Unsealed merger trial documents show rift between Anthem, Cigna

Documents unsealed at the request of several news organizations, including the Wall Street Journal, show a rift between Anthem and Cigna that goes deeper than earlier reports of the insurers accusing each other of breaking the terms of their $54 billion merger agreement.

Transcripts of closed courtroom testimony from the company's CEOs were unsealed Monday and released Tuesday, according to published sources.

In them, Cigna CEO David Cordani revealed doubts about the benefits of the deal for his company, while Anthem CEO Joseph Swedish said his company created a secret team for the planned integration because of Cigna's lack of cooperation, according to the Hartford Courant.

Cordani said Cigna stopped working on the merger in July after the Department of Justice issued an injunction on the deal, the Hartford Courant said. Also, Cordani said he believed Anthem's rebranding strategy to shift Cigna members to the Blue Cross Blue Shield Association would weaken Cigna's commercial offerings and narrow consumer choice.

Swedish's testimony revealed Cordani could be out of a position post-merger, saying he wasn't sure if Mr. Cordani would stay with the new company at all, according to published reports.

Swedish has said consumers would benefit from the efficiencies of a combined organization, while still having choice from numerous competitors.

[Also: Trial: Anthem denies it would 'drop hammer' on providers]

Two Anthem executives testified the company is facing tough competition from other insurers competing to cover employer health benefits programs, and also from online health-insurance marketplaces that let employers offer their workers a range of plans, according to the Wall Street Journal.

Anthem competes more with UnitedHealth and Aetna than Cigna, Morgan Kendrick, head of Anthem National Consumer Accounts testified, according to the WSJ.

The antitrust trial on the proposed merger continues into its second week.

[Also: Anthem, Cigna trial starts as AMA comes out against the mega-merger]

U.S. District Court Judge Amy Berman Jackson is hearing the trial in two parts. The first focuses on the national implications of the merger and is expected to wrap-up this week. The second half, looking at regional impacts, could be heard later in December.

Should the Anthem/Cigna merger be denied due to a successful block by the DOJ, Anthem will owe Cigna a $1.85 billion breakup fee. If Anthem can show Cigna willfully breached their merger agreement, it won't have to pay, according to their contract.

Starting Monday, Dec. 5, in the same Washington, D.C. courtroom and under a different judge, Aetna and Humana face off against the DOJ on their $37 billion merger plan.

The DOJ also blocked this merger in July citing anti-competitive concerns, but industry experts see this consolidation as having the better chance of going through.

The main dispute is whether the Medicare Advantage market would remain competitive, as the merger would result in Aetna and Humana being the largest seller of MA plans in the country.  The insurers have agreed to sell some of their combined MA assets to Molina Healthcare.

In court papers filed this week, Aetna contends the DOJ may try to punish the company for withdrawing much of its Affordable Care Act product from the exchanges, according to Investopedia.

This goes back to a July 5 letter in which Aetna told the DOJ it would be forced to scale back on its ACA footprint should the Justice Department block the deal.

[Also: Feds accuse Aetna/Humana attempting to derail merger challenge by blocking CMS defendants]

After the DOJ injunction, Aetna carried through on its threat in August, withdrawing from 11 of the 15 states where it operated on the exchanges.

Should the DOJ win its argument in court, Aetna will owe Humana a $1 billion breakup fee.

Twitter: @SusanJMorse