Cardinal's New Board May Include Some Returning Members

Dec 13, 2017

Credit Alex Olgin / WFAE News

When state officials took over Cardinal Innovations Healthcare roughly two weeks ago, one of their first actions was to purge the company's board of directors. 

That was more than just a symbolic move. The board, state officials believe, was a big part of the problem.

Now, if all goes as planned, Cardinal will have a newly-elected board of directors by the end of the week.

But, like all things Cardinal these days, there's a twist. Some of Cardinal's old board members could be coming back.

The excessive CEO pay, the overly generous severance packages, the lavish parties and retreats - behind all of this was Cardinal's board of directors, composed of twelve people. They approved it all. Not always unanimously, but still they collectively said yes. 

That's why they were unceremoniously fired by the state.

Their replacements are seen as key to restoring public trust in an organization more known for scandal these days than the Medicaid services they help provide.

“I will simply say this, I am willing to serve because I think I can make a difference, especially with a 

Credit George Dunlap

different board,” said Mecklenburg County Commissioner George Dunlap at last week’s county commission meeting.

He was making his pitch to be on Cardinal's new board. The thing is he was a member of the old board, the same group one lawmaker said had been mesmerized by former CEO Richard Topping.

There is nothing specifically stopping Cardinal's old board members from jumping right back in.

Mecklenburg is one of the twenty counties in which Cardinal operates and one of the twenty counties now tasked with taking the first steps to come up with a new board.

Who did Mecklenburg County commissioners select?

Dunlap.

He voted for the excessive CEO pay at Cardinal.

Dunlap isn’t on the board yet, just on the committee tasked with electing the members. Still he wants that job again. 

It's unclear why commissioners went with Dunlap. They spent much of the meeting complaining about the state rules on how the board is selected.

“For whatever reason the legislature, I think, created an untenable, unworkable, mess,” said Republican commissioner Bill James.

Cardinal's board will be made up of between 11 and 21 people. Other than that, there are very few board member qualifications stipulated in the statute. There is little to ensure the new board could effectively govern an organization in charge of spending hundreds of millions of tax dollars.

“I'm sorry, but you can't give people that aren’t skilled at $700 million organizations a bank book and expect them to manage it appropriately,” said James.

State officials don’t yet know who the other 19 counties served by Cardinal will nominate.

But this ability for the old to again be the new raised the ire of state lawmakers at a committee meeting Tuesday. Democratic Representative Carla Cunningham of Mecklenburg County posed this question to DHHS Secretary Mandy Cohen:

“If those board members did what they did, why can they serve again?”

Cohen said she heard this a lot. She pointed out the model is mandated by state law and even though her department took over Cardinal, DHHS has no power or authority to pick or veto members of the new board. 

There were other questions raised as well. They boiled down to this: how can we know more shenanigans won't ensue once Cardinal is running itself again? 

The only answer Cohen could give was training for the new board and stricter oversight by DHHS.

Cohen told the committee she hopes to return Cardinal to self-rule in two months' time. 

Lawmakers weren’t just focused on the future of Cardinal. They also want to get refunded the $3.8 million in severance payments Cardinal made to just four employees. One lawmaker referred to them as "gilded parachutes."

Cardinal announced it would move $3.8 million from their administrative fund directly into services with the specifics to be worked out with agreement form DHHS.

But lawmakers including Republican Senator Dan Bishop of Mecklenburg County weren’t satisfied. He asked Secretary Cohen to, “see to it that not only that the money moves from one government pocket to another but from the individuals who have seemed to have taken advantage of their positions.”

Cohen said the lawyers are looking into it.