UnitedHealth Group and Change merger is being appealed by the DOJ

Photo: Courtesy of UnitedHealth

The Department of Justice is angling for another chance to block UnitedHealth Group’s acquisition of Change Healthcare, filing an appeal on Friday to reverse a September district court decision that cleared the merger.

The states of New York and Minnesota have joined the appeal filed with the U.S. State Court of Appeals for the District of Columbia.

UnitedHealth Group has said the appeal is without merit.

UnitedHealth Group and Change won their case to merge after federal judge Carl Nichols on September 19 denied the DOJ’s request to block the $13 billion merger. 

The merger combines UnitedHealth Group, owner of the nation’s largest health insurer, and Change Healthcare, a healthcare technology provider and electronic data interchange clearinghouse.

WHAT’S THE IMPACT

After winning its case, UnitedHealth in early October filed notice of the merger completion with the Securities and Exchange Commission.

On Monday, UnitedHealth Group said about the DOJ’s appeal, “”After nearly two years of regulatory review, a full trial and a favorable court decision, we are executing on our vision to achieve a simpler, more intelligent and adaptive health system for patients, payers and care providers. The appeal is entirely without merit.”

The basis of the DOJ’s initial attempt to block the merger centered on the competitively sensitive data UnitedHealth would gain from its rivals through the acquisition, which would combine UHG subsidiary OptumInsight and Change.

To alleviate anti-competitive concerns, UnitedHealth said it would divest Change’s claims editing business of ClaimsXten to TPG Capital, which is part of the court order.

THE LARGER TREND

During the bench trial, Nichols questioned the DOJ’s argument that UnitedHealth would use other payers’ claims data to competitive advantage. UnitedHealth argued it would not access this information due to firewalls within the company. It has incentives to protect other payers’ data since Optum is a multi-payer company, the organization said at the time.

Optum is a subsidiary of UnitedHealth Group that serves a majority of payers in the U.S. Its OptumInsight arm provides data and analytics to hospitals, physicians and health plans.

Optum and Change announced their intent to merge in January 2021. In March, The American Hospital Association sent a letter to the DOJ’s Antitrust Division that said the merger threatened to reduce competition for the sale of healthcare information technology services to hospitals and other providers and would result in a large-scale consolidation of competitively sensitive healthcare data and make it available to UnitedHealthcare.

Change said it believed that its merger with UnitedHealth Group would advance its ability to create products and services that improve the delivery of healthcare and reduce the high costs and inefficiencies of the health system, which it would share broadly with patients, providers and payers, according to an April SEC filing.

The UnitedHealth case was one of three losses for the DOJ in 2022, which filed a record 10 merger challenges throughout the year, according to Competition Policy International.

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