Former CEO sues Cardinal Innovations for libel and slander

Former Cardinal Innovations CEO Richard Topping sued the agency Tuesday.
Former Cardinal Innovations CEO Richard Topping sued the agency Tuesday.

Former Cardinal Innovations CEO Richard Topping sued his former agency for libel and slander Tuesday, claiming he was scapegoated in an effort to recoup his $1.7 million in severance.

Topping's lawsuit comes almost two months after Cardinal sued him to recover his severance pay.

His suit is the latest chapter in a yearlong drama involving Cardinal and its management. The saga included a state auditor's report ripping Cardinal for spending on Topping's pay as well as on lavish Christmas parties, board retreats and charter flights. In November, state health officials took over the agency and fired its board.

Cardinal is North Carolina's largest so-called LME/MCO, an organization that manages a treatment network for people with disabilities, mental health needs and substance abuse. Cardinal operates in 20 counties.

Richard Topping, Cardinal Innovations Healthcare's former CEO Davie Hinshaw dhinshaw@charlotteobserver.com

Topping, represented by attorney David Rudolf, claims he was defamed at a March news conference at Cardinal's Charlotte headquarters.

In a nearly 90-minute presentation at the news conference, Kurt Meyers, a former assistant U.S. attorney, laid out an extraordinarily detailed case against Topping using documents, emails and text messages. He tried to show how Topping repeatedly sought higher compensation.

He alleged that Topping "stole" proprietary information, destroyed agency data and engaged in "a pattern of self-enrichment ... at the expense of Cardinal." New CEO Trey Sutten said, "I think (Topping) was trying to find the key that would unlock the treasure chest."

In Tuesday's suit, Topping claims Meyers' presentation was "misleading and false." Specifically he claims:

Contrary to allegations made by Cardinal, it was not Topping — who once made an annual salary of $635,000 — who "took steps to inflate his salary." The pay, Topping and his attorneys say, was based on an independent market survey of similarly sized companies. In a letter to Cardinal attached to the suit, Rudolf says Topping and other executives were paid at the 50th percentile of market rates.

Topping was not stealing information in order to start a new company that would compete with Cardinal. Instead, Rudolf wrote, Topping was trying to create a health care-related smartphone app that had nothing to do with competing with Cardinal or its intellectual property.

Topping did not create "daisy chain" provisions that ensured generous severances for his executive team and gave him leverage with the board. He said they were instead standard terms known as "change of control" provisions that were originally drafted by an outside law firm and put in place not by Topping but by Cardinal's general counsel, Chuck Hollowell.

The suit claims Topping's personal reputation has been "severely damaged" and he hasn't been able to find another job in health care.

It names as defendants Cardinal, Hollowell, deputy general counsel Stephen Martin and board member Carmen Hooker Odom of Charlotte, among others.

"Cardinal Innovations Healthcare, Carmen Hooker Odom, Chuck Hollowell and Stephen Martin deny the false claims and baseless allegations brought by former CEO Richard Topping," Cardinal spokeswoman Ashley Conger said in a statement. "We remain committed to transparency, public service, and fulfilling our mission to improve the health and wellness of our members and their families."

Conger said Cardinal has hired attorney Jim Cooney to defend itself "against Mr. Topping's meritless claims."

Odom declined to comment.

Lawyers for Cardinal and the state Department of Health and Human Services are trying to recover S3.8 million in severances paid to Topping and three other executives.

An email from Hollowell to Topping on Nov. 3, three weeks before the state takeover, suggested a state official had given "the green light" to award the payments. It references a phone call between Cardinal officials and a DHHS official.

"He wanted us to understand that we should read this as saying if Cardinal makes the severance payments you will need to pay that amount back to the state," Hollowell wrote. "That is the green light they are trying to give us to make the full payments and make them quickly, while also giving themselves political cover. There will be the appropriate amount of public outrage about any payments that are made, but they know the checks will be big and they are giving us a pathway to get it done."

A DHHS spokesman could not be reached.

Jim Morrill, 704-358-5059; @jimmorrill