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UnitedHealth-Change deal approval faces appeal from DOJ, states

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The Department of Justice is appealing a federal judge’s decision allowing UnitedHealth’s $13 billion purchase of Change Healthcare to close.

The DOJ, joined by New York and Minnesota, filed a notice of appeal on Friday following U.S. District Judge Carl Nichols’ September ruling that dealt a blow to the department by greenlighting the UnitedHealth-Change deal.

UnitedHealth closed its acquisition of the health technology firm in October. As part of the closing, Change’s shares were delisted.

The DOJ did not file an appeal in the weeks following the ruling, leaving some antitrust experts to wonder whether it would let the deal go through.

It’s surprising it took the DOJ this long to file an appeal, said Jim Burns, chair of the Williams Mullen Antitrust and Trade Regulation Practice Group.

“The DOJ doesn’t like to have to be in a position to unscramble eggs,” Burns said. The agency has previously said that it’s important to stop combinations early rather than attempt to “unscramble” assets after a deal closes.

But David Balto, a former antitrust attorney for the DOJ, said these businesses are kept separate and that “there is nothing to unscramble.”

UnitedHealth said the appeal is “entirely without merit” in a statement sent to Healthcare Dive.

“After nearly two years of regulatory review, a full trial and a favorable court decision, we closed the transaction on October 3, and are executing on our vision to achieve a simpler, more intelligent and adaptive health system for patients, payers and care providers,” UnitedHealth said.

In February, the DOJ sued to block the deal from moving forward. It argued during an August bench trial that UnitedHealth’s bid for Change would disadvantage rivals and result in higher costs, lower quality and less innovative commercial health insurance for Americans — concerns shared by others in the healthcare sector.

In a 58-page opinion, Judge Nichols said the DOJ case had “serious flaws” and that it relied on “speculation” rather than real-world evidence to prove its antitrust claims.

The most serious flaws were failing to prove that UnitedHealth is likely to misuse Change Healthcare’s data to advantage the company, a move that would ultimately chill innovation among rivals, Nichols, a former President Donald Trump appointee, said.

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