Cardinal's Board Slashes CEO's Pay In Response To Audits

Oct 18, 2017

The board of Cardinal Innovations Healthcare voted to cut the CEO’s salary by two-thirds Tuesday night. That’s after multiple state audits uncovered high salaries, severance packages and overspending by Cardinal, which manages Medicaid-funded mental health and drug treatment services in the Charlotte area.

Credit Mark James / Charlotte Observer

After a four-hour meeting behind closed doors, the board Chairwoman Lucy Drake says the board passed a resolution to lower CEO Richard Topping’s pay from $617,526 to $204,195 – the maximum allowed under state regulations. 

“We brought him in and we offered it to him. And he has said he cannot accept that. But he has his contract that will give him up to 90 days but he knows we don’t want to go that long.”

A Cardinal spokeswoman said Topping was unavailable for comment.

Meanwhile, Drake is unsure what Cardinal's future leadership will look like. 

“We have got to find out who on the team is going to stay. We’ve got to find out who will be running Cardinal. Because this just completely overwhelmed me. I didn’t know this was going this way tonight.”

This special board meeting comes after two state audits found Cardinal was paying its CEO more than state law allows and offering such generous severance packages that the state was concerned “about the entity’s solvency and ability to continue to provide services in the event of a significant change in its leadership team.”  

Cardinal is not a for-profit company. But it's not a nonprofit, either. Known as a Local Management Entity/ Managed Care Organization (LME/MCO), Cardinal and six other LME's in North Carolina are a way for the state to outsource mental health care, addiction treatment, developmental programs and other services paid for by Medicaid.

“I think the board showed good faith and they did their job as a responsible board,” Dave Richard, who leads the Medicaid division at the state Department of Health and Human Services, said after speaking to board members.

Yet to be resolved are severance packages. According to an audit released this month, the top 10 staffers are guaranteed between two and three years of full salary and health care. These severance packages take effect even if the CEO is fired or resigns. Richard and a board member declined comment when asked if those severance packages are still in effect.  

Contact the reporter at  704-926-3859 or aolgin@wfae.org