Justice Dept. Sues to Block $13 Billion Deal by UnitedHealth Group


WASHINGTON — The Justice Division on Thursday sued to dam a $13 billion acquisition of a well being expertise firm by a subsidiary of UnitedHealth Group, within the newest transfer by the Biden administration to clamp down on company consolidation.

The company argued {that a} deal by UnitedHealth to purchase the well being tech agency Change Healthcare would give UnitedHealth delicate information that it might wield towards its rivals within the insurance coverage enterprise. The swimsuit was filed in U.S. District Court docket for the District of Columbia. New York and Minnesota additionally joined the lawsuit.

A spokeswoman for Optum, the UnitedHealth subsidiary, stated in a press release that the Justice Division’s “deeply flawed place is predicated on extremely speculative theories that don’t mirror the realities of the well being care system,” and added that the corporate would “defend our case vigorously.” A spokeswoman for Change Healthcare stated it was nonetheless “working towards closing the merger as we adjust to our obligations underneath the merger settlement.”

The deal is the most recent transaction to run into opposition from the Biden administration, which has made countering company consolidation a central a part of its financial agenda. President Biden signed an govt order final yr to spur competitors in numerous industries. He additionally appointed Lina Khan, a outstanding critic of the tech giants, to steer the Federal Commerce Fee and Jonathan Kanter, a lawyer who has represented massive corporations, as chief of antitrust efforts on the Justice Division.

Since then, the F.T.C. has blocked Lockheed Martin from shopping for a maker of missile propulsion techniques and the chip big Nvidia from buying the design agency Arm. Even earlier than Mr. Kanter was confirmed, the Justice Division sued to dam the merger of two main insurance coverage brokers; the acquisition of Simon & Schuster by the writer Penguin Random Home; and a deal that might have married a few of JetBlue’s operations with American Airways’.

“It’s half and parcel of this effort to ensure that markets really are aggressive,” stated William Baer, who beforehand served as the pinnacle of the Justice Division’s antitrust division.

In a press release, Legal professional Common Merrick B. Garland stated the company “is dedicated to difficult anticompetitive mergers, notably these on the intersection of well being care and information.”

Optum stated final yr that it could purchase Change Healthcare, an organization that provides expertise providers to insurers. UnitedHealth is among the largest well being firms within the nation, with $287.6 billion in income in 2021. Along with its well being care info expertise enterprise, its Optum unit owns doctor practices, a big chain of surgical procedure facilities and one of many nation’s largest pharmacy profit managers.

On the heart of the Justice Division’s lawsuit is the information that Change Healthcare gathers when it helps course of insurance coverage claims. The division argued that the deal would allow UnitedHealth to see the principles that its rivals used to course of claims and undercut them. UnitedHealth might additionally crunch information about sufferers at different insurers to realize a aggressive benefit, the company stated.

The lawsuit claims that, in accordance with a UnitedHealth estimate, greater than half of American medical insurance coverage claims “go by way of (or contact)” Change Healthcare’s techniques. It says that UnitedHealth’s former chief govt noticed the tech firm’s information because the “basis” of the reasoning behind the deal.

The lawsuit additionally argued that UnitedHealth might withhold Change Healthcare’s merchandise — which different insurers use — from its rivals or save a few of its new improvements for itself. The Justice Division added that the deal would give UnitedHealth a monopoly over a kind of service that was used to display insurance coverage claims for errors and pace up processing.

The businesses have stated the acquisition will enhance effectivity within the trade. Additionally they explored promoting the a part of Change Healthcare that the Justice Division stated would give UnitedHealth a brand new monopoly.

Lawmakers and regulators have more and more nervous that massive companies might use troves of knowledge to harm their rivals. A congressional committee has investigated whether or not Amazon makes use of information from outdoors retailers who use its platform to develop competing merchandise, for instance. Critics of Fb have additionally argued that the corporate’s having years of consumer information makes it troublesome for an upstart service to problem its dominance.

Since Mr. Kanter joined the antitrust division on the Justice Division, critics have stated he shouldn’t oversee circumstances towards corporations whose rivals he represented whereas in personal follow. In line with a monetary disclosure kind he filed final yr, he as soon as represented Cigna, a significant insurer that competes with UnitedHealth, and the distant well being care firm Teladoc.

Mr. Kanter has not participated within the lawsuit towards UnitedHealth, an individual accustomed to the Justice Division’s case stated.

Reed Abelson contributed reporting.

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