Federal criminal probe ongoing at North Carolina’s health agency

By: - September 30, 2015 9:49 am


Aldona Wos may no longer be the Secretary of the N.C. Department of Health and Human Services, but there’s still plenty of interest in how she ran the agency.

In particular, a federal grand jury wants to know how several contracts were awarded to members of her inner circle, as well as to a consulting firm that took over much of the management of the state’s Medicaid program.

The grand jury is also looking at a troubled Medicaid billing unit that was the subject of several audits that found the supervisor wasted more than $1.6 million in unnecessary overtime and the hiring of friends, family and her church members. The federal probe was first reported by the News & Observer late Friday.

DHHS spokesman Jim Jones said the agency is complying with the federal investigation.

“The Department of Health and Human Services team is cooperating and working with the federal government in this process,” Jones wrote, in a written statement. “We will continue to respect the confidentiality of the process by the federal government to protect the integrity and fairness of this review.”

Aldona Wos announced her decision to leave DHHS in August.

The documents requested relate to scenarios already in the public eye. Those range from the controversial actions of the former Medicaid billing director Angie Sligh who hired and approved large overtime payments for church and family members to controversial hires by Wos, many of whom received significant pay through personal services contracts instead of the more typical hiring agreements found in state government.

Wos, a wealthy Greensboro physician and prominent Republican fundraiser, became Gov. Pat McCrory’s choice to lead the state’s largest agency in 2013.

While McCrory remained a staunch defender of Wos, her tenure at DHHS was marked with controversy with high-dollar hires of top staff, the bungled launch of a Medicaid billing system and food stamps delivery system and repeated criticisms of mismanagement coming from state lawmakers.

She announced her resignation on Aug. 5, citing a need to spend more time with her family and a week after the federal requests for documents arrived at DHHS on July 28. At the announcement of her resignation, McCrory wiped away tears, praised her intelligence and dedication to DHHS and said Wos “taught me so much.”

Copies of subpoenas obtained through a public records request to DHHS show that the grand jury asked for employment records related to the troubled Medicaid billing unit run by Angie Sligh, who worked at DHHS before Wos’ tenure until February of this year as the information technology director for NC TRACKS. NC TRACKS is the complicated Medicaid billing system that had a problem-filled launch in 2013, leaving hospitals and doctors’ offices going months without being paid for Medicaid patients. The state auditor’s office looked into personnel issues in Sligh’s department several times, ultimately finding that more than $1.6 million was wasted when overtime payments and hires that didn’t follow state policies.

A second subpoena sent to DHHS asks for records related to those directly under Wos’ command, where high-dollar contracts and pay have attracted public criticism over the last two years.

Among those that the grand jury demanded “any and all records for contract” were Les Merritt, the former Republican state auditor who worked on a contract basis for DHHS; Thomas Adams, a chief of staff Wos hired who worked a month and then received a large severance; Joe Hauck, an employee of Wos’ husband’s company who came to DHHS to work for Wos on a contract basis; and Alvarez and Marshal, a consulting firm that Wos hired on a no-bid contract to run the state’s Medicaid program.

The grand jury also demanded copies of Wos’ $1-a-year contract, records that reflect performance, payment records, advertisements of job and contract posting and “any and all communications, including electronic communications between NCDHHS/Secretary Wos and Leslie Merritt, Thomas L. Adams, Joachin (Joe) Hauck, and Alvarez and Marshal.”

Merrit was hired at DHHS in 2013 on a contract where he stood to make up to $300,000 a year to serve as the chief financial officer for the agency’s division that coordinates care for mental health and those with developmental disabilities.

N.C. Policy Watch first reported in 2013 that Adams, a short-term chief of staff for Wos, worked at DHHS for a month, but received a $37,227 severance despite state personnel policies that don’t entitle employees serving at the pleasure of state officials to receive severance payments.

Another contract employee the federal grand jury wants to learn more about is Hauck, who worked with Wos’ husband’s company and earned more than $310,000 through the DHHS contract. The Associated Press requested documents in 2014 related to Hauck’s work product, and received only a handful of memorandums produced during Hauck’s 11 months of work at the agency.

Finally, Washington, D.C. consulting firm Alvarez and Marshal were initially hired through a no-bid contract in 2014 to help develop a Medicaid reform plan, and paid consultants as much as $473 an hour, according to the News & Observer. The contract has been extended several times, and is now up to $8 million and has been expanded to include day-to-day management of the state’s Medicaid program.

Want to read the subpoenas for yourself? Click here and here.

Questions? Comments? Reporter Sarah Ovaska-Few can be reached at (919) 861-1463 or [email protected].

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Sarah Ovaska-Few

Sarah Ovaska-Few, former Investigative Reporter for N.C. Policy Watch for five years, conducted investigations and watchdog reports into issues of statewide importance. Ovaska-Few was also staff writer and reporter for six years with the News & Observer in Raleigh, where she reported on governmental, legal, political and criminal justice issues.