Judge rejects Fallon’s request to stop former exec from working at competitor

Telegram & Gazette (Worcester, MA)

WORCESTER -- A judge has turned down Fallon Health's request for an order that would have stopped a former executive from working for competitor Aetna for a year.

Worcester Superior Court Judge Janet Kenton-Walker denied the health insurer's request for a preliminary injunction against former Chief Financial Officer Kevin Grozio, writing in a June 6 order that it was not clear that Mr. Grozio's new employment with Aetna breached an employment contract he had with Fallon.

The judge also wrote that Mr. Grozio would not be working against Fallon during his first year at Aetna and that he could suffer harm if not allowed to work in the job Aetna hired him to do.

In a signed affidavit, Mr. Grozio denied Fallon's allegations, as well.

"I have no intention of competing with Fallon in violation of the agreement," Mr. Grozio said.

Fallon, its lawyer and a lawyer for Mr. Grozio declined to comment on the case, which remains open.

In an emailed statement, Aetna said, "We are pleased with the judge's decision in this matter."

The dispute revolves around an employment agreement Mr. Grozio signed with Fallon in 2017 when he became CFO. But it also highlights the competition between businesses for executive talent and new Massachusetts legislation concerning noncompete agreements.

Fallon is a small, nonprofit health insurer that operates in Massachusetts and had 264,342 insured members at the end of March. Aetna of Hartford, Connecticut, is a national for-profit insurer that was acquired in 2018 by CVS Health of Woonsocket, Rhode Island, for $69 billion. Aetna had about 22 million medical insurance members at the end of September 2018.

Mr. Grozio, who lives in Wilbraham, joined Fallon in 2011 as a vice president of underwriting and actuarial services. By the time he announced plans to leave for a job as CFO of Aetna's Medicare Advantage division in April, he was making about $450,000 a year and had access to all of Fallon's confidential information for its insurance plans, according to Fallon's complaint signed by Fallon Chief Executive Richard P. Burke.

Under the terms of his 2017 employment agreement with Fallon, Mr. Grozio could not compete against Fallon for one year after leaving the company and could not use or disclose the insurer's confidential business information outside of Fallon.

Mr. Grozio said in his affidavit he enjoyed his time at Fallon but decided to accept a job with Aetna, "because I concluded that Aetna would provide an opportunity for professional growth and development for me at this point in my career."

Fallon went to court in May to request a preliminary injunction against Mr. Grozio, arguing that he violated that agreement by negotiating with Aetna and accepting a job while employed by Fallon. Fallon also claimed Mr. Grozio possessed business knowledge that could harm Fallon.

Mr. Grozio said in his affidavit that Aetna tailored his new job so he would not compete with Fallon for one year. His lawyers argued that Aetna and Mr. Grozio promised he would not disclose information from prior employers.

In addition, the lawyers argued that the noncompete provision in Mr. Grozio's agreement with Fallon was invalid under a new Massachusetts law loosening noncompetition agreements.

Judge Kenton-Walker did not determine whether the new noncompetition law applied to Mr. Grozio's agreement with Fallon. She ruled instead that Fallon had not shown it would likely succeed in an action against Mr. Grozio or suffer irreparable harm.

Finally, she wrote, Mr. Grozio could suffer harm if, as the sole provider for his family, he were not allowed to work in the position he was hired for at Aetna.

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