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Judge Appointed Via Nuclear Option Rules Against DOJ in United-Change Merger

Analysis  |  By Laura Beerman  
   September 26, 2022

Judge Carl Nichols, who formerly served in the Department of Justice (DOJ), greenlights deal but requires key claims system divestiture.

Only three times in Senate history has the nuclear option—a 51 versus 60 vote confirmation—been used. One of those was the confirmation of Carl Nichols, the judge for the U.S. District Court for the District of Columbia, who has ruled against the DOJ in its attempt to block the merger of UnitedHealth Group (UHG) and Change Healthcare.

It's interesting to speculate what the outcome might have been with another judge at the helm, but the most concrete trajectory will come from two sources: the DOJ's response and the full ruling details. Jonathan Kanter, Assistant Attorney General of the Antitrust Division, has said that the department is "reviewing the opinion closely to evaluate next steps" in what Reuters calls "a blow to the U.S. administration's tougher enforcement of antitrust issues."

Judge Nichols complete opinion will be unsealed this week.

Ruling details

If Judge Nichols' ruling stands, the nearly $13 billion merger between UHG and Change—which will join the OptumInsight division—would become final December 31, 2022.

While the overall ruling may have been a surprise, Nichols' stipulation regarding Change's ClaimsXten software was not. As part of the merger, UHG will be required to divest that portion of the business to TPG capital—a $2.2 billion deal that United announced in April 2022, two months after the DOJ's lawsuit, which was joined by the Attorneys General of Minnesota and New York.

As HealthLeaders reported in February 2022, the complaint alleged that the merger would raise costs and harm competition in not only health insurance markets, but also technology used by health insurers to process insurance claims and reduce healthcare costs.

Continued opposition

While UHG and Change statements express pleasure with the decision, the same cannot be said of an early response from the National Community Pharmacists Association (NCPA).

CEO B. Douglas Hoey pulled no punches in expressing the association's disappointment, stating: "With its insurance business, its pharmacy benefit manager business, and its mail-order pharmacy business, UnitedHealthcare is already a three-headed dragon and one of the worst actors in the market."

The NCPA was one of several organizations to oppose the merger, including the American Hospital Association (AHA).

Judge Nichols' divesture ruling on Change's ClaimsXten business addresses only a portion of the merger opposition. The original DOJ suit cited the frequency with which UHG, UnitedHealthcare, and Optum senior executives move frequently across the companies and engage in "enterprise-wide planning."

The AHA's ongoing opposition included the ClaimsXten advantage among its multiple antitrust concerns, echoed by the NCPA's Hoey: "The acquisition of … Change Healthcare will give [UHG] a massive advantage over its competitors, and it will create an irresistible incentive for the insurance company to use patient data to steer business to its own pharmacy, and away from local, small-business pharmacies."

Laura Beerman is a contributing writer for HealthLeaders.


KEY TAKEAWAYS

The U.S. District Court for the District of Columbia has denied the DOJ's request to stop UnitedHealth Group's acquisition of Change Healthcare.

The ruling requires the sale of Change's claims editing software, a central facet of the government's antitrust claims.

The judge's complete ruling will be published as the DOJ looks to "evaluate next steps."


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