RALEIGH, N.C. — North Carolina legislators expressed impatience Tuesday with state regulators for failing to act yet against a regional managed-care mental health agency that’s been the subject of two critical state reports this year on leadership pay and benefits.
The State Auditor’s Office in May accused Cardinal Innovations Healthcare Solutions, which receives hundreds of millions of federal and state taxpayer dollars annually, of spending excessively on salaries and benefits for their CEOs and on conferences and Christmas parties.
The state Department of Health and Human Services conducted its own investigation, and its interim report discussed Tuesday by a General Assembly committee raised red flags about generous severance packages for CEO Richard Topping and 10 other executives and key employees through mid-2019.
According to the report, the packages would cover at least two years and kick in for several reasons beyond being fired without justification, the report said. Paying them could cost millions, pose a “substantial risk” and could jeopardize Cardinal’s ability to operate should there be a management shake-up, the review said.
Republican Sen. Tommy Tucker of Union County, the legislature’s most vocal critic of Cardinal leadership, questioned why the department hasn’t taken action to remove Topping and board members.
“The public trust has been violated here,” Tucker said. “I don’t know how you choke this snake that has eroded the public trust, but there are things that the secretary and department can do now.”
DHHS Secretary Mandy Cohen told Tucker that Cardinal Innovations’ actions were “completely unacceptable” and that the department would ensure the entity complies with rules governing the managed-care agencies.
There is “no tolerance” for the kind of “executive abuse that exists at this point” at Cardinal, DHHS deputy secretary Dave Richard told the committee.
The DHHS report calculated Topping’s salary and bonus during the year ending June 30, 2016 as $617,526, nearly three times more than what the next highest CEO made among the state’s seven regional mental health agencies. The Office of State Human Resources told Cardinal in August that Topping’s salary can be no higher than $204,195, in keeping with a salary range.
Cardinal, the largest of the seven, has defended Topping’s compensation as lawful. Its board chairwoman wrote Cohen last month saying Cardinal received permission to leave the state personnel system and many of its limits more than 20 years ago.
Three weeks ago, Cardinal formally asked an administrative law judge to rule that it’s not subject to the salary range set by the human resources office. Cardinal, which receives $825 million in revenues annually, likely would lose Topping should his salary be lowered so dramatically and would have a difficult time replacing him, the petition says.
Cardinal Innovations spokeswoman Ashley Conger said in a release that it’s working with both DHHS and the state personnel office “to address their concerns and rectify the disagreement on our market-based compensation practices.” Conger took issue with the DHHS report that found some severance packages stretched to three years, saying that applied to only one day in July 2016.
Cardinal manages and monitors services for the mentally ill, substance abusers and people with developmental disabilities in 20 mostly Piedmont counties, potentially covering 850,000 people. There’s been no evidence that the salaries and expenses cited in the state review have directly resulted in eroded services, but some legislators said Tuesday they’ve received complaints from citizens about coverage under Cardinal.
The General Assembly debated legislation this year designed to rein in salaries at Cardinal, but the measure stalled after senators used the bill as a vehicle to revisit the state’s 2015 Medicaid overhaul.
“We’ve fooled with this a long time,” Rep. Donny Lambeth, a Forsyth County Republican, told DHHS leaders, “and I think you’re going to have to get their attention well beyond just another audit.”