-Cigna hearing will be at 10 AM this Friday, August 12th, 2016.

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