Elevance files lawsuit against former executive for noncompete violation

Indianapolis-based Elevance Health is suing a former executive and accusing him of violating a noncompete agreement when he began working this month for a rival health insurance company.

Elevance alleges that former Chief Execution Officer Shane Hochradel broke employment and stock award agreements when he accepted a position as chief operations officer with Orange, California-based Alignment Healthcare Inc. shortly after he resigned last month.

Hochradel notified Elevance he was resigning on May 8 and his last day with the company was May 13, according to the lawsuit. He started working for Alignment on June 1, according to the complaint.

The complaint says Elevance learned of Hochradel’s decision to accept a position with Alignment on May 11 and “reminded Hochradel of his contractual obligations owed to Elevance Health.” The next day, Elevance “also informed Alignment that Hochradel owed contractual obligations to Elevance Health.”

On May 12, Alignment announced Hochradel would join the company as chief operations officer.

Neither Elevance nor Hochradel responded to requests for comment from IBJ. Elevance filed the lawsuit June 5 in the U.S. District Court for the Southern District of Indiana.

Hochradel joined Elevance in January 2021 as vice president of government claim payment and benefit services. He later served as vice president of enterprise provider data management, senior vice president and chief operations officer, and senior vice president and chief execution officer.

The company alleges that Hochradel’s positions with Elevance gave him access to confidential information, including strategic plans, pricing information, provider relationships, artificial intelligence initiatives and long-term growth strategies.

Elevance argues that the company is a direct competitor with Alignment. Both companies operate Medicare Advantage health plans in several states, including Arizona, California, Nevada and Texas.

The complaint says Hochradel’s job with Alignment will be similar to his role at Elevance and that it falls within restrictions in his employment agreements, which included a 12-month noncompete restriction.

The noncompete restriction prohibited Hochradel from taking a “competitive position” in areas in which he had responsibility for or access to confidential information over the previous 24 months.

The agreements also prohibited the use or disclosure of confidential information and required him to notify Elevance if he received an offer from another company that could be considered competitive. The complaint says Hochradel accepted the Alignment position before he informed Elevance and that he failed to follow notification procedures listed in his stock-award agreements.

“Hochradel failed to notify Elevance Health that he was speaking with Alignment until after he had already accepted the role,” the complaint says.

The complaint also says Hochradel’s work at Alignment would require him to rely on confidential information he obtained during his time at Elevance.

As chief operations officer, Hochradel had access to information involving provider networks, contracting strategies and the company’s use of artificial intelligence. The complaint says that as chief execution officer, he helped lead Elevance’s transformation team and was involved in planning future technology and AI initiatives.

Elevance also argues that Hochradel helped develop “essential future capabilities,” which detailed Elevance’s “multi-step plan to use technological advances and artificial intelligence to cut costs, stimulate company growth, and successfully compete against its competitors such as Alignment.”

The company alleges that Hochradel had a key role in designing and executing a three-year AI strategy and that he updated Elevance CEO Gail Boudreaux on multiple occasions about the initiative.

“Because of the similarities between Hochradel’s role as Chief Execution Officer at Elevance Health and his role as Chief Operations Officer at Alignment, Hochradel will inevitably use his knowledge of Elevance Health’s Confidential Information in his new role at Alignment,” the complaint says.

Elevance is seeking damages for breach of contract and recovery of stock-related compensation that can be forfeited under the terms of Hochradel’s noncompete agreement.