DOJ sues to block UnitedHealth-Change Healthcare deal

The Department of Justice has filed suit to intervene in UnitedHealth Group's acquisition of Change Healthcare, just days shy of the company's planned consummation date of Feb. 27.

In an announcement, the DOJ says that the deal would harm competition in commercial health markets as well as the market for technology that insurers use to process claims and reduce healthcare costs. The deal is valued at $8 billion in cash and $5 billion in debt.

The complaint was filed Thursday in U.S. District Court for the District of Columbia.

“Quality health insurance should be accessible to all Americans,” said Attorney General Merrick Garland in a statement. “If America’s largest health insurer is permitted to acquire a major rival for critical health care claims technologies, it will undermine competition for health insurance and stifle innovation in the employer health insurance markets. The Justice Department is committed to challenging anti-competitive mergers, particularly those at the intersection of health care and data.”

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DOJ alleges in the complaint that the merger would give UnitedHealth Group, the parent company of the country's largest commercial insurer, UnitedHealthcare, access to a treasure trove of data on its competitors' sensitive information. This could be used to give the company a leg up and would eliminate its only major rival in first-pass claims editing technology.

Change currently markets itself as a valuable partner to insurers, and folding it into UnitedHealth would eliminate a neutral party in the market, DOJ said. Should the acquisition be finalized, UHG intends to fold Change into its Optum subsidiary.

“Change Healthcare and Optum together can increase efficiency and reduce friction in health care, producing a better experience and lower costs," UnitedHealth Group said in a statement to Fierce Healthcare. "The Department’s deeply flawed position is based on highly speculative theories that do not reflect the realities of the health care system. We will defend our case vigorously.”

Change Healthcare echoed the sentiment in a statement.

“We are aware and disappointed that DOJ has filed litigation to prevent Change Healthcare from closing our merger with UHG. As we previously disclosed, UHG extended our merger agreement through April 5, 2022," the company said in a statement to Fierce Healthcare. "We will continue our support of UHG in working toward closing the merger as we comply with our obligations under the merger agreement.”

After agreeing to delay the closure of the deal until late February, UnitedHealth and Change said last week they planned to consummate the merger on Feb. 27, setting a deadline for DOJ to intervene.

Organizations such as the American Hospital Association have urged the department to step in, warning that the deal could lead to a massive consolidation of healthcare data.

AHA issued a statement praising the DOJ's decision to intervene in the deal.

"Had DOJ allowed this transaction to move forward it would have permitted a massive concentration of sensitive health care data in the hands of a single, powerful owner with an inherent conflict of interest," Melinda Hatton, AHA general counsel, said in a statement. "There is every indication that it is Change Healthcare that constrains UHG’s largest subsidiary’s (Optum) ability to prejudice payment accuracy in favor of its own financial outcomes by means of increased patient payment denials and coverage restrictions."

"And, allowing Optum the opportunity to own and then manipulate Change’s proprietary evidenced-based clinical support criteria (InterQual) also would have allowed UHG to build its corporate profits by increasing patient claim denials," Hatton said.