Court sides with DOJ on merger letters

Department of Justice-Washington D.C.

A federal court has sided with the Department of Justice in telling Anthem and Cigna to turn over letters and emails that allegedly show the insurers accusing each other of breach of the merger contract, according to recommendations from a special master for the court.

All other documents, or portions of documents, discussing their general positions and strategies regarding the merger that do not include allegations of breach of contract, should be considered protected, recommended Hon. Richard A. Levie, special master for federal Judge Amy Berman Jackson.

The Department of Justice filed a court motion to get the correspondence in late September, after learning during a teleconference with the insurers of the existence of the documents.

[Also: DOJ files motion to get hostile Anthem, Cigna letters]

On August 16, Cigna attorneys said during the call with all parties, that they and Anthem counsel had exchanged letters accusing each other of breaking the merger contract, according to court documents.

Anthem has claimed the merger would result in substantial efficiencies that outweigh anticompetitive concerns, but hostility between the insurers could hamper their integration, said Peter Schwingler, with the DOJ's Antitrust Division, in the September 21 court filing requesting the documents.

Anthem and Cigna countered that the documents were protected under joint defense privilege.

[Also: Court order filed to spilt Anthem/Cigna trial into two dates]

On October 6, Special Master Richard Levie recommended the court grant in part and deny in part the DOJ's motion to compel production of the exchanged documents between the insurers.

Anthem's argument that the information is not relevant was apparently intended to suggest that the newly-merged company will be able to overcome, or overrule, any disagreements to obtain post-merger efficiencies, Levie said.

That may be true, but at best it shows that Anthem's argument is that the court should afford less weight to any evidence of pre-merger disagreements, he said.

[Also: Anthem-Cigna, Aetna-Humana mergers would squeeze commercial insurance market, AMA study claims]

"To the extent that the letters alleging breach reflect hostility between these individuals, such hostility may hamper these individuals' ability to work together to implement the contemplated efficiencies," Levie said. "The letters are therefore directly relevant to the Court's assessment of whether Anthem's proposed efficiencies are in fact likely to counter the alleged anticompetitive outcomes that DOJ anticipates will occur."

The trial on the $54 billion proposed merger is scheduled to begin Nov. 21 in U.S. District Court in Washington, D.C.

Twitter: @SusanJMorse