Kahn Swick & Foti Investigates Alignment Health Officers After Star Rating Cut

Kahn Swick & Foti, LLC has commenced an investigation into the officers and directors of Alignment Health, Inc., the law firm said on October 16, 2026, examining whether they breached fiduciary duties to shareholders. The Business Wire announcement names former Louisiana Attorney General Charles C. Foti, Jr., a partner at the firm, as the lawyer behind the probe.

What Prompted the Kahn Swick & Foti Probe

The investigation follows a whistleblower lawsuit filed by a former Alignment executive, reported on July 8, 2026, alleging the company deliberately misclassified $8 million to $10 million in routine operating expenses as capital expenditures to lift its stock price and executive compensation. According to the lawsuit, the move inflated adjusted EBITDA and let Alignment report its first full year of positive adjusted EBITDA as a public company. At the Baird Global Healthcare Conference on September 15, 2026, Kao declined to comment on the company's Star Ratings positioning, saying, "I cannot talk about it at all[.]" On October 8, 2026, Alignment disclosed that CMS had downgraded the Star Rating for its H3815 contract to 3.5, making the plan ineligible for quality bonus payments in fiscal 2028. Kahn Swick & Foti is examining whether Alignment's officers or directors breached their fiduciary duties or otherwise violated state or federal laws. The firm, whose partners include Foti, was ranked by SCAS among the top 10 firms nationally based upon total settlement value this past year, according to the announcement.

Alignment Health's Membership and Revenue Scale

Alignment Health is a publicly traded Medicare Advantage insurer serving approximately 284,800 Medicare-eligible seniors across Arizona, California, Nevada, North Carolina and Texas, according to akta.pro company records. The same records show full-year 2025 revenue of $3.95 billion, a 46.1% increase over the previous year, and membership of approximately 284,800 as of Q1 2026, representing 30.9% year-over-year growth. The company was founded in 2013 and is headquartered in Orange, California, with John Kao as founder, chairman and chief executive officer.

Earlier Alignment Health Developments

On October 14, 2026, Bronstein, Gewirtz & Grossman, LLC said it was investigating potential securities claims against Alignment Healthcare and urged investors to assist, according to The future of trading. The Law Offices of Frank R. Cruz continued its securities fraud investigation into the company on October 9, 2026, according to GlobeNewswire. Alignment Health Plan announced on October 13, 2026 that it would add Cabarrus, Gaston, Mecklenburg and Rowan counties to its 2027 Medicare Advantage coverage, bringing access to more than 295,000 additional Medicare beneficiaries across 20 North Carolina counties, according to Stock Titan.

Alignment Health's January 2027 Plan Launch

Alignment Health will launch its Central Health Harmony Medicare Advantage plan in Los Angeles and Orange counties on January 1, 2027, according to Stock Titan.