The Department of Justice and the states of Minnesota and New York filed a complaint in the District of Columbia District Court to block the proposed $13 billion acquisition of Change Healthcare by Optum, part of UnitedHealth Group, claiming the acquisition would give UnitedHealth an unfair competitive advantage.
According to Thursday’s complaint, UnitedHealth is the largest health insurer in the United States and Change Healthcare is a health technology company used by health insurance companies that saves insurance companies money and reduces healthcare costs for Americans by “ensuring accuracy, avoiding overpayments, and reducing administrative waste.” Reportedly, Change Healthcare is “the leading source of key technologies that United’s health insurance rivals rely on to compete with United.”
As a result, the plaintiffs state that Change Healthcare has access to sensitive data about UnitedHealth’s rivals, such as information about how their plans are designed and how they calculate payment to providers, and “holds ‘unfettered’ rights to use much of this information,” of which UnitedHealth is purportedly aware.
The plaintiffs contend that this data is an incentive for UnitedHealth to acquire Change Healthcare. If the deal went through, UnitedHealth could allegedly use Change Healthcare’s “data to extract intelligence about its health insurance rivals,” but this would purportedly cause “‘payer and provider sensitivity and competitive concerns,’” as acknowledged by UnitedHealth. However, UnitedHealth has also taken measures to safeguard its own data from its competition.
The DOJ, Minnesota and New York assert that since Change Healthcare’s products are widely used, particularly among healthcare providers, health insurance competitors “would not be able to prevent their data from being routed through Change post-transaction.” Therefore, this would allegedly allow UnitedHealth “to co-opt its rival insurers’ innovations and their competitive strategies and reduce their incentives to pursue those innovations and strategies in the first place.” According to the plaintiffs, the proposed acquisition would allow UnitedHealth to use its position to hurt its health insurance competitors “by raising their costs and denying or delaying their access to innovations and quality improvements to products and services supplied by Change.” As a result, this would hinder competition and could lead to increased costs as well as reduced quality and innovation. The plaintiffs proffer that the transaction would likely create a monopoly in first-pass claims editing solutions.
The plaintiffs allege violations of Section 7 of the Clayton Act against the defendants.
The plaintiffs seek for the court to adjudge and decree the proposed acquisition to violate Section 7 of the Clayton Act and to permanently enjoin the merger, noting the competitive harm. Additionally, the plaintiffs request an award for costs and other relief.
The DOJ’s Antitrust Division and the respective Attorneys General for Minnesota and New York are handling the lawsuit.
