State Delays Cardinal Review After Board Reduced CEO's Salary

Oct 20, 2017

Credit Mark James / Charlotte Observer

The North Carolina Department of Health and Human Services is giving Cardinal Innovations Healthcare more time to comply with state laws dealing with CEO pay for top level executives. The regional managed behavioral health care organization had been paying its CEO three times more than law allows and has generous severance packages for top level executives.

State auditors found employment agreements authorized by Cardinal Innovations Healthcare board members allowed charter flights, luxurious offsite meetings and illegal salaries. Cardinal’s board has passed resolutions to rein in spending on travel, agreed not to hold offsite board meetings and reduced its CEO’s salary by 2/3 earlier this week. Head of the North Carolina Department of Health and Human Services Mandy Cohen said because of those steps she is delaying a review of Cardinal that was scheduled for Monday.

“We are giving them a little bit more time so that they can take some potentially additional steps before we go in and review things,” she said. “They asked for an additional week and we have granted that. So we will be there before the end of the month.”

Among the outstanding issues are severance packages for the CEO and 10 other staffers at Cardinal. Those packages are triggered by a variety of reasons, but include between two and three years of salary plus health care. Those packages are doubly as generous as the next most generous similar organization. George Dunlap is a Mecklenburg County Commissioner and Cardinal board member. He said Richard Topping’s salary cut has already taken effect.

“The board changed his salary effective Wednesday,” Dunlap said. “As of Wednesday he is receiving the state appropriated salary.”

Which is $204,195 a year down from $617,526. Dunlap says he voted in favor of that reduction to get in compliance with state law. He said he approved Topping’s previous salary because he felt a “market rate” as determined by a consultant study was appropriate. Dunlap said he didn’t fully understand how state law governed Cardinal’s employee pay.

“Until we had outside counsel on Tuesday, I think the majority of the board was not aware of the fact that Cardinal was mandated to pay the state salary,” Dunlap said.

Two audits about how the CEO’s salary was not in compliance with state standards have been published this year. One by the state auditor’s office in May and the other by NC DHHS in October.

It is worth noting that before Topping was CEO of Cardinal he was the organization's general counsel.  

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