Blue Cross Blue Shield Association could make Anthem pay a $3 billion noncompliance fee if Anthem acquires Cigna but fails to bring in the majority of the resulting insurer's revenue through Blue-branded plans, Bloomberg reports.
Anthem Vice President for Corporate Development Steve Schlegel said during a U.S. antitrust trial Wednesday that 23 percent of Cigna's domestic revenue would have to be branded Blue to comply with association rules. BCBS association requires two-thirds of its products be Blue-branded, according to the report. However if the deal succeeds, the resulting company's revenue would fall short of the requirement and the insurer would have 120 days to propose a compliance plan.
Anthem has said if it acquires Cigna, Anthem would maintain Cigna as a stand-alone company to compete with other BCBS subsidiaries beyond Anthem's territories. Although branding Cigna products Blue in the 14 states where it has BCBS exclusivity would meet the requirement, Mr. Schlegel denied that was the plan, Bloomberg reports.
Indianapolis-based Anthem and Bloomfield, Conn.-based Cigna are defending their proposed $54 billion acquisition agreement in Washington, D.C., against a lawsuit filed July 21 by the Justice Department. The trial started Nov. 21 with DOJ arguments, and Anthem began its defense Tuesday.