N.C. lawmakers fire health plan chief after loss

George Stokes – who oversaw the health plan for nearly 650,000 state employees, retirees and their dependents – has been abruptly fired after legislative leaders said the plan's finances dropped $115 million.

The N.C. State Health Plan went from $50 million in the black to $65 million in the red.

Senate Majority Leader Tony Rand and his counterpart in the House, Rep. Hugh Holliman, said they sought the firing because they should have been told of the plan's change in fortunes months ago. They said they did not learn about it until last week.

“We feel we should have been informed in January, February or March, so we could work on it,” said Holliman, a Lexington Democrat.

Rand said he was unaware of any misconduct with the plan's operation.

But he said the revenue gap was serious enough that, if not corrected, premiums would have to increase by 23 percent next year to cover the loss.

Stokes, 61, took over the job of executive administrator of the health care plan in April 2005. He was paid a salary of $167,872 a year. He referred all questions to his attorney, James Ferguson II of Charlotte, who could not be reached for comment.

Rand and Holliman said the shortfall does not affect the plan's ability to provide coverage.

They said reserves will make up for the nonexistent surplus in the fiscal year that began Tuesday. Rand said lawmakers will also postpone moving the health plan from operating on a state fiscal year – July 1 to June 30 – to a calendar year. That will save roughly another $20 million.

Rand and Holliman said Stokes' predecessor, Jack Walker, would serve as interim executive administrator until a successor is hired.

Stokes' firing drew suspicion from Dana Cope, executive director of the State Employees Association of North Carolina, who praised Stokes' leadership. Cope said the shortfall was a typical “cash flow” fluctuation in health plan finances that would have corrected itself in later months.

He suspected that Rand did not get along with Stokes and wanted to put Walker back in charge. SEANC had a rocky relationship with Walker.

“They never asked for George Stokes' side of the story,” Cope said.

“He was totally surprised by this. We think this is retribution and retaliation to George because he was not a ‘yes' man.”

Cope said Rand and Holliman told state Insurance Commissioner Jim Long to fire Stokes before calling a meeting of a legislative joint committee that oversees the health plan.

Stokes had run two health maintenance organizations in the Triangle before becoming the health plan's leader. He was Kaiser Permanente's top man in the state and later worked as chief executive of Doctors Health Plan in Durham. Both companies' HMOs are now defunct.

The state health plan is one of the largest in North Carolina. Like many plans, it has struggled to keep premiums from escalating dramatically as health care costs increase.