The Department of Justice wants Anthem and Cigna to produce documents that detail escalating “governance disputes” between the two companies, arguing they prove that the deal would not go as smoothly as the insurers claim.
A court filing from the DOJ says that in an Aug. 16 teleconference, Cigna’s lawyers revealed the existence of letters between both companies’ in-house attorneys that accused one another of breaching the merger agreement.
Anthem and Cigna should be compelled to turn over the documents, the government argues, as they are “relevant to Anthem’s efficiencies defense and, as adversarial communications, fall outside the scope of the joint-defense privilege.” Anthem and Cigna, however, have objected to requests to produce the documents.
But the DOJ says hostility between Anthem and Cigna was apparent in letters between their CEOs, Joseph Swedish and David Cordani, even before it filed the antitrust lawsuit. This could hamper integration efforts, the government says, thus eroding Anthem’s argument that the efficiencies gained through the merger would outweigh any anticompetitive effects.
“Such efficiencies don’t happen overnight; they require cooperation over months (if not years) to integrate the operations of these multibillion-dollar firms,” according to the filing.
This is not the first time news has surfaced of tension between Anthem and Cigna. Before agreeing on a deal, Cigna rebuffed Anthem’s takeover attempt and issued a strongly worded rebuke after Anthem took its bid public.
Later reports revealed continuous letters between the companies’ lawyers, eroding market confidence that the deal would survive. Cigna also has not been on the same page as Anthem regarding the projected date of the deal’s closing, and Anthem has warned that Cigna could walk away from the deal if the antitrust case against it isn’t resolved by the end of the year.
In another blow to both the Anthem-Cigna and Aetna-Humana deals, a new analysis from the American Medical Association argues that the mergers would “collectively quash competition in insurance markets across 24 states,” according to the organization. Both the AMA and the American Hospital Association have lobbied fiercely against the deals, saying they would hurt both providers and patients.