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NC Capitol

State health agency gave big contract to Wos acquaintance

Posted September 6, 2013 1:33 p.m. EDT
Updated September 6, 2013 6:32 p.m. EDT

— An employee of state Department of Health and Human Services Secretary Aldona Wos' husband landed a lucrative contract that puts him among the highest-paid workers at the department.

State records show the health agency paid Joe Hauck more than $228,000 for work done from late January through August to advise the secretary on "strategic planning, reorganization and policy issues." Hauck is on leave as the vice president of sales and marketing for New Breed Logistics, a High Point company for which Wos' husband, Louis DeJoy, is the chief executive officer.

Hauck's resume lists no prior experience in the field of health care, but DHHS Communications Director Ricky Diaz said in a written statement that Wos relied on Hauck's 35 years of executive management experience to "identify key weaknesses of the existing structure," build an executive team and undertake "an in-depth examination of financial issues that have historically plagued the Department."

Hauck did not respond to messages left for him by The Associated Press this week with his assistant at New Breed, which specializes in supply chain management.

In a written statement provided by Diaz Friday afternoon, Wos said the contractual payments were part of a continuing search for "diverse talent to turn around the department."

“The operational, IT and financial challenges at the Department of Health and Human Services are among the greatest in state government, as documented by the state auditor," Wos wrote. "To confront these challenges head on, I have assembled a strong leadership team and brought in experts who we knew could deliver immediate results."

The News & Observer first reported the payments Friday morning.

Data from the Office of the State Controller show Hauck received $228,375 over a dozen or so payments for work done over about seven months. That's more than the annual salary of 17,000 DHHS employees, with the exception of seven workers – all of them doctors. DHHS' top annual salary – again for a physician – is $268,000. Four other senior advisers in DHHS earn between $87,500 and $144,000 annually.

The results of Hauck's contract, which is capped at $310,000 and scheduled to expire on Nov. 30, are "already achieving millions in savings without compromising services," Diaz said. Among those actions: an expanded audit office, a plan to reduce temporary agency workers while hiring more health care professionals and a plan to achieve $5 million in savings for DHHS-supported nonprofits.

Outside a committee meeting at the General Assembly Friday morning, state Sen. Fletcher Hartsell, R-Cabarrus, said he understands that certain positions need specialized knowledge and skills. He also said he needed to know more before making up his mind about this case.

"I would typically want to look into it a little more and understand the rationale," Hartsell said. "If it's a valuable service, it's fine. If it's not, it needs to be addressed otherwise."

State Rep. John Blust, R-Guilford, echoed the need for more details, but he said he's always been concerned about keeping government salaries in line with the work state employees are doing.

"I do think, in an environment like this, when you have not given the teachers a raise or the other state employees a raise, you have to be hyper-sensitive to what people in the higher end are doing and obtaining from government," Blust said. "I don't know the details of the case yet, but I'll definitely be looking at it with interest."

In a letter to lawmakers Friday afternoon, Wos defended contracts with DHHS in light of media reports, calling them "an integral part of our effort to deliver more efficient, effective services to North Carolinians and results to the taxpayers of North Carolina."

She noted multiple problems she inherited at the department, which she said had no plan of succession for top-level leaders who were already on their way out before the transition. She also cited a lack of financial oversight and ineffective communication.

As she assembled her leadership team, Wos wrote, Hauck was a critical part of an effort toward "pinpointing failures and implementing solutions."

"Joe is an accomplished leader with 35 years of executive management experience across the entire spectrum of business operations and communications disciplines," she wrote. "He provides solid business insight with an ability to ascertain and analyze organizational requirements, forecast goals, streamline operations and execute new program concepts."

A doctor from Greensboro and campaign fundraiser for Gov. Pat McCrory, Wos has been under scrutiny for salaries given to some of her top advisers and directors. 

Diaz, a 24-year-old former campaign spokesman for McCrory, is paid $85,000 a year to manage the agency's message and oversee compliance with the state's public records law. Wos' chief adviser for policy issues is another 24-year-old former McCrory campaign staffer, Matthew McKillip. He is paid $87,500.

Les Merritt, a former state auditor, is also on contract at DHHS as a financial adviser. He made $58,000 in two months.

Two of Wos' directors are paid outside their normal salary ranges, exemptions they earned because of their extensive experience, Diaz has said. He also said, in a phone conversation Friday afternoon, that Wos has selected a strong leadership filled with experts.

While he said he can't comment on this case specifically, Blust noted there have been instances where government workers have gotten increases in take-home pay – whether raises or promotions – that might not sit well with others who have had their salaries frozen.

"It does send a bad message if you're asking everyone else to sacrifice and a few don't seem to be sacrificing," Blust said.

Rebecca King said the high salaries for outside advisers are shocking. King was fired Tuesday as chief of oral health services at DHHS.

"I've been in government for 35 years. That's not the type of salaries that professionals in public health make," King said.

According to the dismissal letter obtained by WRAL News, King was accused of poor judgment and unacceptable behavior. She said she raised legitimate concerns about budget cuts to dental programs, but she said she believes her firing is more closely related to the fact that some of her staff lobbied lawmakers on their own time about potential cuts.

Wos was furious about the lobbying and demanded details, King said.

"I thought this part of it was just a witch hunt," she said. "I just think this is wrong. It's not my business what people do while they're on vacation."

Details of all DHHS contracts are supposed to be available on the agency's Open Window Web site, but Hauck's listing doesn't say much. It lists him as a senior adviser and notes five contract extensions since his contract started at the end of January to extend his length of service or increase funding. The end date is currently listed as Aug. 30. However, the site publicly lists Hauck's compensation under that contract and extensions as $0.

Like Wos, Hauck has been a strong political supporter of McCrory, who took office in January. Hauck and his wife donated almost $11,750 to McCrory's gubernatorial campaign in 2011 and 2012, according to records from the State Board of Elections.

All told, New Breed employees and members of their families gave more than $216,000 to McCrory's campaign, according to a report issued earlier this year by Progress North Carolina, a left-leaning policy group. The company led by Wos' husband also gave $25,000 to the Republican Governors Association, which supported McCrory's campaign.

King, who is appealing her firing, said she thinks problems at DHHS go deeper than pay.

"This is not about me. This is about what's going on in North Carolina state government. I think it's wrong, and I'm glad I'm able to speak out."

On Friday, Progress NC spokesman Gerrick Brenner repeated the group's call for members of the GOP-controlled state legislature to investigate hiring and compensation practices in the McCrory administration.

"DHHS is an example of cronyism gone wild and Gov. McCrory is defending their hiring practices," Brenner said. "So, now it's time for the legislature to step in and investigate. It's their duty to provide oversight."

CORRECTION: A previous version of this story incorrectly reported that Hauck's contract was scheduled to expire on Nov. 2. It actually expires Nov. 30.