Locked vault Thelawsuit against Amazon & Co. is an indication of justhow disruptive to the industry companies fear the new venture tobe. (Image: Shutterstock)

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Amazon & Co. was the talk of the health care industry last year,with no shortage of experts weighing in on the disruptions andinnovations they expected to see from the joint venture.

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One company less than enthusiastic about thedeal: UnitedHealth Group-owned Optum, which is suing to block aformer executive from joining the new health care cost-savingventure and potentially divulging trade secrets.

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Related: 5 takeaways from the Amazon/Berkshire/JPMorganpartnership

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According to Modern Healthcare, the suit is an indication ofjust how disruptive to the industry companies fear the new ventureto be.

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David Smith began work this month at the new venture, not yetnamed, as its director of strategy and research. According to thereport, the noncompete and trade secrets lawsuit, filed againstSmith in U.S. District Court in Massachusetts, claims that inSmith's former position as vice president of product, he was “privyto and misappropriated trade secrets that will help the new venturecompete against it, violating nondisclosure and noncompetecovenants in his contract.”

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The suit seeks an injunction barring Smith from workingfor Amazon-Berkshire-JPMorgan and using its trade secrets. Smith,for his part, has argued that he has no Optum trade secrets in hispossession, has no use for such information in his new job, andthat Optum's own arbitration agreement with him precludes it frombringing the lawsuit.

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The potentially broad reach of the joint venture acrossbusinesses in data analytics, pharmacy services, medical clinics,population health management and advisory services looks to providecompetition, if not outright challenges, to firms in the healthcare industry, although Smith is reported saying thatAmazon-Berkshire-JPMorgan does not compete for business with Optum,since it offers no products or services to the general market, nordoes it seek profits.

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The announced purpose of the independent, not-for-profit entityis “to reduce healthcare costs and improve care for their nearly1.2 million employees,” the report says, adding that a UnitedHealthGroup spokesman “insisted that Smith 'violated his employmentagreement and stole confidential company property on his way to goto work for a competitor,” adding that UnitedHealth “has spentdecades developing custom products and services” and is “committedto protecting the hard work of our colleagues.”

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According to Business Insider, Optum's lawsuitalleges that Smith “printed out documents on Optum's corporatestrategy the same day he interviewed with the Amazon [jointventure] in October 2018.”

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Among the reasons Optum has to be nervous about the jointventure is its sheer size, should it decide to woo members ofhealth plans already in place—and since Berkshire Hathaway andJPMorgan Chase are at present customers of Optum, the joint ventureis likely to be directly in competition with Optum.

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In addition, BI points out, “Amazon acquired pharmacy startupPillPack in June 2018; while Amazon's precise plans for PillPackare unclear, it may look to undercut existing pharmacy benefitsmanagers, which serve as intermediaries between pharmacies andinsurers. And OptumRx—a subsidiary of UnitedHealth—is one of thethree largest PBMs in the U.S.”

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Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.