Aetna, Humana mull their options, but experts doubt appeal would succeed

Aetna and Humana are weighing their options about how to respond to a federal judge’s decision to block their merger, but experts are doubtful they will have much luck with an appeal if they decide to go that route.

“After putting forward a compelling case that addressed each of the Department of Justice concerns, we are disappointed with the court’s decision and will carefully consider all available options,” Aetna CEO Mark Bertolini and Humana CEO Bruce Broussard wrote. “We continue to believe a combined company will create access to higher-quality and more affordable care, and deliver a better overall experience for those we serve.”

An Aetna spokesman told Reuters that the company was considering whether to appeal the court's ruling.

However, the companies could very well decide an appeal isn’t worth it, Elai Katz, head of the law firm Cahill Gordon & Reindel’s antitrust practices, said in an interview.

“More often than not, with some very minor exceptions, losing at the district court level in a merger case is kind of the end of the road, and very rarely do these cases get appealed,” he said.

That’s because in a typical transaction, “the financial and corporate pressures are such that going on appeal, which may take months, sometimes even years before you reach a conclusion, is something that just doesn’t make sense and it turns out to make more sense for companies to part ways,” according to Katz.

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And even if Aetna and Humana do opt to fight for their deal, Leerink Partners analyst Ana Gupte views (PDF) an appeal as “unlikely to bear fruit under the Trump administration” given its focus on deregulation and driving down prices through a competitive Medicare Advantage industry.

Indeed, Judge John Bates’ ruling might be difficult to reverse, Katz said, noting that “there were good arguments made on both sides in this case, but it’s very thorough, detailed, carefully written opinion.”

Gupte also wrote that an extension of the merger agreement past Feb. 15 by Humana “is by no means assured.” The companies announced that new deadline in late December, after previously extending the deadline to Dec. 31. Instead, Humana might draw takeover interest from insurers such as Cigna and Anthem, she wrote.

Anthem and Cigna’s own attempted merger is also expected to be blocked by a federal judge, though a ruling is still pending. Other than the fact that the Aetna-Humana ruling means that a decision in the Anthem-Cigna case should come soon, Katz doesn’t think the outcome of one case will have much influence on the other.

“I don’t see these two cases as being dependent on each other,” he said, given that the Anthem-Cigna case involves different legal issues than those considered in the Aetna-Humana case.