Aetna Says Government Lawyers Should Be Sanctioned

Oct. 05--Aetna and Humana are asking for sanctions in the insurers' antitrust case against the Department of Justice because they say the government has delayed releasing documents they are seeking.

Before the trial begins in December, both sides have to produce documents for the other side, so that they can prepare their arguments and witness lists.

The companies say that even if the government turned over the documents it's been seeking now, there is no longer sufficient time to use them because of the tight litigation schedule.

Aetna and Humana want documents from the Centers for Medicare and Medicaid Services [CMS], because antitrust regulators are arguing that the merger "would enhance Aetna's power to profit at the expense of seniors who rely on Medicare Advantage."

Aetna and Humana say traditional Medicare and Medicare Advantage -- managed care plans run by for-profit insurers -- should be considered all one market, because seniors can choose either system. They say the combined company would only cover 8 percent of all Medicare clients when you combine both kinds of Medicare.

The combination of Aetna and Humana would cover 25 percent of Medicare Advantage customers, according to the Kaiser Family Foundation.

Humana's strength in Medicare Advantage was what made it attractive as an acquisition. Almost 75 percent of Humana's revenue comes from Medicare Advantage and Medicare prescription drug plans. Aetna will buy Louisville-based Humana for $37 billion if it wins the antitrust case.

In the motion, filed Sunday, the attorneys say that how the Medicare market should be evaluated is "one of the central issues" in the trial.

So, the companies say, they suggest appropriate sanctions would be for the judge to "infer that CMS views Medicare Advantage as part of the same product market as Original Medicare," and that the judge should also assume that CMS will approve the divestiture the companies proposed in August. That divestiture would sell 290,000 Medicare Advantage customers in 21 states to Molina, a health insurer that mostly runs Medicaid managed care contracts.

"The first few requests, they effectively are the end of the government's case, were they to be granted," said Ian Fisher, a partner in Chicago's Hahn Loeser law firm, and a complex commercial litigator. "In antitrust, defining the where the market is, that's the whole game."

Fisher said as he reads the companies' filing, he believes that the law firms representing the insurers have a lot of lawyers to throw at the case and digest massive amounts of information quickly.

"It seems like the government is just overwhelmed, outgunned," he said.

Loren Kieve, a complex commercial litigator in San Francisco, said Aetna's motion is unlikely to succeed. He said: "It sounds to me like the insurers are overreaching."

However, Fisher said Aetna and Humana have a chance at their last request, which just extends discovery to October 26.

Aetna declined to comment on the filing. The government has not yet responded to the motion.

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