Minnesota health care entrepreneurs Ken Ehlert and Mark Pollman sold their research and development firm to UnitedHealth Group in 2017, joining the Minnesota behemoth as high-ranking executives.
UnitedHealth lawsuit alleges former executives stole trade secrets to create rival firm
The suit pivots on a diabetes management tool initially developed by the two executives, who sold their company to United and then ended up at odds with the health care giant.
January 4, 2024 at 9:15PM
The deal led to the commercial launch of a diabetes management tool called Level2 in early 2021.
But the relationship between United and Ehlert and Pollman soured, and they were terminated later that same year. The pair then sued United for allegedly reneging on compensation for Level2, a dispute that eventually went to arbitration.
Now, UnitedHealth has sued a new Level2 competitor called Lore Health, claiming it was created by Ehlert and Pollman with confidential information purloined from United.
"Trade secrets that Ehlert and Pollman misappropriated include much of the core information necessary to reboot Level2 outside of United," the company said in a suit filed last week in U.S. District Court in Minnesota.
Ehlert and Pollman could not be reached for comment.
The duo in 2009 founded a health care R&D firm called Savvysherpa. From 2012 to 2017, Savvysherpa invested about $7 million in developing Level2, a diabetes management program centered on real-time glucose monitoring.
The program is aimed at helping people control type 2 diabetes, while lowering health care costs.
Ehlert and Pollman sold Savvysherpa in 2017 to United Health for $46.8 million. As part of the deal, Ehlert became UnitedHealth's chief scientific officer and CEO of UnitedHealth Group R&D, and Pollman joined as chief technology officer of the R&D unit.
The Savvysherpa deal price was subject to upward revision based on the "enterprise value" of Level2 once it had been further developed and commercialized, Ehlert and Pollman said in their 2022 breach-of-contract suit against United in Hennepin County District Court.
But United reneged on negotiating additional compensation and "began a campaign to appropriate the Level2 business entirely for its sole benefit," the suit said.
Ehlert and Pollman claimed in May 2022 that the Level2 business was worth between $1.5 billion and $2 billion.
United said in a Hennepin County court filing that Ehlert and Pollman would have been eligible for additional compensation only if a separate deal concerning Level2 could be reached with an arm of DexCom, a glucose monitoring device maker. But that deal never happened.
United claimed that per terms of Ehlert's and Pollman's employment agreements, the Level2 compensation dispute had to go to arbitration. Hennepin County District Court Judge Kristin Siegesmund agreed, staying Pollman and Ehlert's suit pending the outcome of arbitration.
The litigation was closed in December 2022. United declined to comment, saying arbitration is confidential.
Prior to filing their suit, Ehlert and Pollman were terminated after "several disputes" between them and United, the company said in a Hennepin County court filing.
Ehlert and Pollman said in a separate filing that they were terminated as part of a UnitedHealth restructuring aimed at exerting total control over the Level2 business.
In October 2021, about three months after Pollman and Ehlert had left United, Pollman made a "lunch date" with a former subordinate, United said in its suit filed last week.
"Pollman walked away from the lunch with a hard drive containing nearly 500,000 files from United, including highly sensitive business documents," the suit said.
Shortly after the alleged hard drive exchange, Ehlert and Pollman set up several companies, including Lore Health, United claimed.
The company also alleged that Ehlert and Pollman have made "substantial efforts to hide their involvement with Lore," recruiting several doctors to be "the face of the organization."
Neither Ehlert nor Pollman is named on Lore's website, which indicates a San Diego headquarters. United claims Ehlert and Pollman run the business from their homes in Minnesota.
Mark Briesacher, Lore's executive director and a pediatrician, didn't respond to requests for comment.
The Minnetonka-based health insurer says the new contract “ensures continued, uninterrupted network access” to hospitals and clinics at the Bloomington-based health system.
