Judge orders Anthem, Cigna to produce merger-breach letters

The federal judge presiding over the Anthem-Cigna antitrust trial has ordered the companies to produce letters in which they accuse one another of breaching their merger agreement.

In an order filed Friday, Judge Amy Berman Jackson granted the Justice Department’s request to require the companies to produce the documents, which the DOJ says help disprove Anthem’s case that the deal’s potential efficiencies would outweigh its anticompetitive effects. Hostility between the defendants, which the letters illustrate, could hamper a smooth integration and thus erode potential efficiency gains from consolidation, the DOJ argues.

Cigna feels Anthem hasn’t effectively prepared to defend the deal in court, and Anthem argues Cigna has not turned over documents to regulators in a timely fashion, sources told the New York Post.

Anthem and Cigna fought the DOJ’s request to turn over the documents, saying they fall under joint-defense privilege, FierceHealthPayer has reported.

But a court adviser recommended the judge compel the insurers to turn over the letters, noting that “neither Anthem nor Cigna has offered any evidence that the breach allegations were designed in any way to further the joint-defense effort.” However, the adviser recommended that the court only enter into evidence select parts of the documents that are relevant to the case; Berman agreed to do so.

The tension between Anthem and Cigna, which has simmered since Anthem’s initial failed takeover bid, has crystallized now that the two companies are facing an antitrust lawsuit, leading some industry analysts to doubt their deal will ever be completed.

Cigna CEO David Cordani has made it clear that the insurer is simply following Anthem’s lead as it fights for the deal, and at a recent hearing on whether to split the trial into two parts, Anthem’s lead counsel noted, “if we’re going to lose and we lose quickly, that’s better for everyone.” The trial will be split into two phases, with one examining how the deal with affect national markets, and the other how it will impact local markets.