Arthur R. Lehman, L.L.C.

Cigna alleges breach of contract in merger case

Mergers and acquisitions are complicated business arrangements with many business and legal steps that must be undertaken before the agreement can be finalized. At the heart of these business deals are generally complicated and legally binding contracts.

These contracts must be properly executed to be completed. When terms of the agreement are not carried out, a breach of contract may have occurred. A breach of contract can lead to a variety of legal consequences for both sides to the agreement.

The potential consequences for a breach of agreement is playing out right now between two health insurance companies. Many months ago, health insurance giants Cigna and Anthem announced a merger deal. In the deal, Anthem would acquire Cigna and incorporate it into their health insurance operations in a $54 billion deal.

However, after the deal was announced the United States' Justice Department sued to stop the merger from being completed. They argue that the merger will violate anti-trust laws. The companies are set to argue the case with the Justice Department in just about six weeks.

Now, Cigna has sued Anthem for breach of contract. Cigna is arguing that Anthem has breached the agreement by not adequately preparing for the upcoming litigation with the Justice Department. They argue that executives have not put the effort they need to in creating a plan to explain why the deal will not violate current law.

Breach of contract cases can be legally challenging and complicated. Businesses need to make sure they fully understand their rights and responsibilities when it comes to their contracts. If a breach occurs, they should aggressively protect their interests.

Source: New York Post, “Cigna up in arms over Anthem’s ‘breach’ of agreement,” Josh Kosman, Oct. 11, 2016

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