An official with the North Carolina Department of Health and Human Services (DHHS) on Tuesday told a legislative committee that the agency won't tolerate "executive abuse" that DHHS says currently exists at Charlotte-based managed-care agency Cardinal Innovations Healthcare Solutions. DHHS Deputy Secretary Dave Richard met with a General Assembly committee and discussed findings of an interim report on the agency's review of Cardinal that was released last week.
The behavioral health organization was also the subject of a sharply-critical report from the State Auditor's Office, released in May. The reviews highlighted luxurious pay and benefits packages for Cardinal Innovations' executives, along with spending levels for conferences and Christmas parties.
The DHHS report pegged Cardinal CEO Richard Topping's salary and bonus last year at $617,526. That's nearly three times the earnings for the next highest paid CEO among seven regional mental health agencies in North Carolina.
Cardinal Innovations received more than $680 million in revenue last year, mostly from the state and federal governments. In May, state Auditor Beth Wood released an audit which found Cardinal was holding onto $70 million that should have been spent on patient care.
Some North Carolina lawmakers are suggesting that the state’s massive contract with Cardinal Innovations should be canceled, if the managed care organization doesn’t quickly address issues raised by the state reviews. "The public trust has been violated here," said Republican Sen. Tommy Tucker of Union County. "I don't know how you choke this snake that has eroded the public trust," Tucker added. The lawmaker said there are things DHHS can do now to address the situation.
"We've fooled with this a long time," said Republican Rep. Donny Lambeth of Forsyth County. He told DHHS officials they need to do more than "just another audit" to get the attention of Cardinal's leaders.
Cardinal Innovations manages and monitors substance abuse, mental health and developmental disabilities services for clients in 20 counties.
Cardinal has said it is working with North Carolina's DHHS and the state personnel office to address their concerns. But the organization maintains that its executive compensation packages are "market based," and Cardinal last month asked an administrative law judge to rule that it is not subject to the salary range set by the state human resources office.