UnitedHealth Sues To Stop Executive From New Job -- WSJ

By Jon Kamp and Anna Wilde Mathews 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (January 31, 2019).

BOSTON -- Health giant UnitedHealth Group Inc. went to court Wednesday to try to stop a former executive from working for a company it sees as a competitor, the health-care venture launched last year by Amazon.com Inc., Berkshire Hathaway Inc. and JPMorgan Chase & Co.

The scope of the still-unnamed venture remains hazy beyond stated goals to improve health care and rein in costs for employees. But filings related to the case and court testimony offer some fresh clues about the closely watched effort, including that it may build its own solutions if what it needs isn't available elsewhere.

In court, the new hire at issue said the venture is focused on serving the three founding companies and isn't competing with UnitedHealth's Optum health-services unit to sell services or products. Court filings indicate the venture is examining third-party vendors' products and combining them in ways to boost value for the founding companies.

Optum filed a lawsuit in Boston federal court this month seeking a temporary restraining order to keep former employee David W. Smith from working at the new venture or sharing trade secrets.

Optum alleged in its lawsuit that Mr. Smith, who spent 2 1/2 years working in Optum's corporate strategy and product units before resigning last month, violated a noncompete agreement by joining the new venture. Optum also accused Mr. Smith of improperly accessing confidential documents before departing for the new venture, which filings referred to as ABC.

Mr. Smith denied the allegations in court filings and court testimony, saying he didn't leave Optum with any company files and doesn't want or have any use for that information in his current job at ABC. Mr. Smith has asked the court to order arbitration.

During the daylong hearing, Mr. Smith described his new job, started this month, as focused on analyzing the employee patient pool among the three founding companies, which he said have significant health-care needs.

When U.S. District Judge Mark L. Wolf asked whether any innovative ideas would be scaled up and sold to the broader market, Mr. Smith said this wasn't on the near-term horizon.

"That's not the near-term goal," Mr. Smith said. He agreed when the judge asked if ABC could be a laboratory for finding new ways to deliver affordable care, but also "it could be the great solutions are already out there and it's about pulling out the right ones together."

The judge didn't rule on the restraining order request Wednesday, and the hearing is set to continue Thursday.

Jack Stoddard, the joint venture's chief operating officer, also offered some details of the new entity's operations in an affidavit filed to support Mr. Smith.

The venture is "currently using data, analytics, and expertise to combine products from third-party vendors," potentially including Optum, Mr. Stoddard said, and "if viable offerings or solutions do not exist in the market, ABC may consider building new solutions" or having vendors create them. He also said the venture isn't "profit-seeking."

The new venture is "evaluating potential health care solutions for the [founding companies'] over 1.2 million employees," said Mr. Stoddard in the filing.

Amazon, Berkshire Hathaway and JPMorgan launched their health-care venture a year ago with a high-profile announcement that drove down the share values of a number of large health-care companies, including UnitedHealth, which is also the parent of the biggest U.S. health insurer.

Limited details have emerged about the new venture's potential scope. The announcement last June naming prominent surgeon and researcher Atul Gawande as the venture's chief executive was another clue, but Dr. Gawande and others he has hired have kept their plans under wraps.

Optum, for its part, said in its lawsuit the new venture is a potentially significant rival. The startup is immediately poised to win health-services business from JPMorgan and Berkshire Hathaway, both current Optum clients, Optum said. The venture could become a major competitor in the longer run, the UnitedHealth unit claimed, by seeking business from other companies.

A lawyer for Mr. Smith argued during the court hearing that Optum's lawsuit aimed to intimidate its own workers and a perceived business threat.

Write to Jon Kamp at [e-mail] and Anna Wilde Mathews at [e-mail]

(END) Dow Jones Newswires

January 31, 2019 02:47 ET (07:47 GMT)

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