While Connecticut’s insurance commissioner gave his blessing to the sale of Health Net’s northeastern business to UnitedHealthcare, the state’s attorney general said he wants to take a closer look at the acquisition.

Thomas R. Sullivan

Connecticut Insurance Commissioner Thomas R. Sullivan approved the deal Dec. 5, where Health Net will sell its subsidiaries in Connecticut, New York and New Jersey to UnitedHealthcare in a deal that could total $630 million, according to the two companies.

The subsidiaries serve 578,000 customers in the three states, according to Health Net.

“In my view, the approval of this transaction strengthens, not weakens, consumer choice and security,” Sullivan said in a statement.

That same opinion was not shared by Connecticut’s attorney general, Richard Blumenthal, who announced hours after Sullivan’s decision that his office is investigating the details of the deal for any anti-competitive consequences that would violate state law.

“One of our concerns is whether the merger will cause excessive concentration in some segments of the health insurance market and thereby unlawfully restrain competition,” Blumenthal said in a statement. “We have reached no conclusion in our investigation, which is separate and distinct from the department of insurance legal responsibilities.”

Blumenthal added that his office has taken steps to obtain additional information on the acquisition, including a scheduling a meeting with representatives of both California-based Health Net and Minnesota-based UnitedHealthcare.

Blumenthal has been a harsh critic of Health Net recently, following the disclosure that a data drive from the insurer’s Connecticut office was missing. The company said the drive, which contained the data of 1.5 million customers in four states, went missing in May, but didn’t report it until November, citing an extensive forensic examination to determine the drive’s contents.

Blumenthal chided the insurer’s “incomprehensible foot-dragging” on the matter, indicating his office would investigate and seek answers to avoid another such occurrence.

Approval details

In his opinion, Sullivan noted that when Health Net announced last year it was initiating a strategic review of its northeast business operations, one option was to exit the Connecticut market. If Health Net did not find a partner, he noted, the insurer’s customers would have been left to get coverage on their own, but UnitedHealthcare made a commitment to offer renewal coverage for group policies.

Sullivan’s department will continue regulating Health Net during a two-year transition period, according to his opinion on the acquisition. During that period, UnitedHealthcare must file changes to the business of Health Net, including staffing changes, charitable contributions to Connecticut entities and other information, as well as communications with policyholders, members and providers on the transition of commercial business.

The order also requires Health Net and UnitedHealthcare’s full cooperation with the data breach investigation, including remediation efforts and future handling of personal health, financial and identity information.

Daryl Richard, a spokesman for UnitedHealthcare, told IFAwebnews.com that the company is “appreciative” of Connecticut’s approval and awaits word from other state regulators. Richard said the deal was approved in New Jersey, but still awaits approval from regulators in New York.

“If fully approved by the other states, we will work to ensure a smooth transition process for members, physicians, hospitals, and other health care professionals,” he said. “We look forward to advancing the health and well-being of Health Net’s members through affordable, quality health care options.”