The Department of Justice (DOJ) officially sued Tuesday to block UnitedHealth Group’s (NYSE: UNH) takeover of Amedisys (Nasdaq: AMED), calling the deal “presumptively anticompetitive and illegal.”

In its complaint, the DOJ laid out multiple gripes it had with the deal, indicating that it would negatively impact patients, payers and home health workers.

“We are challenging this merger because home health and hospice patients and their families experiencing some of the most difficult moments of their lives deserve affordable, high quality care options,” U.S. Attorney General Merrick B. Garland said in a statement. “The Justice Department will not hesitate to check unlawful consolidation and monopolization in the health care market that threatens to harm vulnerable patients, their families, and health care workers.”

In addition, the Attorneys General of Maryland, Illinois, New Jersey and New York joined the lawsuit.

Based in Baton Rouge, Louisiana, Amedisys has 521 care centers in 37 states and the District of Columbia. It offers home health, hospice, palliative and home-based high-acuity care. UnitedHealth Group’s Optum agreed to acquire Amedisys for $3.3 billion in June of 2023.

“We remain committed to the transaction, which we believe will create more opportunities to deliver quality, compassionate and value-based care to patients and their families,” an Amedisys spokesperson told Home Health Care News Tuesday. “We look forward to supporting Optum in presenting our case.”

UnitedHealth Group is one of the largest health care companies in the country, and has already been investigated by the DOJ over antitrust concerns elsewhere. The DOJ sued over UnitedHealth Group’s Change Healthcare takeover in 2022, but ultimately fell short of blocking the deal.

UnitedHealthcare is UnitedHealth Group’s insurance arm, while Optum is its health care provider services arm.

Optum already acquired the home health giant LHC Group in February of 2023 for $5.4 billion. LHC Group and Amedisys were once two of the largest standalone home health companies in a historically fragmented industry. If Optum were to have both under the same roof, it would own about 10% of the home health market, becoming by far the largest provider.

In the DOJ’s complaint, it focused on what would be lost if LHC Group and Amedisys were to no longer compete.

“The fact that this merger would extinguish competition at the expense of Americans is not a secret,” the DOJ wrote. “Indeed, both UnitedHealth and Amedisys recognize the value that direct competition between the two companies provides to patients today. As Amedisys’ former CEO and current Board Chairman said, the ‘pure competition’ between Amedisys and UnitedHealth means the two companies ‘keep each other honest and we keep driving better and better quality. And who benefits from it? Our patients.’”

There is significant overlap between Amedisys’ current footprint and LHC Group’s.

To get ahead of those concerns, Amedisys agreed to divest certain locations to the home health provider VitalCaring in June. That deal’s closing is contingent on the UnitedHealth Group-Amedisys deal closing, however.

But the DOJ was not satisfied with VitalCaring as a divestment partner.

“VitalCaring will not replace the competitive intensity lost by the merger,” the DOJ wrote. “The company has operated for only three years, and the hodgepodge of assets that it would acquire would nearly double VitalCaring’s size immediately. Not only does VitalCaring’s quality lag behind both UnitedHealth and Amedisys, but several of VitalCaring’s previously acquired assets saw quality decrease post-acquisition. VitalCaring’s private equity investors have significantly written down their valuations of the company due to its poor financial performance.”

The Dallas-based VitalCaring, led by April Anthony, is backed by The Vistria Group and the Nautic Partners.

“Worse still, VitalCaring faces a lawsuit in Delaware Chancery Court seeking nearly half-a-billion dollars stemming from its current CEO’s alleged breaches of contractual and fiduciary duties while leading a rival home health and hospice provider, Encompass Home Health (“Encompass”),” the DOJ continued. “In a related action, a Texas state court held that while CEO of Encompass, VitalCaring’s current CEO ran VitalCaring ‘from the shadows,’ and in violation of her contractual duties to Encompass.”

Even if that divestiture were to be completed, the DOJ wrote in its complaint that there would still be “over 100 home health and hospice markets” affected by what it believes would be an anticompetitive fallout from the UnitedHealth Group-Amedisys deal.

The DOJ also believes home health and hospice workers would be negatively impacted due to decreased recruitment competition between the two home health giants. Amedisys and LHC Group joining forces would “eliminate that competition and threaten the benefits it provides.”

“UnitedHealth identifies Amedisys as among its ‘Main 3’ competitors for nurses, targets Amedisys as its “first line of attack” in recruiting campaigns, and celebrates ‘kicking [Amedisys’] [*]ss in hiring,’” the DOJ wrote. “Nurses who provide home health and hospice services receive better wages and other employment terms as a result of the direct competition between UnitedHealth and Amedisys.”

The DOJ also pointed to evidence suggesting that Amedisys tried to recruit LHC Group’s nurses after UnitedHealth Group acquired the latter, specifically in the Northeast and Midwest.

Among the other arguments made against the deal was around the presumed impact on payers, and the cost for home health services potentially rising due to a combination.

Specifically, the DOJ wrote that home health providers offer services at lower costs than their competitors in order to enter into payers’ networks and win more business.

Whereas rates are generally uniform in traditional Medicare, Medicare Advantage plans negotiate payment with providers.

“Amedisys, for example, acknowledges that rates with Medicare Advantage plans are ‘driven down by price competition,’” the DOJ wrote. “UnitedHealth’s insurance arm acts accordingly, as it has attempted to resist rate increases from Amedisys for UnitedHealth’s own insurance plans by ‘cit[ing] that [Amedisys’s] rates are in line with another national provider with a similar footprint (most likely LHC Group).’”

In addition to its suit, the DOJ is seeking civil penalties against Amedisys for allegedly falsely certifying compliance with its obligations under the Hart-Scott-Rodino Antitrust Improvements Act.

“The complaint alleges that Amedisys violated the HSR Act because, at the time of its sworn certification, Amedisys failed to produce millions of documents or disclose the deletion of other documents,” the press release read. “For each day that Amedisys was in violation of the HSR Act, the United States seeks a monetary penalty of up to $51,744, as authorized by statute.”

UnitedHealth Group and Amedisys plan to continue pursuing the closure of the deal.

Notably, the makeup of the DOJ could look different in the coming months, as President-elect Donald Trump returns to office in late January of next year.