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Feds sue to block UnitedHealth Group merger with tech firm

The Justice Department claims a proposed merger between two leading health care companies would substantially reduce market competition and constitute a monopoly.

WASHINGTON (CN) — The Department of Justice is suing to block UnitedHealth Group’s $13 billion deal to acquire health technology company Change Healthcare.

In a lawsuit filed on Thursday in Washington federal court, the DOJ argues the merger would give UnitedHealth Group an unfair market advantage by granting it “unfettered” rights to sensitive data from rival companies that use Change Healthcare products.

“Because Change’s products are so widely used, including by many healthcare providers, UnitedHealth Group’s health insurance rivals would not be able to prevent their data from being routed through Change post-transaction,” the 45-page complaint states.

The proposed merger between UnitedHealth Group, the largest commercial health insurer nationwide, and Change Healthcare, an independent health insurance billing company, was announced last January. 

Two months after the deal was proposed, the Justice Department launched an investigation and determined that the merger would essentially be a monopoly.

If the merger went through, UnitedHealth Group would be given a market share of more than 80% for health insurance claims editing, the government claims.

The Minnesota-based insurance giant would also be able to co-opt its rival insurers’ innovations and competitive strategies, raise their costs and deny or delay the quality of Change Healthcare’s services, according to the 45-page complaint.

“Ultimately, this substantial lessening of competition would result in higher cost, lower quality, and less innovative commercial health insurance for employers, employees, and their families,” according to a press release from New York Attorney General Letitia James, who is also a plaintiff in the suit along with Minnesota Attorney General Keith Ellison.

They want a judge to declare that the proposed merger is anticompetitive and to permanently enjoin the two companies from ever merging.

U.S. Attorney General Merrick Garland said on Thursday that the Justice Department is “particularly” committed to targeting anticompetitive mergers at the intersection of health care and data.

“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,” Garland said in a statement.

UnitedHealth Group says it will defend the merger "vigorously" in court.

"The Department’s deeply flawed position is based on highly speculative theories that do not reflect the realities of the health care system," the company said in a statement.

Change Healthcare said in a statement that the Tennessee-based company is “disappointed” about the litigation and that it is still working to close the merger despite the court battle.

Follow @EmilyZantowNews
Categories / Business, Government, Health, National

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