A federal judge in Washington, juggling challenges to two multibillion-dollar merger deals in the health insurance industry, said Thursday he would keep only one of the cases and begin the trial in the other ahead of the U.S. Justice Department’s preferred February start date.
U.S. District Judge John Bates gave no indication of which case he would preside over, and he did not specify exactly when he wanted a trial to begin. Bates did, however, flag his representation of Blue Cross Blue Shield two decades ago, noting that it could create the appearance of a conflict of interest in the Justice Department’s case against Anthem Inc.’s proposed $54 billion acquisition of Cigna Corp.
Aetna Inc., under deadline pressure in its proposed $37 billion acquisition of Humana Inc., faces a year-end deadline to wrap up the deal. Anthem, citing an April 30 deadline to close its tie-up with Cigna, also wants resolution by the end of 2016.
Federal antitrust enforcers urged Bates this week to ignore those deadlines, saying the companies set those dates and “can alter them with the stroke of pen.” For both matters, the Justice Department proposed a trial-ready date of Feb. 17.
Anthem, represented by White & Case partner Christopher Curran, proposed an October trial. Bates questioned whether that timeline was reasonable given the complexity of the deals. The Justice Department has described the mergers as “unprecedented in their scale and in their scope.”
“That’s a very fast schedule looking at other cases and, certainly, looking at cases of this magnitude,” Bates said.
On the timing of a trial, Bates said only that he would set a “faster schedule” than what the government has proposed. “What exactly that schedule will be I need to think through a little bit,” he said.
Curran acknowledged at Thursday’s hearing there is “contentiousness” between Anthem and Cigna.
When the Justice Department sued to block the two health insurance deals on July 21, alleging that they would lead to increased premiums and lower quality health care, Anthem vowed to vigorously fight for its acquisition of Cigna. Cigna took a less enthusiastic tone, saying instead that the company was “evaluating its options consistent with its obligations under the agreement.”
Without a resolution at the end of the year, Curran said, Anthem would not be able to secure the approval of state regulators before the April 30 deadline, allowing Cigna to back out and receive a $1.85 billion breakup fee.
“First of all, I think that would kill the deal,” Curran said, referring to the Justice Department’s push to begin the trial in 2017.
Bates at one point appeared uncomfortable with the notion that a company could use a deadline to speed up a court’s antitrust proceeding. “Do you think that’s something the parties of the deal can do to the courts?” he asked.
Curran assured the judge that Anthem was “not posturing” or playing games. Repeating what he said in court papers leading up to Thursday’s hearing, Curran said Anthem worked in good faith with the Justice Department during its investigation and blamed the government for putting the deal in the position of dying on the vine.
“If we could extend the date, we would,” Curran said. “But we can’t. We’re stuck.”
On the question of whether Bates should preside over the two antitrust lawsuits, the judge said he did not believe it would be realistic—or “fair to the parties and the public—for him to handle both cases. Bates said he would send one case back to be reassigned.
“That’s my determination,” he said. “I can’t do both.”
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