United States District Court, W.D. Virginia, Charlottesville Division
Glen E. Conrad, Senior United States District Judge.
William Richard Hulkenberg, Sr., Ronald Jones, Larry Bowen,
William Richard Hulkenberg, Jr., Jeremy Hulkenberg, and
Andrew Hall (the "Former Employees") filed a
one-count Virginia-law claim of wrongful termination against
Anabaptist Healthshare, Kingdom Healthshare Ministries LLC,
Unity Healthshare LLC, OneShare Health, LLC, Alex Cardona,
and Tyler Hochstetler. The case is currently before the court
on Defendants' motion to dismiss under Rule 12(b)(6) of
the Federal Rules of Civil Procedure, ECF No. 35, and the
Former Employees' motion to amend their complaint. The
motion to amend attaches a proposed amended complaint adding
Eldon Hochstetler, Tyler Hochstetler's father, as a
defendant. ECF No. 49-3. Defendants oppose this motion
arguing that amendment would be futile and that adding Eldon
Hochstetler as a defendant would be a bad faith amendment. In
addition, the Former Employees moved for leave to file a
reply in support of their motion to amend, which attached a
proposed reply. ECF No. 51. The court considered the Former
Employees' proposed reply when deciding Defendants'
motion. For the reasons set forth below, the court will grant
in part Defendants' motion to dismiss, grant the Former
Employees' motion for leave to amend their complaint, and
deny as moot the motion for leave to file a reply.
following facts are taken from the complaint and the exhibits
attached thereto. Before delving into the facts of this case,
however, the court summarizes the statutory context in which
these claims developed. The allegations require some
understanding of a health care cost sharing arrangement that
Congress used to allow certain religious organizations to
avoid the so-called individual mandate of the Affordable Care
Act. See generally 26 U.S.C. §§ 5000A(a),
(d)(1), & (d)(2)(B).
Virginia law, a health care sharing ministry
("HCSM") is "a health care cost sharing
arrangement among individuals of the same religion based on
their sincerely held religious beliefs, which arrangement is
administered by a" § 501(c)(3) non-profit
organization, and complies with other requirements. Va. Code
Ann. § 38.2-6300. These requirements include that an
3. Provides for the financial or medical needs of a member
through payments directly from one member to another. The
requirements of this subdivision  may be satisfied by a
trust established solely for the benefit of members, which
trust is audited annually by an independent auditing firm;
5. Provides written monthly statements to all members that
list the total dollar amount of qualified needs submitted to
the organization by members for their contribution.
Id. By following these requirements, HCSMs are not
"considered to be engaging in the business of
insurance" for purposes of Virginia's insurance
statutes. Va. Code Ann. § 38.2-6301.
Former Employees are all former at-will employees of
defendant Kingdom Health Care Ministries LLC
('"Kingdom"), now known as OneShare Health, LLC
("OneShare") or Unity Health Care Ministries, LLC
("Unity"). Compl. ¶¶ 4-9, 12. Bowen was
fired at some point in late 2018. Id. ¶¶
55-57. The other Former Employees were placed on paid
administrative leave on November 3, 2018 and were terminated
on January 7, 2019. Id. ¶¶ 61-62.
Anabaptist Healthshare and Unity were predecessor entities to
Kingdom. Alex Cardona serves as OneShare's CEO, and Tyler
Hochstetler is a board member. Unity, Kingdom, and OneShare are
or were all HCSMs. Id. ¶¶ 10-14.
Former Employees' Allegations
non-party, Aliera Healthcare, Inc ("Aliera"),
factors heavily in the Former Employees' allegations.
Aliera is a for-profit company founded by Timothy Moses,
which entered into a partnership with Unity in 2016-2017.
Under the Aliera/Unity agreement, "Unity had no control
over its finances fueled by Membership dues."
Id. ¶ 25. Rather, "Moses controlled all
the finances for Unity through Aliera," and purportedly
violated IRS regulations by rendering the partnership a
for-profit enterprise. Id. ¶¶ 26-29. The
Former Employees allege that Moses is a convicted felon who
eventually embezzled funds from the Aliera/Unity partnership
and engaged in self-dealing. Id. ¶¶ 16,
February 2018, a publicly traded third-party, apparently a
potential business partner called HealthMarkets, Inc.,
refused to do business with Aliera/Unity without conducting
some form of diligence. HealthMarkets had concerns about the
partnership's financial solvency and commission
structures. Id. ¶¶ 34-35. In response,
Cardona retained a consulting firm, Milliman, Inc., to
provide an audit of Aliera/Unity. RL In April 2018, Cardona
and Hochstetler discovered Moses' embezzlement in the
course of the Milliman audit. Id. ¶¶
39-40. By June 2018, Moses "admitted" to having
"pilfered" funds from the Aliera/Unity partnership.
Cardona and Hochstetler removed Moses' access to certain
accounts, but they did not report his actions to any legal
authorities. Id. ¶¶ 41-42. The Former
Employees also allege that Cardona and Hochstetler acted in
concert with Moses to some extent, and thereby profited from
Moses' behavior. In addition, Cardona allegedly created
sham sales positions for his wife and niece, extracted large
sales commissions, and both Cardona and Hochstetler took in
purportedly illegal "per member/per month" fees.
Id. ¶¶ 28-32.
August 9, 2018-after Cardona and Hochstetler had discovered
Moses' actions-Unity hired William Hulkenberg, Sr. and
Ronald Jones as Chief Ministry Officer and Chief Sales
Officer, respectively. Id. ¶¶ 43-44. The
Former Employees allege that Hulkenberg, Sr. and Jones owed
fiduciary duties to Kingdom and its HCSM members in their
respective roles as Chief Ministry Officer and Chief Sales
Officer. Id. ¶¶ 4-5. The remaining Former
Employees were involved in business development, product
design, interaction with third party administrators, working
with on-line webcasts and product demonstrations, as well as
administration. Id. ¶¶ 6-9.
point, Hulkenberg, Sr. became suspicious of "foul
play" on the part of Moses and Cardona. Id.
¶¶ 45-46. Between October 25 and November 3, 2018,
Hulkenberg, Sr. alerted the other Former Employees, had
discussions with Hochstetler and Cardona to no avail, and met
with a Kingdom board member regarding his concerns.
Id. ¶¶ 45-50. On ...