Anthem, Cigna blast one another over blocked insurer merger

[WASHINGTON] Cigna Corp and Anthem Inc traded accusations of harassment and sabotage in competing lawsuits as the two health companies feud publicly in the wake of a stalled US$48 billion merger.

Cigna accused Anthem of trying to undermine its business by stealing confidential information and harassing its customers. Anthem blamed Cigna for the deal's failure, saying its CEO David Cordani sabotaged the companies' merger when Anthem rejected his demand to be made chief executive officer of the combined entity.

The Cigna complaint, initially filed Feb 14 in Delaware, exposes the deep rift between the two companies in their effort to win antitrust approval for the tie-up they struck in 2015. The clash contributed to a federal judge's decision to block the merger earlier this month.

Cigna assailed Anthem's conduct while the two companies were seeking regulatory approval of the deal, accusing its rival of using the pending merger for its own benefit and to hurt Cigna. Anthem's actions ultimately led to the deal's collapse when the Justice Department sued to block it, Cigna said in the complaint made public Friday.

"Anthem's destructive conduct must come to an end," Cigna said in the lawsuit, which seeks to recover a US$1.85 billion break-up fee and US$13 billion in damages.

Anthem had countersued Cigna to stop it from terminating the agreement while Anthem pursues an appeal to overturn the court ruling blocking the merger. An appeals court in Washington Friday set an expedited schedule to hear Anthem's case. Arguments will be held March 24.

Delaware Chancery Court Judge Travis Laster on Feb 15 blocked Cigna from making any moves to scuttle the merger until he can decide whether it can legally pull out. Laster scheduled arguments on that issue for April 10.

Anthem's complaint was also unsealed late Friday. In it, the Indianapolis-based carrier said the merger agreement required both companies to appeal a court order rejecting their tie-up and that Cigna can't terminate it.

The federal judge's decision to block the merger on antitrust grounds doesn't kill the deal, Anthem said in the lawsuit. A change of lawyers at the Justice Department with the Trump administration may provide "a path forward," according to the suit.

Anthem pointed the finger for the deal's failure at Mr Cordani. Even after a deal was struck to make him president and chief operating officer of the combined company, Mr Cordani deemed it unsatisfactory, Anthem said.

Mr Cordani "disengaged from the merger process and embarked on an unprecedented campaign to sabotage the merger and procure a US$1.85 billion reverse break-up fee because Mr Cordani wanted to remain in charge of Cigna and to take the break fee to grow a company he runs," Anthem said.

In its suit, Cigna countered that Anthem "misappropriated" Cigna's confidential information and told to the market that it would copy innovative components of Cigna's business if the deal didn't close. It also used discovery in the lawsuit as a "pretense" to harass Cigna's customers by sending out subpoenas without advance notice to Cigna, according to the complaint.

Anthem's misuse of Cigna's confidential information became apparent this year, Cigna said. At a JPMorgan healthcare conference in January, Anthem touted to investors that it had learned valuable information from Cigna, including about how to sell certain specialty products that Anthem doesn't currently offer, and would use that information to compete against Cigna if the transaction didn't close.

The cases are Cigna Corp v Anthem Inc, CA NO 2017-0109-JTL, and Anthem Inc v Cigna Corp, 2017-0114-JTL, Delaware Chancery Court (Wilmington).


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