DOJ sues to block UnitedHealth's acquisition of Amedisys

Photo: Courtesy UnitedHealth Group

The Department of Justice has sued UnitedHealth Group and Amedisys over their planned merger due to anticompetitive concerns.

UnitedHealth and Amedisys are two of the largest home health and hospice providers in the country, according to the lawsuit filed Tuesday, November 12 in federal court in Maryland. Plaintiffs also include the states of Maryland, Illinois, New Jersey and New York.

Amedisys was the largest home health and hospice company in the country as of 2022, the lawsuit said. UnitedHealth and Amedisys are direct competitors. The proposed merger between UnitedHealth and Amedisys would forever eliminate that competition, the DOJ said. 

It would result in UnitedHealth's control of 30% or more of the home health or hospice services in eight states, according to the lawsuit. 

Also, the merger would result in the nation's three largest home health providers being owned by the two of the largest Medicare Advantage insurers in the country, UnitedHealthcare and Humana. Humana purchased home health and hospice company Kindred in 2021. 

"Under the law, the proposed merger is presumptively anticompetitive and illegal," the lawsuit states.

The United States and the attorneys general of Maryland, Illinois, New Jersey and New York want the court to prevent the merger and impose civil penalties on Amedisys for its alleged failure to comply with the Hart-Scott-Rodino Antitrust improvements Act for allegedly falsely certifying its submission was not complete. The plaintiffs also want the court to order a civil monetary penalty to UnitedHealth, saying its acquisition of Amedisys violates the Clayton Antitrust Act.

WHY THIS MATTERS

UnitedHealthcare is the nation's largest insurer.

UnitedHealth Group's growth strategy includes investing in a market that meets the needs of an aging population. 

The merger would further consolidate UnitedHealth's dominant position in healthcare, the lawsuit said. 

"In 2022, UnitedHealth concluded that home healthcare – including home health and hospice services – would 'grow exponentially as the baby boom ages and as Millennials move into older cohorts,'" the lawsuit said. "Recognizing that it could not 'build enough capacity internally' to quickly establish the kind of outsized grip on the industry it has amassed elsewhere, in February 2023 UnitedHealth acquired LHC Group, Inc., which was, at the time, the nation's third largest home health provider and a large hospice provider."

In May 2023, Amedisys agreed to merge with infusion provider OptionCare. To stem the competitive threat, UnitedHealth paid a "breakup fee" to OptionCare for terminating its merger with Amedisys, and then gave Amedisys with a $3.3 billion merger offer, the lawsuit said.

Even though Amedisys's chief financial officer and chief operating officer acknowledged in handwritten notes that the OptionCare deal would be better for both employees and patients, "Amedisys ultimately agreed to be subsumed into UnitedHealth's fold," the lawsuit said.

The skilled nursing workforce employed by UnitedHealth and Amedisys would be unfavorably impacted by the merger, the lawsuit said, because both companies are each other's biggest competitors for staff.

Patients benefit from the competition that drives better quality, the lawsuit said. Amedisys's former CEO and current board chairman said, "The 'pure competition' between Amedisys and UnitedHealth means the two companies 'keep each other honest …'" the DOJ said.

UnitedHealth and Amedisys have proposed divesting assets in hundreds of separate markets to VitalCaring Group, which is facing legal issues in Delaware and Texas over alleged breach of contractual and fiduciary duties by its CEO, according to the complaint. 

"Even if VitalCaring were an adequate buyer, the divestiture does not resolve the competitive overlap in over 100 home health and hospice markets across 19 states and the District of Columbia, accounting for well in excess of $1 billion in total commerce," the lawsuit said. "Nor does the divestiture address the harm to thousands of home health and hospice nurses in labor markets."

THE LARGER TREND

Over the past three years, UnitedHealth has spent more than $36 billion acquiring companies in a variety of healthcare settings, turning itself into the largest commercial health insurer in the United States, the largest employer of physicians, the second-largest pharmacy benefit manager and one of the largest healthcare technology and service vendors, according to the lawsuit. 

"This merger would also further consolidate UnitedHealth's standing as the dominant force in nearly every corner of the American healthcare system," the lawsuit said.

Email the writer: SMorse@himss.org