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Anthem-Cigna Trial Scheduled for November 21st

Last Friday the U.S. Circuit Court for the District of Columbia held the scheduling conference for the proposed health insurance merger of Anthem and Cigna. Judge Amy Jackson decided that the merger trial will begin on November 21st, 2016, and that she will render a decision in early January. She stated that while Anthem’s proposed trial schedule was too short, DOJ’s was too long, and she would be operating under the assumption that their merger deadline of April 30th was a hard date.

Judge Jackson began the conference with a statement that Judge Richard Levie has been appointed as the special master for both trials and asked if either side had any objections. They had none, and she reviewed her proposed schedule and commented sharply that Anthem’s demands for a speedy trial were inconsistent with its slowness to provide information about the mergers. The trial will proceed on a short twelve-week schedule, which may lead to less opportunity for depositions. Anthem’s counsel then indicated they would challenge many if not all of the product market definitions in DOJ’s complaint, and said that their overall defense was that consumers would have many competitive alternatives in the health insurance markets, even post merger, no matter how the markets were defined.

DOJ representatives countered that if this merger was anticompetitive in just a few markets, that was reason enough to block the entire deal. Judge Jackson asked if there were any parts of the case that could set aside; DOJ replied that all of the different areas were closely linked. They are willing to look at any proposed remedies, but such remedies would have to be evaluated to determine whether they will solve the merger’s competitive problems. Anthem is also interested in possible remedies but worried that any such negotiations would delay the trial.

Jackson returned to the issue of timing, telling Anthem that “DOJ has a point that your deadline imposes demands on the trial discovery schedule.” Anthem acknowledged this but said their shareholders had approved the transaction, the merger had to occur by April 30th, 2017, and that require approvals from over a dozen state Insurance Commissioners. Currently Colorado, Connecticut, Georgia, and New Hampshire have suspended their reviews of the merger until the case is complete, so it is imperative that the trial begin as soon as possible. Jackson told them bluntly that it was not possible to have a ruling by the end of 2016 and that she wanted a month to make a full and fair decision.

Near the end of the conference, Jackson remarked that “it is a bizarre situation that we are doing all this for the benefit of a merger that may not be desired.” Cigna’s representatives then approached the bench and asked to correct the record. They said Cigna was committed to litigating this case and to the transaction, although they could not say what would happen on April 30th and whether Cigna would decide to extend the deadline. Anthem implied that they would not. Jackson pointed out that all the documents submitted to the court say the April 30th deadline has no wiggle room, and any information on that would be very helpful. Cigna responded with a waffling statement that the merger agreement speaks for itself and they cannot speculate as to what Cigna’s Board of Directors will decide. Jackson then responded that made things less clear.

During the conference Judge Jackson repeatedly became annoyed with Anthem and Cigna and their often vague and unhelpful answers. She concluded that she would soon issue a scheduling order and that the trial would begin in late November. This is a significant setback for Anthem, and we will be closely monitoring the proceedings.

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