Anthem to Petition Supreme Court to Review Rulings Blocking Cigna Deal

By Anna Wilde Mathews Features Dow Jones Newswires

Anthem Inc. said it would petition the Supreme Court to review the antitrust rulings blocking its acquisition of Cigna Corp., a long-shot bid to revive a $48 billion deal amid litigation between the two companies.

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A federal appeals court last month declined to allow the acquisition, affirming a trial judge's earlier ruling that blocked the deal. Two judges on the three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit rejected Anthem's argument that the trial court had failed to sufficiently weigh the company's claim that billions of dollars in cost savings would flow from the merger.

Anthem said its petition would focus on the stance of the third judge, Brett Kavanaugh, who sided with its defense of the deal. The insurer's statement quoted from his dissent, which said "the record evidence decisively demonstrates that this merger would be beneficial to the employer-customers who obtain insurance services from Anthem and Cigna."

Anthem said its petition will urge that "1960s-era merger precedents relied upon by the courts below must be updated to reflect the modern understanding of economics and consumer benefit."

The petition faces extremely long odds. The Supreme Court reviews only a tiny share of the appeals it receives. If the court did take the case, it could take a year to resolve. That would be a timing challenge under the best of circumstances, but more so here because Cigna is fighting to terminate the deal.

In the appeals-court decision, the D.C. Circuit's Judge Judith Rogers wrote for the majority that "the district court reasonably determined Anthem failed to show the kind of extraordinary efficiencies that would be needed to constrain likely price increases in this highly concentrated market, and to mitigate the threatened loss of innovation."

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During Cigna's first-quarter earnings call with analysts early Friday, Cigna Chief Executive David Cordani mentioned Anthem's petition, briefly going over the legal status of the case and saying, "we will update you when there is additional news to share."

Anthem and Cigna agreed to the deal in July 2015. The Justice Department spent a year reviewing the proposed merger before filing an antitrust lawsuit to challenge it.

The appeals court was reviewing a judgment by U.S. District Judge Amy Berman Jackson in Washington, D.C., who held a month-long trial at the end of 2016 and ruled against Anthem in February. Judge Jackson found the merger would unlawfully suppress competition among large health insurers, harming multistate employers that already have only a few competing choices when insuring their workers.

The litigation has played out amid acrimony between Anthem and Cigna. The companies had been feuding even before the Justice Department filed its lawsuit, with each company eventually accusing the other of violating the merger agreement.

After Judge Jackson blocked the deal, Cigna and Anthem sued each other in Delaware state court, where litigation continues. Cigna tried to terminate the transaction in February but a Delaware judge barred the company from doing so.

A hearing is scheduled for May 8 in the Delaware court, where Cigna again will seek to opt out of the deal. Anthem has tried to prevent the smaller insurer from walking away.

Cigna, in its Delaware lawsuit, seeks the deal's $1.85 billion breakup fee as well as more than $13 billion in damages from its partner, which it alleges violated the terms of their deal. Anthem, for its part, has argued that Cigna sought to sabotage the deal, and its lawsuit also is claiming the right to monetary damages from its merger partner.

Write to Anna Wilde Mathews at anna.mathews@wsj.com

(END) Dow Jones Newswires

May 05, 2017 09:42 ET (13:42 GMT)