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

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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 knowledge that it may wield in opposition to its opponents within the insurance coverage enterprise. The swimsuit was filed in U.S. District Courtroom for the District of Columbia. New York and Minnesota additionally joined the lawsuit.

A spokeswoman for Optum, the UnitedHealth subsidiary, mentioned in an announcement that the Justice Division’s “deeply flawed place relies 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 mentioned it was nonetheless “working towards closing the merger as we adjust to our obligations underneath the merger settlement.”

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The deal is the newest 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 giant firms, 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 methods 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 buy of Simon & Schuster by the writer Penguin Random Home; and a deal that may have married a few of JetBlue’s operations with American Airways’.

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

In an announcement, Lawyer Normal Merrick B. Garland mentioned the company “is dedicated to difficult anticompetitive mergers, notably these on the intersection of well being care and knowledge.”

Optum mentioned final yr that it will purchase Change Healthcare, an organization that gives expertise companies to insurers. UnitedHealth is among the largest well being companies within the nation, with $287.6 billion in income in 2021. Along with its well being care data 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 middle 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 foundations that its opponents used to course of claims and undercut them. UnitedHealth may additionally crunch knowledge about sufferers at different insurers to achieve a aggressive benefit, the company mentioned.

The lawsuit claims that, based on a UnitedHealth estimate, greater than half of American medical insurance coverage claims “move via (or contact)” Change Healthcare’s methods. It says that UnitedHealth’s former chief govt noticed the tech firm’s knowledge because the “basis” of the reasoning behind the deal.

The lawsuit additionally argued that UnitedHealth may 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 sort of service that was used to display insurance coverage claims for errors and pace up processing.

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

Lawmakers and regulators have more and more apprehensive that huge companies may use troves of information to harm their rivals. A congressional committee has investigated whether or not Amazon makes use of knowledge 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 person knowledge makes it troublesome for an upstart service to problem its dominance.

Since Mr. Kanter joined the antitrust division on the Justice Division, critics have mentioned he shouldn’t oversee circumstances in opposition to firms whose rivals he represented whereas in non-public observe. Based on a monetary disclosure type 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 in opposition to UnitedHealth, an individual conversant in the Justice Division’s case mentioned.

Reed Abelson contributed reporting.

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