Washington – Anthem said Thursday it will appeal a federal court’s decision to block the health insurer’s planned merger with Cigna.
“The company promptly intends to file a notice of appeal and request an expedited hearing of its appeal to reverse the Court’s decision so that Anthem may move forward with the merger, which was approved by over 99 percent of the votes cast by the shareholders of both companies,” Anthem said in a statement.
The insurer’s decision to appeal came quickly on the heels of U.S. District Judge Amy Berman Jackson’s ruling late Wednesday that the $54 billion merger between Anthem and Cigna would result in a drop in competition in dozens of insurance markets across the nation.
“The evidence has shown that the merger is likely to result in higher prices and that it will have other anticompetitive effects,” Berman Jackson wrote in her order. “It will eliminate the two firms’ vigorous competition against each other for national accounts, reduce the number of national carriers available to respond to solicitations in the future and diminish the prospects for innovation in the market.”
The judge is expected to release a detailed opinion later Thursday that explains how she arrived at her ruling.
At stake for Anthem is a $1.85 billion breakup fee it would owe Cigna if the merger is not completed.
In contrast to Anthem’s quick decision, Cigna has not said whether it will support an appeal.
The Anthem-Cigna ruling comes two weeks after another U.S. district judge in Washington, D.C., blocked a $37 billion merger between Aetna and Humana on antitrust grounds.
Aetna CEO Mark Bertolini told investors last week he is mulling over an appeal and has until Feb. 15, the day Aetna’s merger agreement with Humana expires, to make a decision.
Anthem CEO Joseph Swedish said Thursday that “moving forward, Anthem will continue to work aggressively to complete the transaction.”
“Anthem is significantly disappointed by the decision as combining Anthem and Cigna would positively impact the health and well-being of millions of Americans – saving them more than $2 billion in medical costs annually,” Swedish said.
Nationally, Anthem covers 40 million Americans, and Cigna covers 13 million. The merger would have produced the nation’s largest health insurer, eclipsing the current reach of United Healthcare.
Anthem is the largest seller of health insurer in Connecticut, followed by Aetna and Cigna.
Connecticut Attorney General George Jepsen determined the merger would limit competition in the state’s health insurance market, and Connecticut joined the federal lawsuit along with the District of Columbia, California, Colorado, Georgia, Iowa, Maine, Maryland, New Hampshire, New York, Tennessee and Virginia.
The Justice Department’s success in blocking the insurer tie-ups could signal the end, at least for a time, to megamergers in the industry.
Or maybe not. Court documents revealed that United Healthcare had an interest in acquiring Cigna. And industry analysts have speculated that Cigna or Anthem may be interested in making a bid for Humana, which specializes in Medicare Advantage plans.
Cigna CEO David Cordani recently estimated his company will have $7 billion to $14 billion of deployable capital.
“We have a track record of being very disciplined relative to our capital priorities and not allowing surplus capital to sit around,” Cordani said.