Cansler departs DHHS

It's rarely a good sign when an agency head gives two weeks' notice. It's an even worse sign when the news is carefully spun and then dropped late on a Friday afternoon before a holiday weekend.

Posted 2:41 a.m. Jan 14, 2012 — Updated 2:45 a.m. Jan 14, 2012

Laura Leslie

It's rarely a good sign when an agency head gives two weeks' notice. It's an even worse sign when the news is carefully spun and then dropped late on a Friday afternoon before a holiday weekend.

That's exactly what happened today with the announcement of Health and Human Services Secretary Lanier Cansler's hasty return to the private sector.

The full story is here. But the interesting bits are between the lines of the official news release, headlined "Gov. Perdue Names Delia Acting Secretary of DHHS."

In this afternoon's release, Perdue and Secretary Cansler say lots of nice things about each other. And the governor's appointment of Cansler as the first chairman of her new "Commission on an Affordable Healthcare System for North Carolina" is clearly intended to signal a friendly break. But there's plenty of story behind today's move.

Perdue raised eyebrows when she named Cansler as her HHS Secretary shortly before her inauguration in 2009. The former Republican lawmaker's credentials weren't in question: he had served as deputy HHS secretary under former Dem Governor Mike Easley. But he left the public sector in 2005 to start a lobbying firm, Cansler-Fuquay Solutions, that consulted for various interests in the health-care sector.

Just days before Cansler's appointment, one of his firm's clients, Computer Sciences Corporation, had won a $265M contract to overhaul the state's Medicaid claims system. As Secretary, he would be in charge of overseeing that contract.

Cansler said he had never actively lobbied for CSC, claiming he had just "introduced" executives to some lawmakers. And he set up firewalls within HHS, naming a deputy secretary to oversee the contract to avoid the appearance of conflict of interest.

But the controversy, which never quite went away, re-emerged in recent weeks after lawmakers got a preview of an upcoming state audit that said lax agency oversight had contributed to the ballooning of CSC's contract cost, from $265M to $495M, and its delayed implementation date, nearly two years behind schedule.

Cansler fiercely denied any conflict of interest and defended his agency staff and CSC, pointing the blame instead at constantly changing federal guidelines that kept moving the goalposts for the system redesign. The federal health care overhaul only made it worse, he told lawmakers at a December meeting.

But other states - notably New York - have also had battles with CSC over Medicaid upgrade contracts. And when the official audit was finally released this week (delayed, auditor's staff said, by foot-dragging at DHHS), it wasn't kind to Cansler or his agency.

CSC hasn't been Cansler's only controversy, either. In 2010, former House Co-Speaker Richard Morgan filed an ethics complaint against Cansler over the awarding of a no-bid HHS contract to another of his former clients, Carolinas Center for Medical Excellence. The State Ethics Commission dismissed the claim in early 2011, finding no evidence of wrongdoing.

Cansler has steadfastly denied any conflict of interest with any of his former clients. And he had some notable successes as HHS secretary.

But three years of deep budget cuts, struggles with mental health care system reform, and a seemingly endless string of scandals at the state's hospitals had to have taken its toll. And Cansler has spent much of the past year at the epicenter of political budget struggles between the Democratic governor who appointed him and the Republican lawmakers who now control the purse strings in Raleigh.

The audit may have been the proverbial final straw — for one side, or both.

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