CI Cigna Group

By Brent Kendall 

WASHINGTON -- A federal judge said on Friday she won't rule on Anthem Inc.'s proposed acquisition of Cigna Corp. until early next year, a setback for Anthem's efforts to hold the $48 billion health-insurance deal together.

The Justice Department sued last month on antitrust grounds to block the merger, as well as a second major health-insurer deal to combine Aetna Inc. and Humana Inc.

The government argues the mergers would harm consumers, employers and health-care providers with an unacceptable reduction in competition. Anthem disagrees, saying its deal will benefit the public.

U.S. District Judge Amy Berman Jackson, who is presiding over the Anthem matter, set a trial date of Nov. 21 and said she aims to rule by the end of January. She said during a scheduling hearing Friday that Anthem's proposed Nov. 1 start date was too soon, while a timeline requested by the Justice Department was too prolonged.

Anthem has been pushing for a resolution this year out of concern that Cigna might jump at an opportunity to back out of the transaction. Anthem can extend the merger agreement to April 30, 2017, but if the deal doesn't close by then Cigna can walk away with a $1.85 billion breakup fee.

Anthem wants to expedite the case, saying it would need at least 120 days after a favorable court ruling to secure regulatory approvals from state insurance regulators.

Judge Jackson on multiple occasions noted the continuing tensions between Anthem and Cigna and said it was a "bizarre situation" that the court, and other relevant parties, were being asked to move so quickly in the case "for the benefit of a merger that may not be desired" by Cigna.

The two companies have had a difficult relationship for months, with quarrels emerging on several fronts that threatened to undermine the deal, which was announced more than a year ago.

Cigna lawyer Charles Rule said the company remains committed to the merger agreement and to litigating the case, but he didn't commit to giving Anthem or the court additional time. Mr. Rule said he couldn't say what Cigna's board would do on April 30.

Anthem lawyer Christopher Curran said the company is committed to helping move the case along as quickly as possible.

Mr. Curran reiterated Anthem's belief that Cigna would walk away if given the opportunity. He said Cigna for now has to say it remains committed to the deal in order not to jeopardize collection of the merger's breakup fee.

U.S. District Judge John Bates, also in Washington, will begin the Aetna-Humana trial on Dec. 5 and plans to rule in mid-January. Collectively the two cases could set the landscape for the U.S. health-insurance industry for years to come.

Write to Brent Kendall at brent.kendall@wsj.com

(END) Dow Jones Newswires

August 12, 2016 17:45 ET (21:45 GMT)

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