Optum sues exec hired away by Amazon-Berkshire-JPM
- Optum, the fast-growing and increasingly lucrative health services arm of UnitedHealth Group, has sued former executive David Smith to protect its trade secrets from being shared with Smith's new employer, the joint Amazon-Berkshire Hathaway-J.P. Morgan health venture.
- The new company, referred to as ABC in court documents, hired Smith away from Optum in December. The lawsuit filed Jan. 16 accuses ABC of hiring Smith as part of a larger plan to "lift Optum's model or, at the very least, to duplicate or develop similar products and services."
- Two other recent ABC hires were mentioned in Optum's lawsuit — product director Caitlin Fleming and former advisor Jack Stoddard. Optum alleges in its lawsuit that Smith helped his new employer make those hires.
The Amazon-Berkshire-JPM venture has companies across the industry on their toes, but Optum is the first to take concrete action to protect itself from what's otherwise been considered a potential market invasion.
The worry makes sense. Before ABC was announced last year, Optum was the new kid on the block. Since its creation within UnitedHealth in 2011 by combining data analytics, a PBM and physicians, the company has been on the up and up.
In 2017, Optum accounted for 44% of UnitedHealth Group's profits. Last year, Optum beat earnings expectations and surpassed $100 billion in revenue for the first time, with all three of its service arms showing continued positive growth. Optum, wrote Moody's Vice President Dean Ungar, "continues to demonstrate the promise of vertical integration as a way to diversify revenues and, ultimately, to lower the cost of healthcare."
Optum fears ABC will copy-paste its model, backed by big Wall Street dollars and fueled by proprietary information the executive allegedly shared.
Little is known about how the joint venture plans to tackle its stated mission of lowering employee healthcare costs. Just this week, CEO Atul Gawande canceled a planned keynote speech at next month's HIMSS conference. Gawande was tight-lipped about his new role at the America's Health Insurance Plans annual conference in June. He said only that he felt "incredibly lucky" to "get 1 million new patients and they will be people from across the country."
In its lawsuit, Optum argues Smith was hired and tasked specifically with stealing information. The company alleges he printed a company document marked "Confidential" on the same day he printed his resume and spoke with ABC, that he sought out confidential information from other employees that was unrelated to his job, and, on the day he resigned, acquired information regarding Optum's product portfolio performance, new product
development and product job family and assessment plan.
"Moreover, to date, Smith and ABC have been unable or unwilling to provide any substantive insight as to what Smith will be doing in his new role for ABC," the lawsuit reads. "In the absence of any such clarity, Optum can only conclude that Smith’s role as 'Director of Product Strategy and Research' at ABC will be broad and substantially similar to his former role at Optum and, importantly, implicate Optum's trade secrets."
A hearing is scheduled in Boston on Jan. 29.
- STAT In a sign of its concerns about Atul Gawande’s new venture, Optum sues over trade secrets
- United States District Court for the District of Massachusetts Optum v David Smith
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