U.S. judge will not block Amazon-Berkshire-JPMorgan health venture’s new hire


BOSTON (Reuters) – A federal judge on Friday declined to block a UnitedHealth Group Inc unit’s former executive from working at a new healthcare venture launched by Amazon.com Inc, Berkshire Hathaway Inc and JPMorgan Chase & Co.

Traders work at the post where UnitedHealth Group is traded on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 31, 2018. REUTERS/Brendan McDermid

The decision by U.S. District Judge Mark Wolf in Boston came in a lawsuit closely watched in the industry for clues about the future plans of the venture, which was announced in January 2018 with a goal of lowering healthcare costs.

UnitedHealth’s Optum unit had sought a court order blocking David Smith from working at the venture, saying he could share trade secrets that would give it a competitive advantage.

But Wolf declined to issue a temporary restraining order preventing Smith from working there pending the outcome of an arbitration, saying Optum had not established Smith was likely violating an agreement to not work for a competitor.

He said the unnamed Boston-based venture, nicknamed “ABC,” does not offer products that compete with Optum, and said while it might do so someday, the startup could become a potential Optum customer instead of its rival.

“Any prediction about the future now would be speculative,” he said.

Wolf said Optum had also failed to show Smith has disclosed any of its confidential information since joining ABC, an allegation Smith denied.

Optum, which provides pharmacy benefit management and other services, said in a statement it would “aggressively” pursue its claims against Smith in arbitration.

Smith’s lawyer and ABC declined to comment.

In January, Optum sued Smith, its former vice president of product and corporate strategy, alleging he violated an agreement to not work at a competitor for a year in exchange for stock and options.

Optum claimed Smith, now a director of strategy and research at ABC, misappropriated trade secrets that would give the venture an unfair advantage.

Testifying in court last month, Smith argued ABC was not a competitor but is focused on serving its three founding companies’ 1.2 million employees.

Jack Stoddard, ABC’s chief operating officer, testified that ABC is examining whether it can “reinvent what insurance looks like in terms of benefit design.”

Stoddard said ABC had not ruled out developing products. But he said its “preferred path” was to partner with companies like Optum to provide services and had no plans to directly compete with Optum in 2019.

The case is Optum Inc v. Smith, U.S. District Court, District of Massachusetts, No. 19-cv-10101.

Reporting by Nate Raymond in Boston; Editing by Richard Chang

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