Antitrust Law Daily Combination of Harvard Pilgrim Health, Tufts Health conditionally approved
Monday, December 14, 2020

Combination of Harvard Pilgrim Health, Tufts Health conditionally approved

By Jeffrey May, J.D.

Antitrust Division requires divestiture of Tufts commercial health insurance business in New Hampshire.

To settle Department of Justice Antitrust Division concerns that the proposed merger of Harvard Pilgrim Health Care and Tufts Health Plan would likely to harm competition in two health insurance markets serving New Hampshire employers, the parties have agreed to divest Tufts Health Freedom Plan Inc., which is the Tufts Health Plan’s commercial health insurance business in that state. The Antitrust Division, along with the New Hampshire Office of Attorney General, filed a civil antitrust lawsuit today in the federal district court in New Hampshire to block the proposed merger. At the same time, they filed a proposed final judgment that, if approved by the court, would resolve the competitive harm alleged in its complaint. The Justice Department has also closed its investigation into the merger’s potential effects in Massachusetts after concluding that the merger was unlikely to substantially lessen competition there, according to today’s announcement (U.S. v. Harvard Pilgrim Health Care, Inc., Case No. 1:20-cv-01183).

The regional health insurers announced their intent to combine in August 2019. Now, 16 months later, the deal has been conditionally cleared. At the time the merger agreement was disclosed, the parties said that the new organization would become one of the region’s largest nonprofit health services organizations, providing health coverage in all segments of the market regardless of a person’s age, income, life circumstance or health status.

According to the government, in New Hampshire, the parties competed vigorously with one another in the sale of commercial health insurance to (1) private small group employers with up to 50 full-time eligible employees and (2) private large group employers with between 51 and 99 full-time eligible employees, a segment of commercial large group health insurance referred to as community rated by class or "CRC." They are allegedly two of the three top commercial group health insurers that offer plans to these two types of private employers in New Hampshire. The Justice Department’s complaint alleges that since Tufts Freedom’s inception in 2016, competition between it and Harvard Pilgrim has resulted in lower premiums, richer plan benefits, and better service for small groups and CRC groups in New Hampshire. Further, it was alleged that eliminating the head-to-head competition would likely result in higher prices, lower quality, and less customer choice in the sale of commercial health insurance to small groups and to CRC groups in New Hampshire.

Settlement terms. Under the terms of the proposed final judgment, Harvard Pilgrim and Health Plan Holdings must divest Tufts Freedom to UnitedHealth Group Inc. or to an alternative purchaser approved by the United States and allow United the opportunity to hire key employees who operate Tufts Freedom. Harvard Pilgrim and Health Plan Holdings also would be required to provide transition services and use best efforts to maintain Tufts Freedom’s contracts with healthcare providers during the transition to United, according to the government.

The case is No. 1:20-cv-01183.

Attorneys: Catherine Rosato Reilly for the U.S. Department of Justice. Jennifer Foley for New Hampshire Department of Justice. Jane E. Willis (Ropes & Gray, LLP) for Harvard Pilgrim Health Care, Inc. Lisl J. Dunlop (Axinn, Veltrop & Harkrider LLP) for HealthPlan Holdings, Inc.

Companies: Harvard Pilgrim Health Care, Inc.; HealthPlan Holdings, Inc.; UnitedHealth Group Inc.

MainStory: TopStory Antitrust AntitrustDivisionNews GCNNews NewHampshireNews

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