UnitedHealth Sues Former Exec for Taking Secrets to Amazon-Berkshire-Chase Joint Venture

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UnitedHealth Group’s Optum unit is suing David Smith, a former information technology executive, for breach of contract. They note that Smith, in the 18 months before his resignation, played a pivotal role in reviewing Optum’s strategy, and was “one of fewer than 50 people at the company” with access to Optum’s detailed profit-and-loss statements. They are alleging that Smith took this information, basically trade secrets, to the new joint health venture formed between Amazon, Berkshire Hathaway and JP Morgan Chase

In January 2018, Berkshire Hathaway’s Warren Buffett, Amazon’s Jeff Bezos, and JP Morgan Chase’s Jamie Dimon announced a joint venture to cut healthcare costs and improve services. In late June, they named Atul Gawande to be the joint venture’s chief executive officer.

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The joint venture is to be located in Boston. The three companies have anywhere from 840,000 to 1.2 million employees worldwide. Although as yet unnamed, in the lawsuit it is referred to as ABC, for Amazon-Berkshire-Chase.

Just yesterday, speaking at the World Economic Forum in Davos, Switzerland, Dimon said, “With health care, we have the best in the world—doctors, hospitals, pharma, you name it—but we also have some of the worst outcomes. Obesity, wellness programs that could work better, the opioid problem, 40 million uninsured. So you know, to me, you look at the whole issue and what should we do about it.”

The joint venture appears to be in the planning stages. In addition to Gawande, the venture hired Dana Gelb Safran, formerly a chief performance measurement and improvement officer at Blue Cross Blue Shield of Massachusetts, as well as David Smith. Dimon indicated the group is currently focused on building its team and “looking at how to attack this problem. It’s a long-term view. We don’t expect any announcement anytime soon.”

According to the lawsuit, while Smith was interviewing for the joint venture, he took part in strategy meetings at UnitedHealth and requested confidential information from staffers who didn’t directly work for his unit.

“On the same day that he talked with ABC, and just one minute before printing his resume, Smith printed an Optum document marked ‘Confidential’ that contains, among other things, Optum’s highly confidential information including an in-depth market analysis of the healthcare industry,” the lawsuit states. It also alleges that Smith continued printing confidential documents up to his last days at the company.

CNBC reports that Optum lawyers have spent the last month talking with the joint venture’s attorneys in order to delay Smith’s start with the company. They filed an injunction last week after those talks got nowhere.

Smith’s attorneys filed a response on Tuesday, claiming Smith wasn’t working in a competitive role, saying, “ABC offers no products or services to the general market, is not profit-seeking, and does not compete for any business with Optum. The crux of a non-compete restriction is actual competition. Here, there is none.”

UnitedHealth, on its part, is portraying the joint venture as a potential threat. For the most part, the healthcare industry has been intrigued by the venture, while simultaneously skeptical. On the other hand, everyone is aware that Amazon is enormously disruptive in whatever industry it touches. A year ago in January, Dan Mendelson, chief executive officer of Avalere Health, a healthcare consulting firm, told CNN, “They’re going to be using their own spending and resources as a laboratory. But I think their aspirations are bigger than their employee bases.”

The joint venture, for its part, is long on intentions and short on details. It has simply said it has the intention of creating “simplified, high-quality and transparent healthcare at a reasonable cost.”

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