For the past two weeks, the U.S. Justice Department has clashed with Anthem Inc. in a blockbuster antitrust trial rife with conflict.

The government is fighting to block a $48 billion health care merger that Anthem’s tie-up partner—Cigna Corp.— appears to no longer want.

The drama of that trial, where Cigna’s chief executive hardly hid the strain between the insurer and its suitor, isn’t expected to be mirrored when Aetna Inc., on Monday, begins to defend its $37 billion takeover of rival Humana Inc.

Two cases simultaneously in front of different judges

The two cases—the biggest antitrust trials in Washington in years—will now play out simultaneously on separate floors in front of different judges. The Justice Department filed both cases simultaneously in July to thwart what regulators described as “unprecedented consolidation in the health insurance industry.”

Pennsylvania, Georgia and Florida were among eight states, along with the District of Columbia, that joined DOJ's complaint against Aetna.

Jones Day partner John Majoras will lead Aetna’s defense. Majoras represented AB Electrolux last year when the Justice Department challenged the Swedish company’s proposed $3.3 billion acquisition of General Electric Co.’s appliance business. The deal collapsed in December 2015, when General Electric pulled out of the sale in the middle of trial.

Justice Department lawyers argue the proposed tie-up between Aetna and Humana would “harm two groups of consumers especially vulnerable to enhanced market power and reduced choice”: senior citizens on Medicare Advantage plans and individuals younger than 65 who seek coverage on Affordable Care Act plans.

Humana, based in Kentucky, is the largest Medicare Advantage provider, and Connecticut-based Aetna is, as the government put it, “the rapidly growing fourth largest.” The two companies are competitors for the sale of individual health insurance on public exchanges in 17 counties in Florida, Georgia and Missouri.

“Aetna sought to prevent this court from even considering the effect of the merger on the exchange markets by announcing, soon after the complaint was filed, that it would withdraw from the exchanges in Florida, Georgia, and Missouri—the very states that are the subject of plaintiffs’ claims,” Justice Department lawyers wrote in their pretrial brief. “But the court should not allow Aetna to avoid antitrust scrutiny by essentially shuttering its factory.”

Aetna’s lawyers reject the government’s claim that the company’s planned retreat from health care exchanges next year was a response to the antitrust suit. “[T]his case is about effects on competition, not intent, and those effects must be assessed in light of actual market facts and current competitive conditions,” Aetna’s attorneys said in their papers.

Aetna: ‘Real questions’ about viability of exchanges

Aetna’s legal team said it’s “beyond dispute that the ACA exchanges are threatening to collapse under their own weight.” The insurer’s lawyers promised to show that “these economic realities—and the difficulty of setting prices, forecasting profits and losses, and assessing risk in such a volatile marketplace—have not been lost on the federal government.”

Aetna argued in pretrial filings that the government “is left asking the court to look into the fog of the future, and to divine who will be competing on the exchanges, where they will be competing, and all of the other market conditions that would be necessary to assess competitive impact.”

The company’s lawyers wrote: “That is a speculative request indeed, since there are real questions whether the exchanges will exist at all after ACA opponents assume control of the executive and legislative branches early next year.”

Indeed, President-elect Donald Trump vowed on the campaign to repeal or otherwise replace the Affordable Care Act— a task easier said than done. Trump later said he was open to keeping parts of the ACA.

The Jones Day lawyers defending Aetna don’t have any clear connection to Trump, but the firm itself does.

Trump last week named Jones Day partner Donald McGahn II, a top lawyer for the campaign and transition team, as White House counsel. Jones Day partner Gregory Katsas and associate James Burnham are leading the Justice Department transition with Kirkland & Ellis partner Brian Benczkowski, who previously worked for U.S. Sen. Jeff Sessions, R-Alabama, Trump's pick for U.S. attorney general.

The transition of power isn’t likely to have a major effect, if any, on the Aetna and Anthem antitrust cases. U.S. District Judge John Bates is expected to issue a ruling before or shortly after Trump takes office on Jan. 20, and the judge presiding over the Anthem trial, Amy Berman Jackson, also anticipates ruling in that time frame.

Under the terms of Aetna’s deal, Humana can abandon the sale after Dec. 31 and receive a $1 billion breakup fee. In August, the Justice Department’s Craig Conrath, a senior lawyer in the Antitrust Division, said Aetna and Humana are “getting along with each other.”

Aetna and Humana’s lawyers played hardball to preserve their deal, accusing the Justice Department of "serious delay and misconduct" in the discovery process.

The insurers asked for sanctions that would prevent Justice Department lawyers from calling employees from the Centers for Medicare and Medicaid Services as witnesses or introducing documents from the health agency.

Bates has yet to rule on the request for sanctions.

Instant Insights /

Aetna-Humana trial, unlike Anthem-Cigna, will feature amicable merger partners

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