May 17, 2022

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DOJ sues to block $13 billion deal by UnitedHealth Group

DOJ sues to block $13 billion deal by UnitedHealth Group

WASHINGTON – The Justice Department on Thursday filed a lawsuit to block the $13 billion acquisition of a health technology company by a UnitedHealth Group company, in the latest move by the Biden administration to clamp down on corporate consolidation.

The agency argued that a deal by UnitedHealth to buy health technology company Change Healthcare would give sensitive data UnitedHealth could use against its insurance competitors. The lawsuit was filed in the US District Court of Columbia.

“The Department of Justice’s deeply flawed position is based on highly speculative theories that do not reflect the realities of the health care system,” a spokeswoman for Optum, the UnitedHealth subsidiary, said in a statement, adding that the company would “advocate our case.” Strongly. “ Change Healthcare declined to comment.

The deal is the latest deal to face opposition from the Biden administration, which has made confronting corporate consolidation a key part of its economic agenda. President Biden Sign an executive order Last year to stimulate competition in various industries. as appointed Lina Khana prominent critic of tech giants, for the leadership of the Federal Trade Commission, and Jonathan Kantera lawyer like Big Business, as head of antitrust efforts at the Department of Justice.

Since then, the Federal Trade Commission Lockheed Martin banned From buying a missile propulsion systems maker and Chip giant Nvidia from purchase Arm design company. Even before Mr. Kanter’s confirmation, the Department of Justice filed a lawsuit to prevent the merger of two major insurance brokers; The Buy Simon & Schuster by publisher Penguin Random House; And a deal that would have married some of JetBlue’s operations with American Airlines.

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Thursday’s lawsuit challenges a deal struck by Optum, which said last year it would buy Change Healthcare, a company that provides technology services to insurers. UnitedHealth is one of the largest health companies in the country, with revenues of $287.6 billion in 2021. In addition to the healthcare information technology business, the Optum unit owns physician practices, a large chain of surgery centers, and one of the nation’s largest pharmacy benefit managers.

At the heart of the Department of Justice lawsuit is the data that Change Healthcare collects when it helps process insurance claims. The Department of Justice argued that the deal would enable UnitedHealth to see and undermine the rules its competitors use to process claims. The agency said UnitedHealth could also process data about patients at other insurers to gain a competitive advantage.

The lawsuit also argued that UnitedHealth could withhold Change Healthcare products – used by other insurers – from its competitors or keep some of its new innovations to itself. The Justice Department added that the deal would give United Health a monopoly on a type of service that is used to screen insurance claims for errors and speed up processing.

The companies said the acquisition would improve efficiency in the industry. They also explored the sale of a portion of a healthcare change that the Justice Department said would give UnitedHealth a new monopoly.

Lawmakers and regulators are increasingly concerned that large companies may use a trove of data to harm their competitors. A congressional committee investigated whether Amazon uses data from third-party merchants who use its platform to develop competing products, for example. Facebook’s critics have also argued that the company’s years of user data make it difficult for an upstart service to challenge its dominance.

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Since Mr Kanter joined the Justice Department’s antitrust division, critics have said he should not oversee cases against companies he represents in his private practice. According to a financial disclosure form he filed last year, he once represented Cigna, a major insurer that competes with UnitedHealth, and telehealth company Teladoc.

A person familiar with the DOJ case said Mr Kanter was not involved in the lawsuit against UnitedHealth.

Red Abelson Contribute to the preparation of reports.