The terminated executive director of Cardinal Innovations Healthcare Solutions will walk away with a severance package worth more than twice his top annual salary, the agency said Tuesday.
Richard Topping will be paid $1.7 million over two years once his 26-month tenure over the state’s largest behavioral health managed-care organization ends Dec. 1. The Cardinal board of directors voted to fire Topping on Friday.
This year alone, Topping’s salary bounced from $635,000 to $400,000 on July 1, then to $617,526 on Oct. 15, and then to $204,195 on Oct. 17— the maximum permitted by state law for the top position of a behavioral health MCO.
Cardinal oversees providers of services for mental health, developmental disorders and substance abuse for Medicaid enrollees in 20 counties, including more than 96,000 in the Triad (Alamance, Davidson, Davie, Forsyth, Rockingham and Stokes). It handles more than $675 million in annual federal and state Medicaid money.
A state audit determined the Cardinal board had made Topping eligible for up to $1.2 million in total compensation for fiscal 2016-17.
Cardinal spokeswoman Ashley Conger said Tuesday morning that the MCO would provide Friday “a full statement” on Topping’s severance package and other potential executive departures.
Employees told the Winston-Salem Journal that three executives resigned Monday: Pete Murphy, its chief information officer; Will Woodell, chief operating officer; and Dr. Ranota Hall, chief medical officer.
Cardinal confirmed the officials’ resignations and their compensation amounts to a Winston-Salem Journal reporter late Tuesday.
Murphy’s severance package is $740,000, while Woodell’s is $690,000 and Hall’s is $684,000.
Rep. Donny Lambeth, R-Forsyth, and co-chairman of a joint legislative oversight committee on Health and Human Services, said the severence packages “are not anywhere close to market-based in an organization that is primarily funded by taxpayers.”
“These funds need to go to pay for much-needed services that are not being provided.”
Lambeth said the severance packages “likely will be challenged by DHHS, and lawyers will end up resolving.”
“We need to get the Cardinal fiasco behind us so that it can operate like the other MCOs that are serving their region and acting responsibly,” Lambeth said. “This bad apple needs to be fixed and fixed soon.”
Cardinal board member George Dunlap told The Charlotte Observer he abstained on the vote on Topping’s severance.
“The board’s position was they (decided) to keep their commitment, what they had offered in severance,” said Dunlap, a Democratic commissioner for Mecklenburg County. “Basically, what they decided to do was to honor his contract.”
Dave Richard, the state’s Medicaid director, said Monday that Cardinal’s board acted inappropriately in approving the severance package for Topping.
“DHHS continues to have serious concerns with the leadership of Cardinal Innovations” following Friday’s action, Richard said.
Topping is being replaced by Trey Sutten, a former state Medicaid official in the McCrory administration, on an interim basis starting Dec. 2.
Topping’s dismissal came a month after the board voted 5-3 at a special called meeting Oct. 17 to reduce his annual salary from $617,526 to $204,195 — the maximum permitted by state law for the top position of a behavioral health MCO.
“Despite having been specifically instructed by DHHS not to pay severance to any employee without the express written permission of DHHS, the board has awarded (Topping) a large severance payment,” Richard said.
“DHHS will issue a demand letter to Cardinal for payment from their administrative funds (of) the amount paid in severance to the CEO and any other member of Cardinal’s leadership.”
An additional seven Cardinal executives could be eligible for a severance package tied to Topping’s termination, the state audit found.
Dr. Mandy Cohen, the state’s health secretary, has not made a public comment since Topping’s firing. Two follow-up state Department of Health and Human Services internal investigative reports released Monday were addressed to her.
Cohen has the authority by state law to dismiss the top executive of a behavioral health MCO, remove its board and discontinue its state Medicaid contract.
Legislators from both parties have said they believe Cohen’s lack of direct response to the Cardinal issues signify that her priorities since taking office have been on the Medicaid waiver request before federal regulators and the opioid crisis. A waiver amendment submission was submitted Monday that had the opioid crisis as its top priority.
Richard said DHHS “will engage (with) interim CEO Sutten to assure full compliance with legislative and regulatory items.”
“These actions indicate a lack of understanding by board leadership of the serious nature of the concerns expressed by DHHS and other public entities.”