Audit: Former NCTracks director wasted $1.6M, hired family members

The report also found lax oversight of the NCTracks program, launched in July 2013 to simplify the Medicaid billing process for doctors' offices and hospitals, as well as reports to lawmakers that omitted $260,000 in employee overtime.

The state Department of Health and Human Services, which oversees NCTracks, says it disagrees with several of the audit's findings.

The director is not named in the report, which examined the period from 2011 to 2014. But Angie Sligh served as information technology director over that program until her retirement in February, according to state personnel records.

Despite that 2013 report, auditors found DHHS "failed to take steps to prevent and detect abuse and waste of state resources" at the Office of Medicaid Management Information Systems Services, or OMMISS.

That included engaging in or allowing nepotism.

Acting off a tip to the auditor's hotline, investigators found the NCTracks program employed the director's daughter, ex-husband, ex-husband's wife and several other family members of employees in the division. It also noted several other hires who regularly attended the director's church. That included four executive assistants she hired at salaries "exceeding their qualifications," the audit says.

One executive assistant, which received $86,852 in total pay during the 2014 fiscal year, made her the highest-paid executive assistant in the state.

Yet auditors note the director was unable to define nepotism.

"When asked for her definition of 'nepotism,' the OMMISS Director answered, '[I] never really thought about it,'" auditors wrote. "She tried to avoid the question but then read the following definition she found on her smartphone: 'The practice among those with power or influence of favoring relatives or friends, especially by giving them jobs.'"

Investigators documented excessive wages to under-qualified employees and unjustified overtime and holiday pay totaling at least $1.6 million.

"The OMMISS director's abuse of her authority through the hiring process caused these excessive costs," the report said.

The auditors' total includes 12 temporary employees paid more than $800,000 more than their qualifications allowed. Under scrutiny, auditors wrote that the director's claim that employees were paid appropriately didn't hold up.

"The OMMISS director tried to justify the higher pay rates for her administrative staff by saying, 'They have to be able to do at least 75 percent of business analyst type work'" the audit said. "However, during interviews with these employees, they did not demonstrate those abilities and could not explain any duties beyond those of an administrative assistant."

Temporary employees failed to sufficiently document more than $200,000 in overtime, auditors said, and provided them with "limited explanations" for the extra work that included things like "lots and lots of typing" or phones ringing "off the hook ... even after hours."

The report also noted that the director claimed unauthorized compensatory time that could result in inflated retirement benefits.

In her response to the auditor's office, DHHS Secretary Aldona Wos said the investigation pointed out an issue "that appears to have existed across state government for a number of years." The audit, she said, triggered the department's own investigation and the development of better internal policies.

The department disagreed with several of the auditors' conclusions, Wos said, such as the amount of pay wasted, whether the director's retirement benefits were affected and whether the division broke state rules when hiring several contractors.

She also said a DHHS investigation failed to substantiate the auditors' nepotism claim and that the department was "unaware of any current employment arrangement" in the Medicaid information management division that violates the state's nepotism policy.

In a statement, DHHS spokesperson Alexandra Lefebvre said the department fully cooperated with the audit and took "appropriate action."

"While many of the issues identified date as far back as 2004, this administration is grateful for the opportunity to take corrective action and to put safeguards in place that will prevent these types of issues from occurring in the future," Lefebvre said.

Wos referenced the certification in her response to auditors, saying it "proves that the new claims payment system is operating correctly" thanks to the efforts of her chief information officer, Joe Cooper.

"DHHS believes the recent notification from the federal government is proof of the excellence that the new CIO's leadership and management imparted to this division," Wos wrote.