Judge Rejects Antitrust Challenge to UnitedHealth Acquisition

U.S. District Judge Carl Nichols ruled for the companies in an advisory he kept secret for now because he said it “could contain competition-sensitive information.” The judge said he would release an edited public version of the ruling in the coming days. In a one-page public order, he turned down the Justice Department’s request to block the companies from completing the deal.

The court’s ruling is an early blow to the Biden administration’s intensification of antitrust enforcement, which filed a lawsuit in February to block the deal. Jonathan Kanter, the Justice Department’s top antitrust officer, said the department disagreed with the decision and is considering next steps.

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“Protecting competition and access to affordable health care is paramount to the Antitrust Department and the Justice Department,” said Mr. Kanter.

The decision is a triumph for UnitedHealth, which owns the largest US health insurer and healthcare organization with thousands of doctors, clinics, surgery centers and other assets, along with a powerful conglomerate of health data.

In a statement, a UnitedHealth spokesperson said: “We are delighted with the decision and look forward to combining with Change Healthcare as soon as possible so that we can continue our work together to make the health system work better for everyone.”

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Change provides services related to payment processes for healthcare systems, analytics for financing and billing, and tools that help hospitals make decisions about patient care.

UnitedHealth had agreed to divest claims processing business assets to address the competition concerns, an offer the Justice Department rejected as unsatisfactory.

Judge Nichols in his injunction demanded that UnitedHealth do that divestiture.

UnitedHealth’s deal for Change, announced in January 2021, will bring the health technology business under the Optum health services arm of the company. UnitedHealth had argued that the combination with Change could help improve care by getting better information to doctors and reducing waste. It agreed to pay nearly $8 billion for Change and take on about $5 billion in debt.

The Justice Department had argued that the deal would give UnitedHealth a virtual monopoly on a key tool health insurers use to determine when to pay a claim. And it said the company should not own Change Healthcare’s data clearinghouse, which rival insurers use to compete with UnitedHealth.

The judge, an appointee of former President Donald Trump, expressed his skepticism about the lawsuit during a hearing earlier this month. A trial took place in August.

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The lawsuit was part of an early series of antitrust lawsuits filed by the Justice Department under Democrat President Biden, designed to take a tougher line in the business of business deals. Among other things, the department is awaiting a ruling in its challenge to a major publishing deal, the planned acquisition of Simon & Schuster by Penguin Random House. And it’s preparing to appear in court next week in its lawsuit against an American Airlines Group partnership Inc.

and JetBlue Airways Corp.

The current crop of antitrust officials, buoyed by calls from Democrats for a more aggressive approach, have sought to set new precedents that would push the law in a broader direction, following years of rulings in which the judiciary tended to read antitrust laws more narrowly than a generation ago. Monday’s decision reminded us that the Justice Department’s goals depend on proving their case in front of a judge.

The Federal Trade Commission, which shares antitrust authority with the department, also faces hurdles. It recently lost a ruling from its own internal administrative judge, in a case it challenged Illumina Inc.’s

acquisition of cancer test developer Grail Inc.

Monday’s decision comes as UnitedHealth and its rivals dive deeper into vertical integration of health assets, which include insurance and healthcare providers, and bring together ever-increasing amounts of health data.

Even after the Justice Department filed suit to block the Change deal, UnitedHealth continued with other acquisitions, including a $5.4 billion acquisition of home health care company LHC Group. Inc.

announced last March.

Earlier this month, CVS Health Corp.

— the parent company of health insurance company Aetna, a pharmacy benefits organization and its drugstores of the same name — announced an $8 billion deal to buy home health care company Signify Health Inc. to take over. CVS has said it wants to go deeper into primary care.

Write to Anna Wilde Mathews at [email protected] and Brent Kendall at [email protected]

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