Cardinal Terminates CEO's Contract In Unusual Way

Nov 18, 2017

Cardinal CEO Richard Topping
Credit Cardinal Innovations Healthcare

The board of Cardinal Innovations Healthcare has voted to fire controversial CEO Richard Topping. But, come Monday, Topping will still be employed and still be the head of the company.

This unusual termination capped off an unusual night for company charged with administering $682 million tax dollars throughout 20 counties in North Carolina.

Cardinal is the largest administrator of Medicaid-funded mental health, substance abuse and developmental disability services in the state. It is almost entirely funded by federal, state and local tax dollars.

So when two highly critical state audits were released this year, more than just eyebrows were raised.

Lawmakers were angry, patient trust was eroding and more questions were being asked. Which leads to Cardinal spokeswoman Ashley Conger announcing late Friday night that "the Cardinal Innovations Board of Directors has terminated CEO Richard Topping, effective 12/1."

As in December 1st, roughly two weeks away. Clearly not the 'effective immediately' that usually follows the announcement of a CEO's termination.

Just why was a question left unanswered. But we do know why the termination vote was needed.

In May, the first scathing audit was released. Among other things, North Carolina State Auditor Beth Wood noted that Topping was making $617,000, including his bonus - far more than the $204,000 state rules allow.

But Wood was also critical of the state's Office of Human Resources for not clearly stating or enforcing the regulation. By October, the office had done so. Topping's salary was slashed, and that did not go over well. Here's how Cardinal Board Chair Lucy Drake describe that October conversation:

“We brought him in and we offered it to him. And he has said he cannot accept that.”

It seems Topping's termination may have been inevitable. But he will get two years of severance, says Cardinal Spokeswoman Ashley Conger.

"According to the terms of his contract, Mr. Topping is being paid a 24-month severance."

Which brings us to that second scathing state audit. It cited Cardinal's severance agreements as being excessive, and not just for the CEO. Ten other top Cardinal employees have similar severance packages. Which allows them to quit and still get a multi-year severance if there's a change in the CEO.

None had as of Friday night, but they still can on December 1st, which could cause havoc in the leadership ranks of the company.

One other key point on soon-to-be ex-CEO Richard Topping's severance: It's 24 months at full salary. But Cardinal declined to comment on whether that's at his prior, much higher salary, or the lower one mandated by state law.

There was another dismissal shortly after the board meeting began. It took just 90 seconds from the opening gavel strike for Cardinal's Board to vote out one of its own.

This dismissal was effective immediately. The motion was quickly brought up by Director Steve Yuhasz.

"When we first sat down at this table, we each agreed that we would act and behave as a whole and not as individuals. We agreed to leave our personal agendas behind." But, Yuhasz added, "Recently not every member has lived up to that pledge, to the detriment of this board and this organization."

He then moved that Bryan Thompson be immediately removed from the board. He was removed, with no further explanation given. Thompson left before he could be asked for comment.

Almost lost in all of this was the announcement that Trey Sutten will be getting a promotion at Cardinal. He will move from interim CFO to interim CEO on December 2nd. Sutten has been with Cardinal for about a month.