Just days before the planned consummation date, the United States Department of Justice sued to intervene in UnitedHealth Group’s acquisition of Change Healthcare. In the complaint, the DOJ alleges that the proposed acquisition would harm competition in commercial health markets and in the market for a vital technology used by health insurers to process health insurance claims and reduce health care costs.
Change Healthcare provides vital software and services to participants in the health care system – including UnitedHealth’s health insurance competitors. Some of the software and services provided by Change Healthcare include electronic data interchange (EDI) clearinghouse services, which transmit claims and payment information between insurers and providers, and first-pass claims editing solutions, which review claims under the health insurer’s policies and relevant treatment protocols.
The complaint alleges that the transaction would give UnitedHealth (a large company that already owns the largest health insurer in the country) access to a vast amount of rival health insurers’ competitive information. Having access to that information, UnitedHealth would be able to use that sensitive information to gain an unfair advantage and harm competition in health insurance markets. The DOJ also notes that the acquisition would eliminate United’s only major rival for first-pass claims editing technology and therefore give United a monopoly share in the market.
DOJ Statements
In the press release announcing the suit, the DOJ states that “United’s acquisition of this neutral player would allow United to tilt the playing field in its favor, harming current competition and allowing United to control and distort the course of innovation in this industry for the foreseeable future.”
“Quality health insurance should be accessible to all Americans,” said Attorney General Merrick B. Garland. “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 anticompetitive mergers, particularly those at the intersection of health care and data.”
“The proposed transaction threatens an inflection point in the health care industry by giving United control of a critical data highway through which about half of all Americans’ health insurance claims pass each year,” said Principal Deputy Assistant Attorney General Doha Mekki of the Justice Department’s Antitrust Division. “Unless the deal is blocked, United stands to see and potentially use its health insurance rivals’ competitively sensitive information for its own business purposes and control these competitors’ access to innovations in vital health care technology. The department’s lawsuit makes clear that we will not hesitate to challenge transactions that harm competition by placing so much control of data and innovation in the hands of a single firm.”
UnitedHealth and Change Healthcare Initial Statements
The companies involved also released statements, committing to press on and defend the suit in hopes that the acquisition will be permitted to move forward.
“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.”
“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.”
Progression
On March 17, 2022, the federal judge assigned to the case scheduled a 12-day trial to begin August 1, 2022. In response to that, UnitedHealth Group released a scathing statement, saying that the “government’s case rests entirely on speculation and theories unsupported by any past conduct” and that “Optum’s business model and financial success is dependent on providing products and services to external customers, not just UnitedHealthcare… Put simply, any misuse of customer [competitively sensitive information] would be economic suicide for Optum because its sophisticated external customer base would simply cease using Optum’s services and turn to any number of Optum competitors.”