INDIANAPOLIS (AP) — Health insurers Anthem and Cigna are now trading lawsuits instead of working together to salvage a shaky $48-billion buyout agreement.
The Blue Cross-Blue Shield carrier Anthem said Wednesday that it is seeking a restraining order to block its smaller rival from terminating their deal, which has already been blocked by a federal judge.
Cigna announced Tuesday that it was suing Anthem and seeking more than $13 billion in damages for what it says were Anthem’s breaches of the merger agreement.
The two companies announced Anthem’s plan to buy Cigna in 2015 a few weeks after two other insurers, Aetna Inc. and Humana Inc., announced a separate deal.
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Anthem and Aetna had touted their huge acquisition bids as a way to grow enrollment, cut costs and reap savings that they would then pass on to consumers. They also said the deals, which would have consolidated the nation’s five largest insurers into three, would help stabilize business on the Affordable Care Act’s public insurance exchanges.
But the deals drew concern over their potential impact on prices and competition in insurance markets. The Department of Justice sued last summer to stop both acquisitions, and separate federal judges recently rejected them after trials held late last year.
Aetna and Humana announced Tuesday they were ending their deal.
But Anthem said Wednesday that there still was enough time and “a viable path forward” for completing its acquisition. It is appealing the court decision.
The Indianapolis insurer said Cigna’s lawsuit was the next step in that company’s “campaign to sabotage the merger and to try to deflect attention from its repeated willful breaches” of the deal.
It listed several maneuvers that it says Cigna attempted to sabotage the deal. Anthem said Cigna refuses to allow meetings with its senior management team and has repeatedly delayed producing data.
Anthem also said Cigna’s CEO attacked the combined company’s ability to achieve savings on medical costs during trial testimony.
Cigna called Anthem’s allegations “meritless” and said in a regulatory filing Wednesday that there is no viable way to complete the deal.
Bloomfield, Connecticut-based Cigna said Tuesday that the damages it seeks in its lawsuit include the amount its shareholders would have received if the merger had not failed. It noted that Anthem assumed full responsibility for litigation strategy and getting the necessary regulatory approvals, suggesting that it was Anthem’s responsibility to push the deal through.
The brewing legal battle hasn’t scared Wall Street. Investors sent Anthem shares up 42 cents to $163.74 at the start of trading Wednesday, while broader indexes slipped. Cigna shares also climbed 32 cents to $147.