UnitedHealth Group Can Move Ahead With Merger Despite Justice Department Objections: Federal Judge

The UnitedHealth Group headquarters in Minneapolis on July 12, 2019. (Jim Mone/AP Photo

A federal judge in Washington approved UnitedHealth Group’s multibillion-dollar plan to acquire Change Healthcare, giving the company a win over the U.S. Department of Justice (DOJ), which had sought to get the deal blocked.

The merger was announced in January 2021. The Justice Department filed a lawsuit against the deal in February 2022, insisting that the acquisition would give UnitedHealth, the largest health insurer in the United States, access to competitor data which would end up pushing up the cost of health care.

In the lawsuit (pdf), the DOJ argued that the proposed transaction is likely to “substantially lessen” competition in relevant markets, thus pushing down the quality of services, raising prices, and limiting innovation.

Any “substantial lessening” of competition in a relevant market violates Section 7 of the Clayton Act and is enough for the court to enjoin the merger transaction in full, the lawsuit argued.

Change Healthcare operates a network which is used by hospitals, doctors, dentists, and pharmacies to exchange health insurance claims for reimbursement.

UnitedHealth operates the Optum Insight data and consulting business. The company plans on integrating Change Healthcare into Optum.

Combined, UnitedHealth and Change Healthcare, both of which offer competing health care claims processing software, service 38 of the country’s top 40 health insurers.

By acquiring Change Healthcare, UnitedHealth would be in a position to get data on its insurance competitors, potentially giving the company an advantage against its rivals.

In court, the two companies countered the DOJ by stating that UnitedHealth has policies in place to protect sensitive data and that UnitedHealth would be putting its business at risk if it exploited the data of other insurers, Bloomberg reported.

U.S. District Judge Carl Nichols ruled in support of the merger deal. Nichols temporarily sealed his legal analysis supporting the ruling due to the possibility that it might contain “competitively sensitive data,” he said in a one-page order, according to Bloomberg.

Selling Off ClaimsXten, Blow to Biden’s Antitrust Push

Meanwhile, the Judge ordered Change Healthcare to sell off its rules-based claims payment solution, ClaimsXten, as previously planned.

UnitedHealth and Change Healthcare had earlier looked for a buyer for ClaimsXten in order to get the federal backing necessary for the merger. TPG Capital had agreed to buy ClaimsXten in a deal worth $2 billion. However, the deal is contingent on the merger happening.

UnitedHealth has welcomed the judge’s decision. Jonathan Kanter, the State Department’s top antitrust official, said that they are “reviewing the opinion closely to evaluate next steps,” according to Reuters.

The case is the first major challenge against a health care deal that went to trial during the Biden administration. It’s also a blow to the president’s antitrust agenda. In July 2021, Biden had signed an executive order to promote competition in the U.S. economy.

“No more tolerance for abusive actions by monopolies. No more bad mergers that lead to mass layoffs, higher prices, fewer options for workers and consumers alike,” Biden said in his remarks at the signing ceremony.