State Treasurer Dale Folwell has placed two officials with no previous experience in health insurance or health care into director-level positions with the State Health Plan and is seeking greater control over hiring and firing.
The new directors hired under Folwell, a Republican who took office in January, don’t meet the job requirements calling for considerable experience in the field that were included in the job postings that were issued when his predecessor, Democrat Janet Cowell, oversaw the State Health Plan. Because the jobs were classified as “exempt positions” by the state, posting them wasn’t required and the plan was free to apply different criteria in filling those jobs.
Folwell defended the new hires, characterizing the health plan as broken and saying it sorely needed people with financial know-how rather than health plan experience to improve its finances and reduce costs. He said he had hired people with “integrity, ability and passion” who could implement the changes that are needed.
The State Health Plan, which is a division of the Department of State Treasurer, provides health care coverage to more than 700,000 teachers, state employees, state retirees and their dependents.
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He pointed to a 2011 performance audit of the health plan by State Auditor Beth Wood that criticized the plan for issues such as failing to follow up on “potential overpayments” and being at risk of overpaying medical claims that Folwell believes were never addressed.
“There is nothing in this audit report ... that says you need more medical people,” Folwell said. His extensive list of problems with the State Health Plan includes an enrollment process that is ”way too complicated,” so much so that he had to ask for help after he was elected in order to sign up.
Folwell added that the plan’s recent hires also include a data management manager with a master’s degree in public health from Yale University as well as experience in the health field. Kimberly Gray, previously a contractor for the plan, makes $118,000 annually.
At the same time, however, in the last two months the health plan has dismissed two full-time career employees and a part-time contractor, all of whom had years of experience in the field. Folwell said they won’t be replaced.
“In many respects we are already paying for their services through vendors or contractors,” Folwell said.
The hirings and dismissals – including the hiring of a director who until recently was treasurer of the state Republican Party – raise questions about whether the Treasurer’s office is becoming politicized. Folwell says it’s not.
Senate budget gives Folwell more fire power
Meanwhile, a provision in the state budget approved by the Senate last week ,which was requested by Folwell, would put the State Health Plan more firmly in the Treasurer’s grip if it makes it into the final budget.
It would grant the Treasurer sole authority to dismiss the health plan’s executive administrator. Currently, state law states that the Treasurer can dismiss the executive administrator “after consultation” with the plan’s Board of Trustees.
In addition, the measure would give the Treasurer the authority to hire and fire the plan’s professional staff as well.
There’s more changes to come. We’re not going to stop until this stuff is rectified.
NC Treasurer Dale Folwell
Folwell said he learned to his surprise after he took office that the professional staff worked directly for the executive administrator, not the Treasurer. He described a culture clash at the agency.
“It was said to me a few times in the first few weeks that no one in the State Health Plan works for the Treasurer. And you know what? They’re right,” Folwell said. He was further told that “the only person that sort of worked for the state Treasurer was Mona Moon (the executive administrator), and that even she could only be dismissed with the approval of the State Health Plan board.”
The budget provision also would give the Treasurer the authority to hire and fire the plan’s clerical employees, but Folwell and his general counsel, Sam Hayes, said that was a mistake that they expected would be corrected.
“I’m not asking for any more exempt positions,” Folwell said. Exempt employees can be dismissed without cause.
Ardis Watkins, legislative affairs director for the State Employees Association of North Carolina, said the organization is on board with the additional authority Folwell is seeking.
“Our concern is that Treasurer Folwell get the costs of the health plan down. There’s just too much money going out of the members’ pockets each year,” she said. “Administratively, whatever he has to do to run an efficient health plan that doesn’t cost the members so much money, we support that.”
When asked if he planned to dismiss Moon if the Senate provision makes it into the final budget, Folwell said, “I (could have) dismissed Mona Moon three months ago. ... I could have dismissed her and then consulted with the board. That’s the way I’ve always thought about it.”
He added: “You should ask Mona that. You should ask her if she’s seeking employment.”
“There’s more changes to come,” Folwell also said. “We’re not going to stop until this stuff is rectified.”
Moon declined to comment on her personal situation. When asked about recent personnel moves, she said that she signed the offer letters and dismissals “but I haven’t been involved in the recent selection of candidates or the hiring decisions or the decisions to terminate individuals or contracts.”
Lacey Barnes, interim executive director of the state health plan for 21 months under Cowell, said of the hiring strategy under the former Treasurer: “Always, any position that we were looking to fill, we looked for people with relevant experience.”
Job postings called for experience
When the health plan issued a job posting for the director of health plan operations, it called for a minimum of “7 to 10 years of healthcare operations senior management experience.” Similarly, the posting for the director of policy, planning and analysis required “a minimum of 5 years management experience in healthcare, health insurance or related environment” and “experience in analyzing or formulating healthcare policy.”
According to their online LinkedIn profiles, neither of the individuals hired for those positions meet those requirements. Folwell said that the postings were “so tightly written” that the jobs were very difficult to fill, noting that one of the positions had been vacant since mid-2014.
Ted Enarson, the new director of health plan operations, previously worked for Folwell when he headed the Commerce Department’s Division of Employment Security. Enarson’s last position there was director of tax and benefits integrity. He has a law degree from Campbell University Law School. His annual salary: $110,000.
Folwell said that at DES, Enarson reduced a backlog on initial appeals involving unemployment benefits from 18 weeks to 16 days.
“It’s about personnel and people who can perform, and I can tell you, this guy has (performed) and will perform,” Folwell said.
David Cozart, the new director of policy, planning and analysis, previously worked in finance at Nortel – his last title there was financial planning and analysis leader – and worked on Nortel’s wind down after it filed for bankruptcy. He’s a CPA and also was an audit manager at Ernst & Young for eight years. His annual salary: $94,000.
“He’s an accomplished guy as far as figuring out the process of what needs to happen,” Folwell said.
Folwell said he had only met Cozart once before hiring him and wasn’t aware that he had served as treasurer for the state GOP until a few weeks ago. Cozart resigned from the treasurer’s position last month.
Enarson and Cozart couldn’t be reached for comment.
Enarson is the second director of health plan operations hired since Folwell took office. Enarson’s predecessor, Walter Gray, previously was chief deputy secretary of the state Department of Transportation. Gray is also a CPA and he has an MBA from UNC-Wilmington, but he has no health experience.
Gray left after just three few weeks in office.
“I found another opportunity that I just felt was a better fit,” Gray said, noting that he has resumed a career in real estate. “I fully support (Treasurer Folwell) and his direction. It was just a personal decision that I felt was best for my career and my professional development.”