A former Alignment Healthcare executive has filed a whistleblower suit against the insurer, alleging that its top brass juiced company profits to secure higher bonuses.
Hakan Kardes served as Alignment's chief data and transformation officer from 2019 and 2025, and alleges in the suit that he was forced out of the company after raising concern about "accounting irregularities" to CEO John Kao. Kardes said he discovered that millions of dollars in operating expenses were misclassified as capital expenses, allowing the company to artificially boost its earnings before interest, taxes, depreciation and amortization, or EBITDA.
Kardes said in the lawsuit that he reported these accounting issues to Kao in March of 2025, and the CEO "responded by turning on Kardes and initiating and unrelenting campaign of retaliation against him." As a result, his professional reputation was negatively effected and he later left Alignment.
"Defendants' response was not to permit Kardes to fix the issue, but to remove him from the very budget visibility and authority to do so, reassign core functions that he had built and ultimately force him out of the company," per the complaint.
Kardes also alleges that top executives including Dawn Maroney, president of Alignment; Robert Scavo, chief information officer; and Andreas Wagner, chief human resources officer, all aided Kao in the retaliation.
He had filed a complaint with the Occupational Safety and Health Administration (OSHA) in October 2025, and given that more than 180 days have passed since that filing, Kardes has standing to bring the lawsuit, according to the court documents.
A spokesperson for Alignment Healthcare told Fierce in a statement that the company "believes these allegations are wholly without merit, intends to defend itself vigorously and is confident it will prevail."
"Hakan Kardes voluntarily resigned from the Company in April of 2025 and more than one year later, he has asserted baseless retaliation and accounting claims that we believe are an attempt to pressure Alignment Healthcare and recoup the value of equity he forfeited when he resigned," the spokesperson said.
"In May 2025, when Mr. Kardes communicated his concerns regarding the accounting treatment for certain 2024 capital expenditures, the Board’s independent Audit Committee promptly retained experienced outside legal counsel and a nationally recognized accounting firm to conduct a review," the spokesperson continued. "The Audit Committee concluded that Mr. Kardes’ concerns were unfounded and that the Company’s accounting was appropriate."
The lawsuit argues that if the accounting irregularities were fixed, it would materially shift the company's actual EBITDA and put it far below targets. Because the reported numbers were above goals set in the leaders' annual incentive plans, they were able to earn higher 2024 bonuses.
For example, the reported earnings were 141.7% of the target set in Kao's compensation package, so he earned a $1.3 million bonus rather than $943,770, the lawsuit claims. Kao, Maroney and Chief Financial Officer Thomas Freeman also earned discretionary bonuses on the back of the elevated financial performance, per the complaint.
Kardes argues in the lawsuit that his push to correct the accounting issues "made [him] a serious risk to the defendants' financial prospects and the public financial narrative they had presented to investors."
Shares in Alignment dropped Wednesday after news of the lawsuit broke, though its stock price was rebounding on Thursday morning.