UnitedHealth Group's Optum Inc. on Wednesday filed a lawsuit against a former employee hired by the new health care entity from JPMorgan Chase, Berkshire Hathaway and Amazon, alleging he stole confidential company information before departing.
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The looming legal battle pits one of the largest U.S. insurers against an upstart company backed by a group of the nation’s most prominent businesses that promises to disrupt the health care industry. It also highlights the intense competition in an increasingly consolidated field where mammoth companies are seeking to provide customers both insurance coverage and pharmacy benefits, among other services.
“UnitedHealth Group is a leader in health care because our people have spent decades developing custom products and services -- intellectual property -- that serve the needs of millions of individuals. While we won’t comment on any specific personnel matter, we are committed to protecting the hard work of our colleagues,” Optum spokesman Matthew Stearns said in a statement.
|UNH||UNITEDHEALTH GROUP INCORPORATED||246.86||-0.23||-0.09%|
|BRK.A||BERKSHIRE HATHAWAY INC.||299,380.00||-1,845.00||-0.61%|
|JPM||JP MORGAN CHASE & CO.||98.93||-0.83||-0.83%|
In the complaint filed in a Boston district court, Optum claimed that former Vice President David Smith acquired the company’s “most confidential, competitively-sensitive, strategic information” while he was in discussions to join the Chase-Hathaway-Amazon venture, referred to as ABC in the suit.
Spokespersons for Chase and Amazon did not immediately respond to request for comment. A Berkshire Hathaway representative and Smith could not immediately be reached.
Smith accepted an offer on Dec. 6, 2018 to join the new company as a director of product strategy and research, roughly the same title he held at Optum. The same day, he attended an offsite meeting with Optum where “sensitive competitive information” was shared, according to the suit.
“Not only would this information provide a tremendous unfair competitive advantage to ABC, it is information of a type and nature that he could not perform his proposed duties…for ABC without drawing upon it,” the complaint reads.
Before leaving Optum, Smith also allegedly sought confidential information from junior members of the company that had nothing to do with his role and accessed “trade secrets and other confidential information in the days and weeks leading up to this resignation.”
In one instance, after printing both a confidential document with “in-depth analysis of healthcare trends” and his resume, Smith was in contact with the Chase-Hathaway-Amazon, according to the suit.
While details on the new health care company are sparse, Optum argues that many of the initial statements from the three firms indicate it will be a direct competitor for the insurer.
Chase and Hathaway, for example, are both current Optum customers. In a press release announcing the launch of the venture, the companies said the goal is to “create solutions that benefit” each of the firm’s employees and families, indicating the new entity could seek to replace Optum’s services with its own.
“In his new role, Smith now poses a direct threat to Optum’s trade secrets and other confidential information, which could have a detrimental impact on Optum’s value and competitive advantage,” the suit reads.
Optum is seeking to permanently block Smith's ability to use or disclose any of the insurers "trade secrets and other confidential information," an outcome that could make operating in his new role with the Chase-Hathaway-Amazon venture difficult, if not impossible.