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Justice Department sues to block $13 billion deal by UnitedHealth Group

WASHINGTON — The Justice Department sued Thursday to block a $13 billion acquisition of a health technology company by a subsidiary of UnitedHealth Group, part of the Biden administration’s latest move to crack down on corruption. business consolidation.

The agency argued that a deal by UnitedHealth to buy health technology company Change Healthcare would give UnitedHealth sensitive data it could use against competitors in the insurance industry. The lawsuit was filed in the United States District Court for the District of Columbia.

A spokeswoman for Optum, the UnitedHealth subsidiary, said in a statement that the Justice Department’s “deeply flawed position is based on highly speculative theories that do not reflect the realities of the healthcare system,” and said added that the company “would make our case”. vigorously.” Change Healthcare declined to comment.

The deal is the latest deal to face opposition from the Biden administration, which has made the fight against corporate consolidation a central part of its economic agenda. President Biden signed an executive order last year to spur competition across different industries. He also named Lina Khan, a prominent critic of tech giants, to head the Federal Trade Commission, and Jonathan Kanter, a lawyer who has represented big corporations, as head of antitrust efforts at the Justice Department. .

Since then, the FTC has blocked Lockheed Martin to buy a maker of missile propulsion systems and chip giant Nvidia to buy design company Arm. Even before Mr. Kanter was confirmed, the Justice Department filed a lawsuit to block the merger of two major insurance brokers; the acquisition of Simon & Schuster by the publisher Penguin Random House; and a deal that would have married some of JetBlue’s operations with those of American Airlines.

Thursday’s lawsuit challenges a deal struck by Optum, which said last year it would buy Change Healthcare, a company that provides technology services to insurers. UnitedHealth is one of the nation’s largest healthcare companies, with revenue of $287.6 billion in 2021. In addition to its healthcare information technology business, its Optum has medical offices, a large chain of surgery centers and one of the largest pharmacies in the country. benefits managers.

At the center of the Justice Department’s lawsuit is the data Change Healthcare collects when it helps process insurance claims. The Justice Department argued that the agreement would allow UnitedHealth to see the rules its competitors use to handle claims and undermine them. UnitedHealth could also analyze patient data from other insurers to gain a competitive advantage, the agency said.

The lawsuit also argued that UnitedHealth could withhold Change Healthcare products — which are used by other insurers — from rivals or keep some of its new innovations for itself. The Justice Department added that the deal would give UnitedHealth a monopoly on a type of service used to screen insurance claims for errors and speed up processing.

The companies said the acquisition will improve industry efficiency. They also explored selling off the part of Change Healthcare that the Justice Department said would give UnitedHealth a new monopoly.

Lawmakers and regulators are increasingly concerned that big companies could use troves of data to harm their rivals. A congressional committee has been investigating whether Amazon uses data from outside merchants who use its platform to develop competing products, for example. Facebook critics have also argued that the company with years of user data makes it difficult for an upstart service to challenge its dominance.

Since Mr Kanter joined the Justice Department’s antitrust division, critics have said he should not oversee cases against companies whose rivals he represented while in private practice. According to a financial disclosure form he filed last year, he previously represented Cigna, a major insurer competing with UnitedHealth, and remote healthcare company Teladoc.

Mr. Kanter was not involved in the lawsuit against UnitedHealth, said one of the people with knowledge of the Justice Department case.

Reed Abelson contributed report.