Appeals court upholds decision to block Anthem bid for Cigna

30 April 2017, 12:05 | Andres Norman

Appeals court upholds decision to block Anthem bid for Cigna

Appeals court upholds decision to block Anthem bid for Cigna

A DC Circuit court upheld a lower court ruling blocking a merger between healthcare benefits providers Anthem (ANTM) and Cigna (CI) Friday, likely ending Anthem's takeover bid. Now comes the legal fight over the deal's failure.

Anthem told the DE court in an April 26 filing that there were "meaningful opportunities" to complete deal, saying it was seeking a settlement with the Justice Department under the new Trump administration. On November 21, 2016, the plaintiffs proceeded to trial against Anthem and Cigna before U.S. District Court Judge Amy Berman Jackson of the D.C. District Court.

Cigna said in a regulatory filing that it was continuing to work through the litigation process, and a spokesman declined to comment beyond the filing.

In this latest development, according to Bloomberg reporters David McLaughlin and Andrew Harris in an article posted today, the U.S. Court of Appeals for the District of Columbia upheld the lower court ruling by a 2-1 vote, according to an order issued Friday.

The companies still have the option of another appeal to try to save the deal. Of the $2.4 billion in claimed savings, Israel projected that $1.5 billion would result from Cigna customers accessing Anthem's lower rates, while $874.6 million would result from Anthem customers accessing Cigna's lower rates.

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The American Medical Association said it is pleased with the court's decision. The Anthem-Cigna merger is the largest proposed merger in the history of the health insurance industry, the appeals court notes.

Bloomfield-based Cigna was a reluctant partner in the merger, and has a pending lawsuit in a DE chancery court to end its relationship with Anthem and seek a $1.85 billion breakup fee and another $13 billion in damages resulting from the merger effort. "The problem with this merger, if there is one, is in its effects in the upstream market - namely, its effects on hospitals and doctors as a result of Anthem-Cigna's enhanced negotiating power", Kavanaugh wrote.

Anthem was granted a temporary restraining order against Cigna shortly thereafter. If not, Kavanaugh said, he'd have allowed the combination. He said he would send the case back to the lower court for further deliberations.

Concurring with Rogers was U.S. Circuit Judge Patricia Millett, a 2013 selection by President Barack Obama.

This combo of file photos shows signage for health insurers Cigna Corp., and Anthem Inc. The Delaware cases are Anthem Inc. v. Cigna Corp., No. 2017-114, Delaware Chancery Court (Wilmington) and Cigna Corp. v. Anthem Inc., 2017-0109, Delaware Chancery Court (Wilmington).

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