Richard Topping
By Erin Smith
Cardinal Innovations has filed a lawsuit against the state of North Carolina in an effort to continue paying Richard Topping’s salary of $635,000 per year. The lawsuit protests the ruling of the Office of State Human Resources (OSHR) that the salary and bonuses paid to Cardinal Innovations CEO Richard Topping are out of compliance with the North Carolina General Statutes.
In 2001, the NC General Assembly legislation that reformed the methods through which mental health services are provided and created Local Management Entities (LMEs) and Managed Care Organizations (MCOs). As such, Cardinal Innovations was created and is tasked with the care for more than 850,000 clients in 20 counties.
In Cardinal’s lawsuit, the company alleges the state does not have the authority to determine the compensation for the Chief Executive Officer of the company. Cardinal Innovations is seeking to have the North Carolina Office of Administrative Hearings stop the OSHR from placing limits on the amount of compensation Topping is able to receive. According to an audit performed by NC State Auditor Beth Wood, Cardinal Innovations is considered to be an extension of the state and is “responsible to the General Assembly.”
According to North Carolina General Statutes 122C-124.2, the North Carolina Secretary of Health and Human Services Dr. Mandy Cohen has the authority to remove the Cardinal board and replace the chief executive officer due to issues of noncompliance.
An interim report from the Office of Internal Auditor of the NC Department of Health and Human Services Special Investigations Unit which was released on October 2, 2017, raises more concerns about the employment contract with Topping which provides severance payments for “a broad range of reasons” while the other three LME/MCOs provide severance only for termination without just cause. Topping’s contract also calls for the severance payments to continue for a period of 24 to 36 months which is far greater than the other LMEs/MCOs.
The interim audit also found that Cardinal Innovations has severance contracts with six other executives within the company and four employees. None of the other LMEs/MCOs were found to have similar agreements, according to the interim audit report.
The interim audit also found the salary and bonus opportunities for Topping to be “three times higher” then those at other LMEs/MCOs in the state.
On Tuesday, Health Secretary Mandy Cohen met with a group of legislators to discuss Cardinal Innovations and possible action that could be taken against the company for what has been called “excessive” compensation.
Cardinal Innovations released its own financial report on Monday for the 2015-16 fiscal year. It is reported this is the first such report since Topping took over as CEO. In it, Cardinal claims to have a revenue stream of $682,616,000. The revenue stream breaks down into $587,312,000 from Medicaid, $83,944 in state funding, $7,178,000 in county funding, $4,182,00 in HUD and other funds. Read the entire Cardinal Innovations report here.
Cardinal’s financial report also shows 617 employees and salaries of $34,538,000.
Cardinal Innovations has been attempting to merge with Eastpointe, who provides mental health and substance abuse services for Bladen County. The merger has not been approved by Secretary Cohen.
Earlier this year Nash County was granted permission to disengage from Eastpointe and join Trillium and Columbus County has also made a formal request to be allowed to disengage form Eastpointe.
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