State Leaders Respond To Critical Audit

The audit revealed hundreds of millions of dollars in improper Medicaid hospital payments and conflict of interest. State Auditor Ralph Campbell calls it his agency's most damaging report ever.

Now, the governor and attorney general are weighing in.

Gov. Mike Easley downplays his administration's role in the Medicaid mismanagement.

"That was before this secretary and this administration got there. They discovered the problem, exposed it and took steps to fix it," Easley said.

Easley does not blame, but instead defends his appointee, DHHS Secretary Carmen Hooker Odom. He says she identified the Medicaid mismanagement before auditors.

"I do not know what is new and what's changed, if anything, since the time that she exposed it over a year ago and the time of the audit," he said.

Law enforcement must decide if the problems rose to the level of fraud.

"I have our Medicaid fraud unit, which is made up of attorneys and SBI agents, reviewing the audit and supporting documentation," N.C. Attorney General Roy Cooper said.

Whatever the fallout, the audit has stirred election year tension within state government.

Easley showed little concern that the state may have to return hundreds of millions in improper Medicaid payments. He expects a settlement will be reached to avoid budget problems.