Jeff Bezos and fellow billionaire CEOs Warren Buffett and Jamie Dimon teamed up last year to form a healthcare company they hoped would shake up the country’s pricey and bloated health industry. But, gripped by a new lawsuit, the still-unnamed fledgling venture may be heading for a shakeup of its own.

A UnitedHealth Group subsidiary called Optum filed a lawsuit in Massachusetts District Court in Boston last week, alleging that its former executive, David Smith, has breached his noncompete agreement and is divulging invaluable trade secrets to the Bezos, Buffett, and Dimon startup. Last month, Smith accepted a high-level position at the startup, which Optum calls “ABC” in the lawsuit (a nickname that refers to the three founders’ companies, Amazon, Berkshire Hathaway, and JPMorgan Chase, respectively).

Optum’s complaint (PDF) does not list ABC as a defendant (only Smith), but it takes a few swipes at the company. Specifically, it accuses ABC of trying to steal its thunder as a technology- and analytics-driven venture that works to improve healthcare quality and efficiency while reducing costs.

“On information and belief, ABC’s hiring of Smith is part of ABC’s larger plan to lift Optum’s model or, at the very least, to duplicate or develop similar products and services,” the complaint reads.

ABC’s general counsel did not immediately respond to Ars’ request for comment. But according to court filings, ABC took the stance that “there is no product or service competition between UnitedHealth and [ABC], nor does [ABC] anticipate that there will be any such initiatives or activities that would violate Mr. Smith’s non-compete covenant.”

Optum disagrees. In its suit, Optum notes that while ABC’s business is still fuzzy, statements from the company and its appointed CEO, Atul Gawande, describe work that sounds similar to Optum’s activities. This includes its debut announcement stating that ABC would focus on “technology solutions that will provide US employees and their families with simplified, high-quality and transparent healthcare at a reasonable cost.”

Optum also points out that ABC has stated that it will first provide healthcare services to employees of the three founders’ companies. Currently, Optum provides healthcare services to two of those three companies, Berkshire Hathaway and JPMorgan Chase.

“ABC will very soon be a direct competitor, if it is not already,” the lawsuit alleges.

Secrets and printers

In emailed comments to Ars, Optum’s vice president of external communications, Matt Stearns, explained that:

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.

As such, Optum’s executives were immediately “uncomfortable” with Smith’s plans when he informed them on December 13, 2018 that he was leaving to take a job at ABC, the lawsuit states. Although Smith offered to stay on until his start date at ABC, Optum put him on administrative leave that day and quickly terminated his access to Optum’s system. “[T]he risks that he posed in light of his employment plans were too great to permit him to continue to maintain access to Optum’s information,” the company wrote.

Given the alarm, Optum also began retracing Smith’s steps prior to his resignation, eventually uncovering what it called “pre-departure misconduct.” This included printing out sensitive material along with his resume on a day he interviewed or at least had contact with ABC.

The lawsuit states that on October 29, 2018, Smith printed out a confidential document titled “The Factbook” on a company printer. The document contains “Optum’s highly-confidential, competitive information, including Optum’s in-depth analysis of healthcare trends…” and “also identifies Optum’s potential opportunities in, and solutions for, the changing healthcare market.” Just one minute after printing that, Smith printed out his resume and, later that day, communicated with ABC. Optum claims that Smith had no reason to print out The Factbook besides his contact with ABC.

Similarly, Optum alleges that Smith inappropriately asked junior team members for other confidential information on or around December 4. And on December 10—the day before he signed a written offer with ABC—he printed out yet another sensitive document, titled “Optum Enterprise Strategy.” The document included the company’s portfolio performance, new product development plans, and other information that would “cause Optum irreparable harm if it fell into the hands of a competitor,” the lawsuit alleges.

Optum also suggested that Smith helped poach another Optum employee, its director of product, who took a job at ABC this month. Smith seemed to schedule an unexpected meeting with the director on December 7, the day he received an offer letter from ABC, the company alleges.

Profits vs people

Smith did not immediately respond to Ars’ request for comment. In a written affidavit (PDF), Smith denies all of Optum’s allegations. He wrote that the confidential information and documents Optum accused him of inappropriately accessing were actually germane to his job. He also noted that he likes printing things. “It was my preference and regular practice to read and work from hard copy documents,” he wrote.

He also wrote that his role at ABC will be completely different from his role at his old job. At Optum, Smith’s title was vice president of product, and he spent his time working in the Products unit and the Corporate Strategy unit. He described his work as “focused on profitability” and as developing “strategies and products in areas including workers’ compensation, population health, and pharmacy benefits.”

At ABC, where Smith will be director of Product Strategy and Research, he says his job “has nothing to do with commercializing products or making a profit; it is only focused on helping to improve the health and wellbeing of the employees and families of the Founders and helping make health benefits more affordable for the Founders’ companies.”

In his noncompete covenant with Optum, Smith agreed that for a year after leaving the company he would not “engage in or participate in any activity that competes, directly or indirectly, with any [Optum] activity, product or service that [Smith] engaged in, participated in, or had Confidential Information about during [Smith’s] last 36 months of employment with [Optum].” The agreement also stated that he wouldn’t recruit or solicit any Optum employees for at least two years.

ABC has now recruited a total of three UnitedHealth employees, including Smith.

With its lawsuit, Optum is seeking to bar Smith from working at ABC and claims he violated his agreements and disclosed confidential information.

https://arstechnica.com/?p=1446337