Former DHHS staffer takes job with Medicaid contractor

Posted November 21, 2013

— A state employee who helped oversee the construction and rollout of the NCTracks Medicaid billing system now works for Computer Sciences Corp., the contractor responsible for the troubled project. 

Paul Guthery was an IT manager at the Department of Health and Human Services, where he had worked since January 2010. At a hearing Wednesday, State Auditor Beth Wood described him as the agency's "point person" for CSC, responsible for certifying NCTracks' testing process.

At least one good-government watchdog says his jump from supervising the company to working for it raises the appearance of a potential conflict of interest, one that the state should try to avoid in the future. 

According to public records, Guthery began working for the state on Jan. 1, 2010. His last salary was $126,500 per year. He stopped working for the state Aug. 27 and soon after began working for CSC as an executive account executive. 

Doctors, hospitals and others who render care for patients covered by Medicaid, the state-federal health insurance program for the poor and disabled, must use the CSC-built NCTracks system to get paid for those services. The system went live July 1 and soon after become the focus of controversy, with providers saying it was nearly impossible to submit claims and that payments were delayed by months. The delays threatened to drive some providers out of business and complicated care for thousands of patients.

Since then, the state and CSC have struggled to right the program. It was in late August, as providers bombarded lawmakers and the governor's office with complaints about the system, that Guthery made the jump to the private sector.  

Guthery declined via email to speak with WRAL News, deferring to his company's corporate communications department. Michelle Sicola Herd, a spokeswoman for CSC, declined a request for an interview. But she said Guthery began working for CSC on Aug. 27, which state records list as his last day of work for DHHS. 

"CSC hired Paul because of his knowledge and experience," Herd wrote in an email that addressed several questions posed by WRAL-TV.

Officials with DHHS downplayed Guthery's part in the rollout of NCTracks, saying Thursday that he never occupied a position in which he would give the final word on the program going live. 

"One of the key things is that Paul was one of many people involved in this project, a very large project going on for a very long period of time," said Ricky Diaz, a spokesman for the department.

Diaz emphasized that an outside testing group reviewed the stability of the NCTracks system before state officials turned it on July 1.

Herd, too, emphasized that Guthery did not have the final say-so over the project. 

"Mr. Guthery was not an approver for NCTracks to go-live," Herd wrote in an email. "Members of the NCMMIS+ Program Steering Committee authorized the go-live of NCTracks. The Steering Committee is composed of members representing various divisions of the Department, the Office of the State Chief Information Officer, the Office of the State Controller, the General Assembly and the Office of State Budget and Management."

But Wood blasted the role of that third-party overseer, saying the company hired for independent verification and validation of system testing had not actually conducted any independent verification. Rather, they merely collected information from DHHS and CSC and summarized it in a report.

During a hearing Wednesday, Sen. Jeff Tarte, R-Mecklenburg, asked Wood who was responsible for signing off on reports that system testing had been completed and was successful.

"The agency," Wood answered, adding, "The point person that was at the agency is now working for CSC."

That person was Guthery. 

Diaz said state personnel laws prevent him from talking about what, if any, steps were taken to try to keep Guthery as an employee. But he emphasized that the state had taken strides to get the system on track, pointing out that it has been under construction for more than 10 years.

"There have no doubt been challenges. This is a very large transition for the state of North Carolina," he said. "The NCTracks project has, to date, paid $3.8 billion to North Carolina health care providers, as well as processing more than 78 million claims." 

With regard to Guthery, Diaz said state law does not currently prohibit employees who work with a contractor from taking a job with that contractor. By contrast, had Guthery taken a job as a lobbyist, he would have needed to wait six months before working with the legislature or his old employer. No such cooling-off period applies to employees in other lines of work. 

Jane Pinsky, with the North Carolina Coalition for Lobbying and Government Reform, says lawmakers should consider changing that.  

"If I’m a skeptical, cynical citizen, the question is, did he (Guthery) give them a pass and then they gave him a job?" Pinsky said.  

Earlier this year, another high-ranking DHHS staffer left for a private-sector job. Former state Medicaid director Carol Steckel was recruited to overhaul North Carolina's system but left abruptly for a position with Wellpoint, a managed-care company based in Florida. 

Pinsky pointed out that Wellpoint could end up bidding to run some or all of North Carolina's Medicaid services under the McCrory administration's planned reforms.

"Before hiring Mr. Guthery, CSC reviewed North Carolina State law, as well as CSC policy, and the hire is compliant with both of them," Herd wrote. "Before he came on board with CSC, Mr. Guthery conferred with NC DHHS officials on the propriety of his hire, and the State did not identify any prohibitions to Mr. Guthery's working for CSC."

Diaz said that Guthery's jump was not unusual. 

"In state government, and in DHHS, it is not unprecedented for employees to go work for vendors," Diaz said.

Asked if he thought the Guthery situation could be viewed as a conflict of interest, Diaz said DHHS was being "very transparent" with regard to the situation. Asked if the agency would put any policy changes in place, Diaz referred to DHHS Secretary Aldona Wos' efforts to improve contracting practices more broadly.

"I think what you've seen is this secretary has placed a heavy emphasis on contract oversight and compliance," he said.

But Pinsky says the problem could be addressed in other ways.

"One thing you can do is tell the contractor that, as a condition of the contract, they can’t hire anybody" in the agency, she said. She also suggested the possibility of a non-compete clause for employees hired to administer contracts. 

In the meantime, she says, lawmakers should consider instituting a cooling-off period for high-level staffers. 

"Anybody who oversees a contract or supervises an industry shouldn’t be able to go to work for them the next day," she said. "Does that affect any decisions they’re going to make in how they administer the contract?"


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  • 61babygirl29 Dec 1, 2013

    Let's just remember ALL of this when it's voting time. Just seems like all this being done and we forget as soon as we cast that ballot. Again, just remember ALL when you go vote.

  • wildpig777 Nov 25, 2013

    I RECKON he won't happy with the 1% raise state employees got in the last 6 yrs........... so he went with private industry. now he oughta try and get re-hired at the executive level since gov nor mc is SO VERY GENEROUS WITH TAXPAYER DOLLARS TO THOSE who supported his effort for election and those who are in positions of high authority.

    meanwhile gov nor mc has expressed great concern and appreciation for state employees and teachers and states he will DO ALL HE CAN IN THE FUTURE FOR TEACHERS/STATE EMPLOYEES. you can trust him on that. snicker snicker

  • gotnoid Nov 25, 2013

    I does seem to be a conflict and I'm glad WRAL was able to report this to us. Apparently, it never happened in the previous democratic administrations or we would have heard about such things. Is that correct??

  • gingerlynn Nov 22, 2013

    Well sounds like they were going to make Guthrey a scapegoat. I dont blame him for leaving./

  • mistervegas Nov 22, 2013

    For the most part consultant companies end up costing the state more money. Out sourcing is not the answer. Keeping RIFing state employees and pretty nobody will be left to provide the services for the tax payers.

  • 42_wral_mods_suck_i'm_gone Nov 22, 2013

    This is how McCrory works. Give fat salaries to people with ties to consultants. And surprise those same people want to privatize state jobs to consultants. They'll say well save oney on a low ball a bid. Then the state will pay FAR more when costs over run and projects fail.

  • rushbot Nov 22, 2013

    the wos-gate story continues..it is an established fact that mccrory edited the audit of medicaid when he "reported" on it to the citizens of north carolina.. ..our program, which was ranked number 6 in the united states was instead characterized as terrible and not working..mccrory then had wos/steckel/guthery turn on the nctracks system almost a year early..the system was of course not ready and chaos has ensued..the resulting chaos/failure is the excuse mccrony and all the other regressive republicons in the ga are using to try and bring on private contractors (who probably have given a few bucks to their campaigns) to sell the state a new system..and of course steckel and now guthery have jumped ship to go to work for potential vendors of a new system..this all stinks to high heaven...

  • wildpig777 Nov 22, 2013

    gov nor pope, I mean mc crory --give our teachers a raise.

  • LuvLivingInCary Nov 22, 2013

    wwake is quoting only part of the law…there is also a law that says private industry cannot poach on state employees to get them to jump ship from DHHS employees to projects directly managed by DHHS division. i.e.…State Medicaid employees can't go to work for the MMIS project. trust me with the mess in the MMIS project, they paid him well to take the risks of going to work for a project that could get cancelled at any time…GA did it. If I was McCrory I'd send a team down to GA and get their playbook on how they did it and move CSC down the road before they have to pay the bill.

  • heels2 Nov 21, 2013

    McCrory and Wos are determined to dismantle everything to do with healthcare in North Carolina in order to pay off their political supporters and make them rich in their private enterprises for years to come. All this will come at the expense of NC jobs and ultimately NC taxpayers. If the "fixing Medicaid" charade cannot be stopped by our legislature we will be left with a problem that no one will be able to fix. The problems with Medicaid will not be solved by farming the program out to private, out of state companies. If that happens then the state will lose much of the administrative control. There will be a huge exodus of jobs out of North Carolina. But companies in Rhode Island, New Jersey and Florida (among others) will be thrilled. The tax coffers in these states will be the recipients of our hard earned tax money. There will be no savings. The cover of the book that Wos & McCrory will present will be appealing. Hopefully people will actually read the book before saying "okay".