Department of Justice Blocks UnitedHealth Group’s $3.3 Billion Acquisition of Amedisys

On November 12, 2024, the Department of Justice (DOJ), along with the Attorneys General for the State of Illinois, Maryland, New Jersey, and New York, sued to block healthcare industry giant UnitedHealth Group, Inc.’s (UHG) proposed $3.3 billion acquisition of Amedisys Inc., one of the United States’ biggest home health and hospice care providers, alleging that the deal would give UHG too much power over the market for home health and hospice services. In the civil antitrust complaint filed in the District of Maryland, the DOJ alleges eliminating the competition between UHG and Amedisys would harm (1) patients who receive home health and hospice services, (2) insurers who contract for home health services, and (3) nurses who provide home health and hospice services.

The suit follows UHG’s February 2023 acquisition of LHC Group Inc. (LHC), the third-largest home health provider and a major player in hospice care, leaving UHG and Amedisys as the two largest competitors in the market. UHG has stated that it intends to add Amedisys to Optum, its subsidiary that provides care, and pharmacy and technology services. Despite the filing of the antitrust suit, both UHG and Amedisys have reinforced their commitment to the deal and emphasize that the acquisition would be pro-competitive, creating more opportunities, and delivering quality, value-based care to patients.

The DOJ takes a differing view with the complaint, alleging that both companies have acknowledged that the competition between the two helps them “keep each other honest” and “driv[e] better and better quality” to the benefit of patients, in addition to both competing for home health and hospice care nurses. The merger is being viewed as part of a deliberate attempt to stymie competition. After the LHC integration, the complaint alleges that UHG prevented Amedisys’ 2023 plan to merge with OptionCare. It even alleges that UHG paid OptionCare a “breakup fee,” for terminating its merger with Amedisys. After helping to end that transaction, UHG then made its own acquisition offer of $3.3 billion that Amedisys ultimately accepted.

According to the DOJ’s market share calculations, UHG’s market share after the transaction would make the merger presumptively illegal in:

• Hundreds of local home healthcare markets, with an annual volume of commerce exceeding $1.6 billion annually, in 23 states and the District of Columbia. For example, in Maryland’s Eastern Shore, UHG would control more than 75% of home health services provided to Medicare patients;
• Dozens of local hospice markets, with an annual volume of commerce exceeding $300 million annually, in 8 states. For example, in the area of Parkersburg, West Virginia, UHG would control more than 90% of hospice services provided to traditional Medicare patients; and
• Hundreds of local markets for home health and hospice nurse labor, employing at least 8,000 nurses in 24 states – continuing the current push to use antitrust to protect workers in a merger.

The complaint comes after a meeting between both the DOJ and UHG and Amedisys’ executives aimed at addressing the DOJ’s anticompetitive concerns. To appease the DOJ, Amedisys and Optum proposed divesting care centers in separate markets to VitalCaring Group (VitalCaring), a private operator in Texas, contingent upon the deal’s completion. That proposal does not seem to have sufficiently quelled this DOJ’s concerns about the acquisition. Indeed, the DOJ made note of VitalCaring’s lower quality scores, financial challenges, and the current CEO running a competitor of VitalCaring while at the same time running VitalCaring “from the shadows.”

The Complaint also alleges a Hart Scott-Rodino Antitrust Improvements Act of 1976 (HSR) violation. The DOJ wants civil penalties against Amedisys for falsely certifying compliance with the HSR Act specifically relating to compliance with the DOJ’s Second Request. Alleging that Amedisys violated the HSR Act because, at the time of its December 18, 2023 sworn certification, Amedisys had failed to produce millions of documents or disclose the deletion of other documents. On August 26, 2024, Amedisys submitted a second certification in accordance with HSR disclosing these errors. For each day that Amedisys was in violation of the HSR between December 18, 2023, through August 26, 2024, the Government is seeking a monetary penalty of up to $51,744. These allegations are unusual because the HSR prohibits consummation of an acquisition unless obligations under the HSR Act are met, including compliance with Second Requests – however this acquisition is not yet consummated, meaning there is arguably, as yet, no violation of the Act.

Unusually, the Federal Trade Commission did not participate in the lawsuit even though it is typically the agency that reviews and challenges healthcare provider mergers. While this DOJ has pursued anticompetitive conduct across industries, a new administration, leadership change, and enforcement priorities in the upcoming year may find the DOJ more receptive to proposed fixes by the parties. But, it remains to be seen whether any of those changes will happen in time for UHG and Amedisys. Buchanan’s antitrust team will analyze any developments moving forward.