RALEIGH, N.C. (AP) - North Carolina lawmakers on Tuesday urged state officials work to recoup nearly $4 million in severance to four former top executives of a regional mental health agency, saying having the agency reimburse the state for the payments isn’t good enough.
The Department of Health and Human Services took temporary control of Cardinal Innovations Healthcare Solutions two weeks ago after recent state audits identified excessive spending, CEO pay well above what state policy allowed and generous payments for departing executives.
Cardinal Innovations’ former board previously agreed to severance policies so that CEO Richard Topping would receive $1.7 million when the board fired him last month. Three other executives - the chief medical officer, chief information officer and chief operations officer - received $2.1 million combined from the board when they resigned with Topping, DHHS said.
Department Secretary Dr. Mandy Cohen warned Cardinal leaders before the Nov. 27 takeover that Cardinal would be required to repay the severance from administrative funds, not from those for providing services.
Cohen told a legislative oversight committee Tuesday that DHHS and Cardinal’s interim CEO were working on a plan by next July to earmark the repaid administrative funds to help Cardinal patients in the 20-county area it serves. But several committee members asked or urged Cohen to recoup the $3.8 million directly from the severance recipients.
“If this were a private business and folks recognized there was a problem we wouldn’t sit for several months while those millions of dollars are in the hands of private individuals before taking action,” said Sen. Dan Bishop, a Mecklenburg County Republican. “I would urge that the department be aggressive about that and act to the full extent of its power.”
Rep. Nelson Dollar, a Wake County Republican, also said every effort should be made to recover the money “from people who got golden, gilded parachutes” with taxpayer money. Cardinal receives hundreds of millions of dollars in federal and state funds annually to help the mentally ill, substance abusers and people with disabilities.
Cohen said department lawyers are looking at what legal options the state has to recoup the severance.
She also suggested DHHS needs to find a balance between meting out punishment and working with Cardinal administrators to develop a culture that quickly addresses fiscal noncompliance with state rules. Cohen already has dismantled the board.
“We do want to make sure we look back and hold folks accountable, but very much (we) also need to look forward,” Cohen said. She also defended DHHS for taking charge of Cardinal until after the severance was paid, saying the agency wanted to make sure its takeover plan was legally sound.
“Obviously we wish we would have been able to do that before checks were written,” she said.
Cohen said she hoped that DHHS would return control of Cardinal Innovations back to the Charlotte-based organization within two months. A major step is expected Thursday when a panel is to make appointments to a reconstituted board. County commissioners within Cardinal’s service area - including Charlotte, Winston-Salem and the northern Piedmont - choose most of them.
Legislators worried Tuesday that the commissioners could pick board members to return who agreed to the severance.
“The people who voted for those outrageous golden parachutes breached the trust at least of the vulnerable people of this state,” said Sen. Tamara Barringer, a Wake County Republican. “I would not put any of them back on the board because I am so concerned about rebuilding that trust.”
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