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Louisville-based Humana has announced the official end of a planned $37 billion mega-merger with fellow health insurance titan Aetna.
The move follows by weeks a federal judge’s decision to block the merger. U.S. District Judge John D. Bates ruled that merger would reduce competition in key markets to the point it would violate federal antitrust statutes.
In a news release Monday, Humana noted that under terms of the planned merger the company is “entitled to a breakup fee of $1 billion, or approximately $630 million, net of tax.”
The merger was announced in July 2015. The Justice Department, eight states and the District of Columbia sued to stop the merger, claiming it violated the Hart-Scott-Rodinio Antitrust Improvements Act of 1976. At issue were policies offered on the public exchanges but also Medicare Advantage plans offered elsewhere.
Strikingly, in arguing the merger would hurt competition in public marketplaces – essentially those offered under the Affordable Care Act, commonly known as Obamacare – Bates agreed that Aetna had withdrawn from several areas merely as a ploy meant to manipulate the lawsuit decision.
“In the public exchanges, the Court finds that Aetna withdrew from competing in the 17 complaint counties for 2017 specifically to evade judicial scrutiny of the merger,” Bates said in his ruling.
The ruling was hailed by the American Medical Association.
“Elderly patients were the big winners today as a federal court imposed an injunction on Aetna’s $37 billion acquisition of Humana,” AMA President Andrew W. Gurman said in a statement. “The court ruling halts Aetna’s bid to become the nation’s largest seller of Medicare Advantage plans and preserves the benefits of health insurer competition for a vulnerable population of seniors.”