514-2007
WWW.USDOJ.GOV
TDD (202) 514-1888
JUSTICE DEPARTMENT AND TEXAS ATTORNEY GENERAL CHALLENGE
AETNA'S ACQUISITION OF PRUDENTIAL HEALTHCARE AND REQUIRES DIVESTITURES
WASHINGTON, D.C. -- The Department of Justice and the Texas Attorney General's
Office today filed a civil antitrust suit to block Aetna Inc.'s proposed acquisition of The
Prudential Insurance Company of America's health care business. At the same time, a proposed
consent decree was filed that would allow the acquisition to go forward provided that Aetna sells
its NYLCare Health Maintenance Organization (HMO) businesses in Houston and Dallas-Fort
Worth, Texas.
The lawsuit and proposed consent decree were filed today in U.S. District Court in
Dallas, Texas. The consent decree, if approved by the court, would settle the lawsuit.
"This settlement demonstrates the Department's commitment to preserve competition in
all sectors of the health care industry," said Joel I. Klein, Assistant Attorney General in charge of
the Antitrust Division. "The required divestitures will have two important effects. First they will
preserve competition and protect consumers from higher prices for HMO and HMO-based POS
services. In addition, the divestitures will deny Aetna the ability to unduly depress physician
reimbursement rates and thereby impair the quantity and quality of physician services provided to
patients."
According to the Complaint, the proposed transaction would have made Aetna the
dominant provider of HMO and HMO-based point of service (POS) plans in Houston and Dallas,
with 63 percent and 42 percent, respectively, of enrollees in those areas. It also would have
resulted in increased prices or reduced quality of those health care plans. The Complaint also
alleges that the combination of Aetna, NYLCare, and Prudential would have given Aetna control
over a large share of the physicians' businesses, enabling Aetna to depress physicians'
reimbursement rates in Houston and Dallas. Over time, this likely would have resulted in a
reduction in the quantity or quality of physician services provided to patients.
HMO plans generally compete in local areas on the basis of the breadth and quality of
their physician and hospital networks, their benefits structure and their prices.
"This settlement protects the consumer by preserving competition," said Texas Attorney
General John Cornyn. "Patients will benefit both from the lower health plan prices that
competition ensures and the preservation of quality health care by maintaining competitive
physician reimbursement."
Under the proposed settlement, the required divestitures would restore Aetna's market
shares in Houston and Dallas for HMO and HMO-based POS plans and for the purchase of
physician services to approximately the same levels as before the proposed acquisition.
Aetna, headquartered in Hartford, Connecticut, is a leading provider of health, retirement,
and financial services benefits worldwide. Through its subsidiary, Aetna U.S. Healthcare, Aetna
provides health care benefits to over 15 million plan members throughout the United States.
Prudential, headquartered in Newark, New Jersey, is one of the largest financial
institutions in the world. Prudential HealthCare, a subsidiary of Prudential, provides health care
benefits to approximately 5 million plan members throughout the United States.
As required by the Tunney Act, the proposed consent decree will be published in the
Federal Register, along with the Department's competitive impact statement. Any person may
submit written comments concerning the proposed decree during a 60-day comment period to
Gail Kursh, Chief, Health Care Task Force, Antitrust Division, U.S. Department of Justice, 325
Seventh St., N.W., Suite 400, Washington, D.C. 20530. At the conclusion of the 60-day
comment period, the United States District Court for the Northern District of Texas may enter the
consent decree after finding that it serves the public interest.
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