Aetna Judge Hands Off Anthem Merger Case to Speed Trials

  • Anthem-Cigna merger case moved to new judge in Washington
  • Split improves chances of year-end rulings for both challenges

The judge overseeing two U.S. cases challenging mergers among four of the biggest health insurers gave up one, improving the odds for rulings on both tie-ups by the end of the year and reducing the chance they fall apart beforehand.

U.S. District Judge John Bates in Washington said Friday he would keep the case against Aetna Inc.’s deal for Humana Inc., leaving the challenge to Anthem Inc.’s takeover of Cigna Corp. to another judge. Bates kept the Aetna case because it’s on a tighter deadline with its merger agreement expiring at the end of the year.

“Given the complexity and importance of these cases, the court cannot feasibly try and decide both in that time frame,” the judge wrote in a ruling. “Ultimately, it will be fairer to the parties and better for the public if one of the cases is randomly reassigned to another judge in this district, who can give it prompt and full attention while this judge does the same with the other.”

Aetna, Cigna and the Justice Department declined to comment. Humana and Anthem didn’t respond to requests seeking comment.

Shares Rise

Investors cheered the news. Humana rose 3 percent to close at $178.96 after jumping as much as 4.5 percent on the news. Aetna climbed 2.3 percent to $119.29. Cigna was little changed at $128.50, while Anthem rose 0.8 percent to $127.86.

For a Bloomberg Intelligence Primer on Humana, click here

Both companies told Bates in a hearing Thursday they need rulings by the end of the year because of the timelines outlined in their merger agreements. Anthem has the right to extend the Cigna agreement until April 30. The Justice Department suggested that both cases be ready for trial in February.

The Anthem case was assigned to Judge Amy Berman Jackson in Washington, who was appointed to the bench by President Barack Obama. She set a scheduling conference for Aug. 12 and asked for lawyers’ schedules in December and January, indicating she may hold the trial then.

‘Faster Timeline’

Bates’s decision to keep the Aetna lawsuit is a positive development for Aetna because the case can proceed on the insurer’s timetable, Wells Fargo & Co. analyst Peter Costa said in a research note.

For Anthem and Cigna, “this may represent a setback, in our view, with a Democrat-appointed judge reviewing case, but it could also mean a faster timeline than allowed if Judge Bates kept both cases,” Costa wrote.

Bates, who was appointed by former President George W. Bush, didn’t set a trial date in his decision Friday. He said he wouldn’t adopt the companies’ scheduling proposals but “is inclined to accommodate their contractual deadlines to the extent reasonable.” He said a court-appointed official known as a special master should handle disputes about the exchange of evidence.

The cases are U.S. v. Anthem Inc., 16-cv-1493, and U.S. v. Aetna Inc., 14-cv-1494, U.S. District Court, District of Columbia (Washington).

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