In North Carolina’s citizen legislature, it’s not unusual for lawmakers to work for institutions that get taxpayer money.
But it’s rare for a lawmaker to work for an employer funded by hundreds of millions in taxpayer funds – and one subject of a scathing report by the state auditor for its “unreasonable spending.”
Democratic Sen. Joel Ford is a vice president of Charlotte-based Cardinal Innovations Healthcare, North Carolina’s largest state-funded mental health managed care organization. It operates in 20 counties, has a budget of $682 million and insures one of every four Medicaid patients in the state.
Last month State Auditor Beth Wood ripped Cardinal for spending on lavish Christmas parties and board retreats, CEO pay, charter flights for executives and “questionable” credit card purchases including alcohol. All of that, the report said, threatened to “erode public trust.”
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While Ford, a candidate for mayor, acknowledges the audit findings, he defends his position with the taxpayer-funded Cardinal. He said he checked legislative guidelines, which say there’s no inherent conflict as long as lawmakers don’t vote on measures that directly impact their financial gain.
But like Cardinal, Ford could find himself under a microscope.
“My test is always would it … smell right to the average person,” said Jane Pinsky, director of the N.C. Coalition for Lobbying and Government Reform. “It’s kind of like Caesar’s wife. You need to be above reproach.”
Ford faces Mayor Jennifer Roberts and Mayor Pro Tem Vi Lyles in September’s Democratic primary.
Cardinal is the largest of the state’s seven managed care organizations. Known as Local Management Entity/Managed Care Organizations, or LME/MCOs, they contract with the N.C. Department of Health and Human Services to manage treatment networks for mental health, developmental disabilities and substance abuse.
This year Cardinal is getting $100 million in state and federal funds from the sate Division of Mental Health. It's also getting $721 million in Medicaid funds, a third of which comes from state money.
Last month’s audit blasted Cardinal for paying its CEO $1.2 million in “unauthorized salaries,” money it said could have gone to other needs. Cardinal also paid about $4.3 million in employee bonuses over the last two years, one of only two LME/MCOs to offer them.
Ford joined Cardinal last year because, he said, he was “attracted by the mission of who we help (and) serve.” He makes $150,000 a year as vice president of community development. Ford previously worked for a management consulting firm and had owned his own businesses.
“I like working for an organization that is helping the most vulnerable citizens with complex needs while doing it within budget,” he said.
Neither Ford nor his salary were mentioned in the audit report. While Cardinal’s CEO salary exceeded the maximum allowed by state law, there are no guidelines for other administrative salaries, according to the Office of State Human Resources.
Among other things, Ford oversees an $11 million project underway in Winston-Salem that includes a 24-hour behavioral health crisis facility. Sometimes that means leaving Raleigh, driving to Winston-Salem and returning in time for session. He said he’s able to balance the demands of work, the legislature and a mayoral campaign.
“I juggle three different things and try not to drop any balls,” he said.
Republican Sen. Tommy Tucker of Union County is a frequent Cardinal critic. He said Cardinal and the other LME/MCOs are sitting on nearly $1 billion in reserves at a time when more than 2,000 people are on waiting lists for services. He was particularly critical of the audit findings.
“I just couldn’t sleep at night and spend that money when I knew I had a mission to treat the least of these,” he told North Carolina Health News.
Tucker said he sees no conflict with Ford’s job. “He’s smart enough to keep his votes and and politics separate from where he works,” Tucker said.
A bill that would tighten the salary restrictions for managed care organization CEOs passed the House unanimously and now sits in a Senate committee. Along with other Democrats, Ford voted against the Senate budget that had money for mental health care. He said he would recuse himself from any votes involving LME/MCOs.
Becki Gray, a senior vice president of the John Locke Foundation, a Raleigh-based conservative group, said because Cardinal is tax-supported, “it’s important to have transparency.”
As for the audit, Ford acknowledges the findings but, like other company officials, tries to put it in context.
“It’s disingenuous to highlight one-tenth of 1 percent of (administrative spending),” he said, “which pales in comparison with the $55 million (a month statewide) it would cost to address the waiting list.
“I don’t want to minimize the perception. But as an organization we are in compliance and we are providing the services we are responsible for.”