UnitedHealth Group-owned Optum lost its legal fight Friday to block a former executive from working at Amazon, Berkshire Hathaway and JPMorgan Chase's healthcare venture. Optum argued that the hiring would breach its trade secrets.
U.S. District Judge Mark Wolf in Boston denied Optum's motion for a temporary restraining order to force David Smith to stop working as director of strategy and research at the yet-unnamed joint venture, which has been called ABC.
He ordered the parties to promptly select an arbitrator to resolve the dispute on a confidential basis.
Optum filed a non-compete and trade secrets lawsuit last month against Smith, who worked as Optum's vice president of product, claiming he was privy to and misappropriated trade secrets that will help the new venture compete against it. The healthcare services giant said he violated non-disclosure and non-compete covenants in his contract.
The lawsuit demonstrated how nervous Optum is about the potential impact of the new joint venture on its businesses in data analytics, pharmacy services, medical clinics, population health management and advisory services.
Smith argued he had no Optum trade secrets in his possession, had no use for such information in his new job, and that Optum's own arbitration agreement with him precluded it from bringing the lawsuit.
Beyond that, he said Amazon-Berkshire-JPMorgan does not compete for business with Optum in that it offers no products or services to the general market and is not profit-seeking.
In January 2018, the CEOs of Amazon, Berkshire Hathaway, and JPMorgan Chase announced they were forming an independent, not-for-profit entity to reduce healthcare costs and improve care for their nearly 1.2 million employees. Last June, the companies hired prominent Boston surgeon and health policy writer Dr. Atul Gawande as CEO, and said their joint venture would develop models that could be used by other employers.
Despite the lack of specifics, the endeavor has been touted by some observers as a potential disruptive force that will drive widespread change throughout the industry.
Optum's complaint warned that obtaining its trade secrets could enable a competitor to anticipate its acquisition targets, more quickly develop competing, lower-cost products and services, lure away customers and business partners, and negotiate better deals with pharmaceutical manufacturers.
It noted that two of the three partnering companies, Berkshire Hathaway and JPMorgan Chase, are currently Optum customers, so their joint venture will be a direct competitor.
In a Dec. 21, 2018, letter to the three companies, UnitedHealth Group's chief legal officer, Marianne Short, said media reports indicated that Amazon-Berkshire-JPMorgan's venture will compete directly with Optum and UnitedHealth by trying to manage prescription benefits, open primary care clinics and market software that mines data from patient medical records.
But the three companies have not announced any details of how they will pursue cost-cutting measures.
Testimony in the Boston federal case revealed that the joint venture would address how health insurance benefits are provided, ways to make it easier for employees to see a physician, and reducing the cost of prescription drugs for chronic conditions.
ABC plans to test new approaches, using various third-party partners which potentially could include Optum, according to the testimony.
