NC lawmakers want Cardinal severance back – from executives who got $3.8 million

North Carolina lawmakers Tuesday urged state officials to recover millions in what one called the “gilded, golden parachutes” Cardinal Innovations paid its former leaders, and they want it not from the agency but from the executives themselves.

Last month Cardinal fired CEO Richard Topping and gave him $1.7 million in severance. Three other executives got packages totaling $2.1 million.

“I’m absolutely appalled by the arrogance, avarice and unfettered greed of those people,” Republican Sen. Tamara Barringer of Wake County told the Joint Legislative Oversight Committee on Health and Human Services.

State health officials told the panel that they’re working with Cardinal to recover the amount of the most recent executive payouts in the form of services to their clients.

But GOP Rep. Nelson Dollar of Wake County said the state should make “every effort” to recover the “golden, gilded parachutes” from the former executives. He said the payouts were “just unheard of with taxpayer money.”

Topping declined to comment.

Cardinal also disclosed Tuesday that it has paid a total of $6.1 million in severance payments over the last three years, including nearly $52,000 to state Sen. Joel Ford who left in October. Since joining it in 2016, he made a salary of $150,000 as vice president of community development.

After Cardinal’s board authorized the most recent payments last month, the state Department of Health and Human Services fired the board and took over the organization. Charlotte-based Cardinal, the state’s largest public managed care group, manages mental and behavioral health services to clients in Mecklenburg and 19 other counties.

In a sign of the acrimony surrounding the takeover, attorneys representing DHHS and the former Cardinal officials met Tuesday in a Charlotte courtroom where a judge extended a temporary restraining order until Jan. 18. The order bars the former Cardinal executives or board members from interfering with the takeover or gaining access to Cardinal coffers.

Rob Wilder, the former board’s attorney, declined to comment on the hearing. Deputy Attorney General Michael Wood, who represents DHHS, had previously told a judge that Topping and two former board members shared emails suggesting they had a plan to keep agency money from the state.

At the same time in Raleigh, Dave Richard, deputy secretary for Medical Assistance, told the oversight panel that officials are working with Cardinal’s interim leaders to invest the amount of payouts in services. The money would come from administrative funds and be reinvested by next summer.

But Sen. Dan Bishop, a Charlotte Republican, said that would be taking the money “from one government pocket to another.” He urged DHHS officials to go after the executives themselves.

“I believe that if there is any way to pursue a legally viable claim, DHHS should do that without delay,” Bishop told the Observer later. “The recourse is (a) regional agency will have to return an equivalent amount of money … to DHHS, which is shuffling government money from one government pocket to another.

“And I would be embarrassed to even give that as a remedy for the problem.”

As for getting back the money that’s already been paid out, DHHS Secretary Mandy Cohen said, “We’re still exploring (that) with our lawyers.”

Attorney General Josh Stein told the Observer that his staff is “looking at all our options to recover those funds.”

Cardinal had been under fire for months. In May the state auditor cited “unreasonable” spending not only on board retreats and executive perks but salaries, including Topping’s $635,000. Cohen told lawmakers that her department had little choice but to step in after “the continued bad judgment” by Cardinal’s board and leadership.

“Obviously we wish we’d been able to do that before (the severance) checks were written,” Cohen said.

With a new Cardinal board to be selected Thursday, two lawmakers called for a fresh start – and new faces. Former board member George Dunlap, a Democratic Mecklenburg County commissioner, was appointed to the nominating committee for a new board and said he hopes to return himself.

“I just firmly believe that Cardinal needs a fresh start to earn the confidence, the respect and the trust of the vulnerable people of North Carolina, and frankly all the people of North Carolina,” Barringer told the Observer.

This story was originally published December 12, 2017 at 12:26 PM with the headline "NC lawmakers want Cardinal severance back – from executives who got $3.8 million."