Trade Secrets Motion Against Amazon Health Care Venture Denied in Court; Litigation Likely to Continue

The Amazon, Berkshire Hathaway, JPMorgan Chase health care venture is hitting a rocky start with allegations of stealing trade secrets.
By: | April 25, 2019

When Amazon, Berkshire Hathaway and JPMorgan Chase announced their intentions in 2018 to unite and provide health care service options to their 1.2 million employees, the health care world rejoiced.

But not everyone was pleased with the startup, nicknamed ABC.

Optum Inc., a UnitedHealth subsidiary, filed suit against the ABC partnership, claiming a former mid-level executive, David William Smith, had brought critical trade information with him to his new job at ABC that could damage Optum’s bottom line.

To prove its allegations, Optum laid out Smith’s last few days at the company.

In that time he: (1) printed out an Optum document marked “Confidential” minutes before speaking with ABC; (2) approached several Optum employees seeking information unrelated to his own job duties; (3) after receiving a written offer from ABC, printed out another Optum document marked “Confidential,” which contained information on Optum’s product portfolio performance, new product development and product job family and assessment plan.

As a vice president of corporate strategy and product, Smith worked extensively on Optum’s strategy initiatives, said the company, where he attended meetings discussing highly confidential information.

He had agreed to several nondisclosure, noncompete and nonsolicitation restrictive covenants, as well.

When Smith announced his resignation, Optum immediately placed Smith on administrative leave in order to assess the risk he posed to the company’s confidentiality. It concluded that Smith would likely “give ABC a head start.”

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In a January 2019 hearing, Smith testified that his role at ABC is distinctly different than his role at Optum.

At ABC, he is involved in advising the startup on best practices in providing health care to employees. While at Optum, he was tasked with creating health care products sold to customers like ABC.

This, said the judge, was significant. He denied Optum’s motion, stating that the company failed to establish Smith was likely to violate one of the noncompete agreements he signed, also noting that ABC’s venture did not currently offer any products that would compete with the Optum business.

Scorecard: Optum has lost its case on breach of confidentiality against Amazon, Berkshire Hathaway and JPMorgan Chase, though it is likely to appeal the ruling.

Takeaway: Review top-level employees’ access to confidential information in order to prevent the risk of exposing trade secrets to competitors. &

Autumn Heisler is the digital producer and a staff writer at Risk & Insurance®. She can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

4 Companies That Rocked It by Treating Injured Workers as Equals; Not Adversaries

The 2018 Teddy Award winners built their programs around people, not claims, and offer proof that a worker-centric approach is a smarter way to operate.
By: | October 30, 2018 • 3 min read

Across the workers’ compensation industry, the concept of a worker advocacy model has been around for a while, but has only seen notable adoption in recent years.

Even among those not adopting a formal advocacy approach, mindsets are shifting. Formerly claims-centric programs are becoming worker-centric and it’s a win all around: better outcomes; greater productivity; safer, healthier employees and a stronger bottom line.

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That’s what you’ll see in this month’s issue of Risk & Insurance® when you read the profiles of the four recipients of the 2018 Theodore Roosevelt Workers’ Compensation and Disability Management Award, sponsored by PMA Companies. These four programs put workers front and center in everything they do.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top,” said Steve Legg, director of risk management for Starbucks.

Starbucks put claims reporting in the hands of its partners, an exemplary act of trust. The coffee company also put itself in workers’ shoes to identify and remove points of friction.

That led to a call center run by Starbucks’ TPA and a dedicated telephonic case management team so that partners can speak to a live person without the frustration of ‘phone tag’ and unanswered questions.

“We were focused on building up a program with an eye on our partner experience. Cost was at the bottom of the list. Doing a better job by our partners was at the top.” — Steve Legg, director of risk management, Starbucks

Starbucks also implemented direct deposit for lost-time pay, eliminating stressful wait times for injured partners, and allowing them to focus on healing.

For Starbucks, as for all of the 2018 Teddy Award winners, the approach is netting measurable results. With higher partner satisfaction, it has seen a 50 percent decrease in litigation.

Teddy winner Main Line Health (MLH) adopted worker advocacy in a way that goes far beyond claims.

Employees who identify and report safety hazards can take credit for their actions by sending out a formal “Employee Safety Message” to nearly 11,000 mailboxes across the organization.

“The recognition is pretty cool,” said Steve Besack, system director, claims management and workers’ compensation for the health system.

MLH also takes a non-adversarial approach to workers with repeat injuries, seeing them as a resource for identifying areas of improvement.

“When you look at ‘repeat offenders’ in an unconventional way, they’re a great asset to the program, not a liability,” said Mike Miller, manager, workers’ compensation and employee safety for MLH.

Teddy winner Monmouth County, N.J. utilizes high-tech motion capture technology to reduce the chance of placing new hires in jobs that are likely to hurt them.

Monmouth County also adopted numerous wellness initiatives that help workers manage their weight and improve their wellbeing overall.

“You should see the looks on their faces when their cholesterol is down, they’ve lost weight and their blood sugar is better. We’ve had people lose 30 and 40 pounds,” said William McGuane, the county’s manager of benefits and workers’ compensation.

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Do these sound like minor program elements? The math says otherwise: Claims severity has plunged from $5.5 million in 2009 to $1.3 million in 2017.

At the University of Pennsylvania, putting workers first means getting out from behind the desk and finding out what each one of them is tasked with, day in, day out — and looking for ways to make each of those tasks safer.

Regular observations across the sprawling campus have resulted in a phenomenal number of process and equipment changes that seem simple on their own, but in combination have created a substantially safer, healthier campus and improved employee morale.

UPenn’s workers’ comp costs, in the seven-digit figures in 2009, have been virtually cut in half.

Risk & Insurance® is proud to honor the work of these four organizations. We hope their stories inspire other organizations to be true partners with the employees they depend on. &

Michelle Kerr is associate editor of Risk & Insurance. She can be reached at [email protected]