As planned, the hearing 'violates fundamental principles of procedural fairness,' the DOJ says. Opponents of the megamerger contend the hearing should proceed as scheduled.
Update (5/31/19): The judge denied the DOJ's motion Thursday evening, calling it an "eleventh-hour request to reshape next week's hearing" and "nothing more than a thinly veiled motion to modify the procedures set forth," according to court records.
A highly anticipated court hearing on CVS Health's massive Aetna acquisition is set to begin in just a few days, but the format of that hearing is still the matter of heated debate, suggesting there may be plenty of conflict to come in the already drawn-out review process.
The U.S. Department of Justice said in a filing late last week that the hearing, as currently planned, "violates fundamental principles of procedural fairness" because the DOJ will not be allowed to cross-examine witnesses who plan to testify against the DOJ-approved CVS-Aetna deal.
"At best, this approach will leave the court with an incomplete picture of the merits of the proposed settlement. At worst, it risks leading to a result that harms consumers," the DOJ wrote. "It would be clear error for the Court to rely on evidence introduced in such a flawed hearing to refuse to enter the proposed consent judgment."
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U.S. District Judge Richard Leon's signature is the final step in an approval process that, until now, has been poised to greenlight a potentially transformative tie-up that could force hospitals to rethink their business models.
Leon decided there would be no cross-examination at the hearing, even though he had indicated at a hearing in April that cross-examination would be allowed, the DOJ wrote.
Furthermore, when Leon hand-picked six of the 13 proposed witnesses, based on his own determination of who "would be most helpful" for the hearing, he excluded two of the DOJ's three proposed witnesses—Michael Radu, MBA, an executive from WellCare Health Plans, and Nicholas Hill, PhD, MSc, a consultant who worked previously for the DOJ antitrust division and as an economist in the Federal Trade Commission—depriving the government of an opportunity to rebut opponents' testimony, the DOJ attorneys wrote. (The DOJ's third proposed witness had been proposed also by CVS and was selected to testify.)
"By excluding the United States' proposed witnesses, the Court is thus not only depriving itself of the government's views—the information most relevant to the public-interest determination—but also the views that the Court must defer to in making its determination," the DOJ wrote.
Opponents of the nearly $70 billion merger, however, asked Leon to keep next week's hearing as-is, arguing that the Tunney Act does not require cross-examination because this hearing is merely a means by which Leon can gather additional perspectives on the transaction in question.
The American Medical Association, one of the amici curiae that have witnesses slated to testify, responded to the DOJ in a filing Wednesday, accusing the government of playing games with the timing of its objections.
"After the close of business on the Friday before a holiday weekend, without any warning to the American Medical Association, the DOJ moved to completely change the nature of a hearing that is just four business days away," the AMA attorneys wrote, arguing that the DOJ should have spoken up sooner.
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The DOJ asked Leon to limit testimony to what the witnesses have previously disclosed and to declare that his decision on the DOJ-approved settlement will be made on the factual basis established in the materials compiled over the course of the government's lengthy investigation and review. The AMA objected to each of those DOJ requests.
Some had expected CVS-Aetna's verticality to unlock regulatory approval without a challenge. But even beyond the DOJ's stipulations, Leon has made clear that his review of the DOJ-approved settlement shouldn't be seen as a rubber stamp.
"It's certainly unusual and interesting that a judge is getting involved with this level of detail, but it is not unprecedented," Andrea Murino, a partner at Goodwin in Washington, D.C., and co-chair of the firm's antitrust and competition practice, told HealthLeaders in February.
The central issue at this hearing is whether the DOJ's stipulations—in which five state attorneys general joined—are sufficient to alleviate any anticompetitive concerns stemming from the CVS-Aetna union. Those stipulations called for Aetna to divest its Medicare Part D business to WellCare Health Plans (which is now looking to be bought by Centene Corp. in a major acquisition of its own that is now undergoing DOJ review).
Up to eight hours of testimony are scheduled to begin Tuesday, June 4, at 10:30 a.m. and conclude no later than 5:30 p.m. on Thursday, June 6, at the U.S. District Court in the District of Columbia.
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Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.
Photo credit: San Carlos, CA - Aug. 19, 2016. CVS Pharmacy. Originally named Consumer Value Store, CVS Pharmacy is now a subsidiary of the American retail and health care company CVS Health. (Editorial credit: jejim / Shutterstock.com)
KEY TAKEAWAYS
The DOJ pushed a federal judge to clarify how he will decide whether to sign off on the CVS-Aetna merger.
The government wants to cross-examine witnesses who oppose the nearly $70 billion deal.
The AMA argues that it's too late to change the hearing, which is scheduled for next week.