Aliera Healthcare, Inc. v. Anabaptist Healthshare

• Decision Date: 04 June 2020
• Docket Number: A20A0435
• Citation: 844 S.E.2d 268,355 Ga.App. 381
• Parties: ALIERA HEALTHCARE, INC. v. ANABAPTIST HEALTHSHARE et al.
• Court: Georgia Court of Appeals

355 Ga.App. 381

844 S.E.2d 268

ALIERA HEALTHCARE, INC.

v.ANABAPTIST HEALTHSHARE et al.

A20A0435

Court of Appeals of Georgia.

June 4, 2020

Bondurant Mixson & Elmore, Ronan P. Doherty, Robert L. Ashe III, Amanda K. Seals, Kamal Ghali ; Burr & Forman, Joseph W. Letzer, Gregory F.Harley, for appellant.

Alston & Bird, Kyle G. A. Wallace, Jason R. Rottner, Gavin Reinke, Andrew M. Brown, for appellees.

McFadden, Chief Judge.

This dispute arises from the acrimonious termination of a business relationship. Aliera Healthcare, Inc. appeals an order appointing a receiver and granting an interlocutory injunction to Anabaptist Healthshare and its wholly owned subsidiary, Unity Healthshare, LLC.

The trial court's extensive findings of fact are not clearly erroneous. Under those findings, Aliera cannot show that the trial court manifestly abused her discretion in either ruling. So we affirm.

1. Trial court's findings of fact.

The trial court's order was entered after a two-day hearing. We owe deference to her findings of fact. Where, as here, the trial judge hears evidence and sits as the trier of facts,

[her] findings based upon conflicting evidence are analogous to the verdict of a jury and should not be disturbed by a reviewing court if there is any evidence to support them.... [T]he trial court's decision with regard to questions of fact and credibility must be accepted unless clearly erroneous [and] the reviewing court must construe the evidence most favorably to the upholding of the trial court's findings and judgment.... [T]his standard of review requires us to focus on the findings of fact made by the trial court in [her] order and the evidence supporting those findings, rather than other evidence gleaned from the record, construing it in favor of upholding the trial court's order.

State v. Rosenbaum , 305 Ga. 442, 449 (2), 826 S.E.2d 18 (2019) (citations and punctuation omitted). See also Mondy v. Magnolia Advanced Materials , 303 Ga. 764, 773 (4) (b), 815 S.E.2d 70 (2018) (Trial court's order that "expressly specified which portions of the factual record the judge credited and relied upon as well as the judge's legal analysis ... affect[ed] how the ... ruling would be reviewed on appeal.").

So viewed, the record shows that the parties entered into an agreement under which their complementary products were marketed together. Aliera was tasked with administering that undertaking and so gained exclusive control over Unity's membership roster and website. Anabaptist and Unity came to believe that Aliera was misappropriating funds and so terminated the agreement. Aliera retained control over the lists and website and used that control to issue opt-out offers to the members/customers.

Appellant Aliera and appellees Anabaptist and Unity all provide alternatives to health insurance. Aliera is a for-profit company. Anabaptist is a nonprofit, tax-exempt organization; it manages a health care sharing ministry for members of Anabaptist communities in Virginia. Health care sharing ministries are nonprofit organizations that facilitate the sharing of certain medical expenses among their members.

At the relevant time, members of a qualifying health care sharing ministry were exempt from the Affordable Care Act's individual mandate, which required persons to purchase health insurance or pay a tax penalty. See 26 USC § 5000A (a), (d) (1) and (d) (2) (B). (Congress eliminated the individual mandate tax penalty beginning January 1, 2019. See Pub. L. No. 115-97, § 11081 (2017).) So the members of Anabaptist were exempt from the individual mandate. The purchasers of Aliera's products were not exempt from the individual mandate.

Aliera determined that the parties’ plans were complementary — and that it could increase its sales if it could sell its plans side by side with an Affordable Care Act-exempt health care sharing ministry plan. To this end, in 2016, Aliera approached Anabaptist to propose a relationship between Aliera and Anabaptist. Eventually they entered the contract at issue.

Under that contract, Anabaptist created Unity, a wholly owned subsidiary, to offer health care sharing ministry plans.

The contract provided that Anabaptist granted Aliera the exclusive license to sell and distribute Unity products. It provided that Anabaptist was "the sole and exclusive owner or authorized licensor of and [would] retain all right, title, and interest, including all intellectual property rights, in and to the ‘membership roster,’ " an undefined term in the agreement. The contract provided that Aliera remained "the sole and exclusive authorized non-insurance health care company allowed to market and sell health care products to Aliera and Unity HealthShare members [and] retain[ed] all right, title, and interest, including all intellectual property rights, in and to the Aliera products."

Anabaptist board chair Tyler Hochstetler testified that under the parties’ contract, member funds collected for Unity products were to be segregated into a separate bank account that belonged to Unity. Hochstetler also testified that Anabaptist and Unity trusted that Aliera would properly account for Unity plan assets and that Aliera would keep the Unity plan assets separate from Aliera's funds. Unity entrusted Aliera with its member information and plan assets.

Aliera offered its products to the public in conjunction with the Unity plans. Aliera served as the program administrator for the Unity plans. The marketing materials for the side-by-side plan offerings emphasized the Unity exemption from the tax penalty of the Affordable Care Act's individual mandate.

Some individuals purchased plans that contained only an Aliera product, and some individuals purchased plans that contained only a Unity product. But the vast majority purchased both. Though those plans were offered side by side, only the Unity plan was Affordable Care Act-exempt; so Aliera made clear in its representations to the public and regulators that the plans were legally separate and distinct. Aliera described itself to insurance regulators as a third-party administrator of the Unity plans. It also represented to insurance regulators that it was segregating the Unity plan assets from other funds.

The separate and distinct nature of the Unity plans was also reflected in the Member Guide, which Aliera drafted. The Member Guide delineated between the Aliera component and the Unity component of the combined plans. The Member Guide made clear that the health care sharing ministry was a Unity plan and that the members of that plan were Unity Healthshare members.

Anabaptist representative Hochstetler testified that in January 2018, he learned for the first time that Aliera was not properly segregating Unity plan assets. According to Hochstetler, Aliera's principal, Timothy Moses, who became a member of Anabaptist's board, stated at a January 2018 board meeting that since April 2017, Aliera had not segregated the Unity plan assets, but instead unilaterally allocated revenues in the manner in which Aliera saw fit, keeping as much of the incoming member funds for Aliera's own benefit as it desired. Hochstetler testified that Aliera did not have Anabaptist or Unity's permission or authorization to treat member funds in this way, and that Anabaptist and Unity never authorized Aliera to place Unity funds into Aliera accounts or to use Unity funds for Aliera's own purposes.

Moses’ admissions to Anabaptist and Unity demonstrated that Aliera's representations to insurance regulators about the way it treated Unity plan funds were incorrect. Indeed, Aliera's comptroller acknowledged at the interlocutory injunction hearing that member contributions associated with the Unity plans were not sent directly to Unity Healthshare. Rather, he testified that Aliera deposited payments into an account it controlled; that Aliera transferred money from that account to pay claims; and that Aliera performed monthly reconciliations whereby payments were segregated into Aliera and Unity accounts.

Anabaptist presented evidence that it became increasingly concerned about Aliera's administration of the Unity plans during the summer of 2018. It was particularly troubled by Aliera's repeated refusals to disclose information about the Unity plans over which Aliera had assumed complete control.

On May 4, 2018, Unity learned that Moses had written approximately $150,000 in checks to himself out of the Unity operating account without Anabaptist's or Unity's knowledge or authorization.

Hochstetler testified that after learning that the Unity plan assets were not being properly segregated, Anabaptist and Unity took immediate steps to secure the integrity of Unity's funds. Anabaptist first demanded an accounting of Unity funds so that Anabaptist could assess whether Aliera was handling Unity plan assets appropriately. Aliera did not provide Unity with an accounting. On July 25, 2018, Anabaptist instructed Aliera to turn over control of Unity funds to Unity immediately and to direct Unity plan members to make future payments to Unity. Aliera did not comply with either of these demands and continued to collect funds associated with the Unity component of member plans.

Hochstetler testified that Moses had a criminal history, and given that history, Moses’ taking funds from the Unity operating account, and Aliera's refusal to disclose complete financial information, he and other Anabaptist board members became seriously concerned that the Unity plan assets were at risk of misappropriation. He testified that Anabaptist removed Moses and his wife, another Aliera executive, from certain Unity bank accounts as signers and ultimately froze two accounts containing approximately $5 million in funds used to pay claims.

On August 10, 2018, following a failed mediation with Aliera, Anabaptist terminated the contract.

The parties’ contract provided that, upon termination, "all licenses granted hereunder shall immediately terminate, and the [p]arties will promptly...