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Optum sues former executive for working for competitor company run by Atul Gawande

David Smith said he expects his new role to involve in-depth research on the delivery and costs of healthcare for over one million lives.

Susan Morse, Senior Editor

Optum has sued former executive David William Smith for going to work for Amazon, Berkshire-Hathaway and JPMorgan Chase, breaking his non-compete agreement.

Optum has filed for a temporary restraining order to prevent Smith from working for the company it calls "ABC."

Smith, former vice president of Product/Corporate Strategy, has opposed the request for a TRO in a motion filed Tuesday in Massachusetts District Court.

WHY THIS MATTERS

The lawsuit shows the threat that the ABC company poses for the healthcare industry. Optum's parent company, UnitedHealth Group, also controls the nation's largest health insurance company, UnitedHealthcare.

Optum has about every major insurer as a client.

Court documents show Optum fears competition from the Amazon healthcare venture, even as CEO Atul Gawande has announced virtually nothing about its intent.

Smith said in documents he expected his new role would be in-depth research on the delivery and costs of healthcare for over one million lives covered at ABC.

In fact, according to a December 21, 2018 letter ABC sent to Optum, Optum is confusing the initiatives of the non-profit Amazon healthcare business with that of online giant Amazon. ABC has no products to compete against Optum, nor does it want to disclose confidential information, it said.

Smith said that Mike Weissel, executive vice president of Consumer Solutions Group for Optum, had remarked that ABC was more likely to be a customer, rather than a competitor, to Optum, according to court documents.

An Optum memorandum only speculated that ABC will very soon be a direct competitor, if it is not providing competitive services to Optum's clients already.

"While it is not Smith's burden, his undisputed evidence proves that ABC offers no products or services to the general market, is not profit-seeking, and does not compete for any business with Optum," Smith's motion said. "The crux of a non-compete restriction is actual competition. Here, there is none, and no TRO is warranted."

If nothing else, the lawsuit finally gives a shortened name to the unwieldy "healthcare venture formed by Amazon, Berkshire Hathaway and JPMorgan Chase."

WHAT ELSE YOU NEED TO KNOW

On his own initiative on June 24, 2018, Smith sent Gawande an email expressing an interest to work with ABC and submitted his resume.  He did not receive a reply from Gawande, but on October 7, 2018, an ABC recruiter contacted Smith through LinkedIn and arranged for him to interview with Jack Stoddard, ABC's chief operating officer.

Smith accepted an offer on Dec. 11 and gave notice to work through the end of December, but on December 13, was placed on administrative leave and told to leave the building, court documents said. He left with a slide deck containing his headshot, personal documents and some publicly filed UHG reports.

On December 21, Optum sent letters to both Smith and ABC threatening to bring legal claims against both parties if ABC employed Smith, claiming he had stolen UHG data and was barred from working for ABC by his no-compete agreement.

Smith's non-compete contract restricts him from participating in any activity that competes, directly or indirectly, with any Optum activity product or service he had engaged in or had information about during his last 36 months of employment with Optum.

Optum's statement that it services virtually every dimension of the U.S. health system means Smith is banned from working in every dimension of the health system, the motion said. This alone makes the non-compete unenforceable.

Smith was not a member of Optum's executive team or senior leadership team, the lawsuit said. Smith worked on Optum's strategies and products in areas of workers' compensation, population health and pharmacy benefits. Smith worked for Optum for two-and-a-half years, from July 2016 to December 2018.

Optum said Smith, because of his job title, could not help but use his knowledge on Optum's strategy and other trade secrets.

Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com

 

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