BREAKING NEWS: Justice Department Sues to Block UnitedHealth’s Purchase of Change Healthcare

Feb. 24, 2022

The giant insurer says it will fight the government’s claims that the acquisition will tilt the playing field in its favor.

Geert De Lombaerde

The U.S. Department of Justice has filed suit seeking to block the Minnetonka, Minn.-based UnitedHealth Group Inc. from buying the Nashville-based Change Healthcare Inc., saying the planned purchase would harm competition in the health insurance market, particularly in the use of data.

Commenting on their complaint filed along with the attorneys general of Minnesota and New York, DOJ leaders say Minneapolis-based United’s plan to pay about $8 billion for Nashville-based Change would eliminate a company that markets itself as a valuable partner to insurers and “would allow United to tilt the playing field in its favor […] and distort the course of innovation in this industry for the foreseeable future.”

DOJ officials noted that the proposed combination would give United access to rival insurers’ sensitive information and “also would eliminate United’s only major rival for first-pass claims editing technology” that helps carriers save billions of dollars annually.

“The proposed transaction threatens an inflection point in the health care industry by giving United control of a critical data highway through which about half of all Americans’ health insurance claims pass each year,” Principal Deputy Assistant Attorney General Doha Mekki said in a statement. “The department’s lawsuit makes clear that we will not hesitate to challenge transactions that harm competition by placing so much control of data and innovation in the hands of a single firm.”

Executives from United and Change announced their proposed transaction in January 2021 and last year received two formal requests for information from DOJ attorneys. The purchase agreement – which includes a clause allowing for the sale of businesses with up to $650 million in annual revenues to satisfy antitrust concerns – also has drawn opposition from the American Hospital Association, the American Medical Association and other industry watchers.

“The Department’s deeply flawed position is based on highly speculative theories that do not reflect the realities of the healthcare system. We will defend our case vigorously,” United officials said in a statement.

United leaders had been eyeing an early-2022 closing of their deal but agreed with their Change peers in December to push back to April the deadline to complete the transaction.

Shares of United (Ticker: UNH) were down more than 2 percent to about $448 in afternoon trading on Feb. 24. They are still up about 6 percent versus six months ago. Change shares (Ticker: CHNG) were up nearly 4 percent on the day to roughly $21.