Optum sues to keep trade secrets from Amazon & Co.
The suit seeks an injunction barring former Optum exec David Smith from working for Amazon-Berkshire-JPMorgan and using its trade secrets.
Amazon & Co. was the talk of the health care industry last year, with no shortage of experts weighing in on the disruptions and innovations they expected to see from the joint venture.
One company less than enthusiastic about the deal: UnitedHealth Group-owned Optum, which is suing to block a former executive from joining the new health care cost-saving venture and potentially divulging trade secrets.
Related: 5 takeaways from the Amazon/Berkshire/JPMorgan partnership
According to Modern Healthcare, the suit is an indication of just how disruptive to the industry companies fear the new venture to be.
David Smith began work this month at the new venture, not yet named, as its director of strategy and research. According to the report, the noncompete and trade secrets lawsuit, filed against Smith in U.S. District Court in Massachusetts, claims that in Smith’s former position as vice president of product, he was “privy to and misappropriated trade secrets that will help the new venture compete against it, violating nondisclosure and noncompete covenants in his contract.”
The suit seeks an injunction barring Smith from working for Amazon-Berkshire-JPMorgan and using its trade secrets. Smith, for his part, has argued that he has no Optum trade secrets in his possession, has no use for such information in his new job, and that Optum’s own arbitration agreement with him precludes it from bringing the lawsuit.
The potentially broad reach of the joint venture across businesses in data analytics, pharmacy services, medical clinics, population health management and advisory services looks to provide competition, if not outright challenges, to firms in the health care industry, although Smith is reported saying that Amazon-Berkshire-JPMorgan does not compete for business with Optum, since it offers no products or services to the general market, nor does it seek profits.
The announced purpose of the independent, not-for-profit entity is “to reduce healthcare costs and improve care for their nearly 1.2 million employees,” the report says, adding that a UnitedHealth Group spokesman “insisted that Smith ‘violated his employment agreement and stole confidential company property on his way to go to work for a competitor,” adding that UnitedHealth “has spent decades developing custom products and services” and is “committed to protecting the hard work of our colleagues.”
According to Business Insider, Optum’s lawsuit alleges that Smith “printed out documents on Optum’s corporate strategy the same day he interviewed with the Amazon [joint venture] in October 2018.”
Among the reasons Optum has to be nervous about the joint venture is its sheer size, should it decide to woo members of health plans already in place—and since Berkshire Hathaway and JPMorgan Chase are at present customers of Optum, the joint venture is likely to be directly in competition with Optum.
In addition, BI points out, “Amazon acquired pharmacy startup PillPack in June 2018; while Amazon’s precise plans for PillPack are unclear, it may look to undercut existing pharmacy benefits managers, which serve as intermediaries between pharmacies and insurers. And OptumRx—a subsidiary of UnitedHealth—is one of the three largest PBMs in the U.S.”
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