The U.S. Department of Justice (DOJ) has rejected the sale of Amedisys’ (Nasdaq: AMED) home health and hospice assets to BrightSpring Health Services Inc. (Nasdaq: BTSG) and The Pennant Group (Nasdaq: PNTG) as a remedy to an ongoing lawsuit.

Amedisys earlier this month announced the divestiture of a number of its home health and hospice locations to several companies, including affiliates of BrightSpring and Pennant. The deal was aimed at addressing the DOJ’s antitrust concerns related to the sale of Amedisys to UnitedHealth Group’s (NYSE: UNH) health care subsidiary Optum.

The DOJ in November 2024 filed a lawsuit to block the sale, citing concerns that the combination of the two companies would curb competition in the hospice and home health space.

“The DOJ hasn’t been convinced that the remedy proposal, which includes more than 120 sites, will maintain competition in the home health and hospice market,” a person familiar with the matter said on Monday, according to an MSN report.

The case is set to go to a mediation conference before a magistrate judge on Aug. 18. Last Friday a federal judge announced the addition of a supplemental mediation conference to discuss the deal, set for Aug. 28.

The second meeting will occur in the event that additional discussion is needed following the initial mediation. A mediation conference is a method of alternative dispute resolution in which a neutral third party helps parties in a legal dispute to reach an agreeable solution.

Amedisys offers home health, hospice and palliative care, among other services to more than 465,000 patients annually across 38 states and Washington D.C.

Optum inked a deal to acquire Amedisys in 2023 in an all-cash transaction of $101 per share, or about $3.3 billion. The DOJ began investigating the deal last summer.

Should the Amedisys sale proceed, it could grant Optum control of 30% or more of the hospice and home health landscape across eight states, the DOJ indicated. The transaction would also expand the company’s footprint in five additional states, with Optum standing to gain about 500 locations in 32 states, according to the agency.

The DOJ has alleged that UnitedHealth Group is seeking to overcome competitors by acquiring them rather than beating them in the market. The insurance mammoth last year also purchased the home health and hospice provider LHC Group for $5.4 billion. The DOJ has also cited multi-faceted concerns that included potentially adverse impacts on competition as well as on home-based care workers and payers.

The DOJ performed a similar investigation — and filed a lawsuit — when Optum acquired the health care technology company Change Healthcare. A federal court eventually allowed that deal to proceed.

This is not the first time a proposed divestiture in the Amedisys sale has been disputed. Amedisys previously agreed to sell some of its locations to the Texas-based home health and hospice provider VitalCaring, but that agreement fell through. The agreement included 100 hospice and home health locations.