Generous severance packages available to a mental health agency’s chief executive officer and 10 other employees show a “further abuse of public dollars,” a state senator said Tuesday.
Lawmakers will try to pass legislation to ban the severance packages and align Cardinal Innovations Healthcare Solutions’ executive’s pay with state personnel laws, said state Sen. Tommy Tucker, R-Union.
Cardinal offers services for people with disabilities, mental health needs and substance abuse in 20 N.C. counties, including Mecklenburg. The quasi-governmental entity received $587 million in Medicaid money and another $88 million from the state’s mental health agency in the 2016 budget year.
Cardinal had been under fire from legislators and the former head of the state Department of Health and Human Services for paying its CEO Richard Topping more than $635,000 in salary this year.
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The state Health and Human Services agency’s Office of the Internal Auditor released a 17-page report on Monday that criticized Cardinal’s severance packages for being offered for longer than similar entities and offering severance pay to 10 employees other than the CEO.
According to the audit:
▪ Four of seven similar quasi-government groups, including Cardinal, offer severance packages. Three do not offer severance pay at all.
▪ No other similar quasi-government entities offer severance to any employee other than the CEO. Cardinal offers severance pay to six executives and four “key employees” in addition to the CEO.
▪ The similar quasi-government entities that also offer severance packages only do so if the CEO is terminated “without just cause.” Cardinal’s severance packages can be paid out for a variety of reasons, including if Cardinal ceases to be an independent entity or if a change occurs that materially alters Cardinal’s services, revenues, governance or employment practices.
▪ Cardinal’s severance packages range from 24 to 36 months, while the similar entities cap out severance pay at a year.
“Cardinal Innovations is in active litigation with OSHR to address and resolve the concerns raised by OSA and reiterated by DHHS,” Cardinal said in a statement in response to the audit. “We stand by the legality of our market-based employment practices, which have been in place without issue for 23 years.”
If Cardinal spends money to pay severance to top management, it could compromise the services it receives public dollars to provide, said Vicki Smith, the executive director of Disability Rights North Carolina.
“This population is already vulnerable and there is already insufficient resources to meet their needs,” Smith said.