New Details on Amazon, Berkshire Hathaway, JPMorgan Health Venture Emerge in Court Battle
January 30 2019 - 9:15PM
Dow Jones News
By Jon Kamp and Anna Wilde Mathews
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 jon.kamp@wsj.com and Anna Wilde Mathews at
anna.mathews@wsj.com
(END) Dow Jones Newswires
January 30, 2019 21:00 ET (02:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
Berkshire Hathaway (NYSE:BRK.A)
Historical Stock Chart
From Aug 2024 to Sep 2024
Berkshire Hathaway (NYSE:BRK.A)
Historical Stock Chart
From Sep 2023 to Sep 2024