LOUISVILLE — The chairman of the board of Passport Health Plan resigned Wednesday, the latest in a series of personnel moves at the state's only managed health care program for the poor.
Dr. Larry Cook, who served as chairman of the board for 13 years, stepped down as CEO of Passport after a November audit showed various conflicts of interests as well as lavish spending on meals, travel and lobbying.
Cook had said he would stay on as chairman of the board until he retires from his position at the University of Louisville on June 30. But Gov. Steve Beshear demanded Cook step down as chairman because Beshear said the organization was responding too slowly to a host of problems found in the audit.
Cook's departure comes a day after two key Passport executives — Executive Vice President Shannon Turner and Associate Vice President Nici Gaines — were fired from the organization.
In addition to an ouster of Passport's top executives, Beshear is asking for other changes including the reorganization of Passport's board, cooperation in a complete audit of Passport and the hiring of a compliance officer and an internal auditor.
Beshear has said that if Passport does not make changes, the state will terminate Passport's contract with the state after June 30, the contract's last day.
Passport has the state's largest contract, nearly $800 million. It manages health care services for 164,000 recipients on Medicaid in Jefferson and 15 other counties.
Cook, in a written statement, said he felt that the organization would best be able to address the issues raised in the audit through new leadership and restructuring the Passport board.
"When I look back on my career, I believe I will regard the formation of University Health Care dba Passport Health Plan and its evolution as a nationally recognized Medicaid managed care plan as one of my proudest accomplishments," Cook said. "The program is my legacy and what is most important to me."
William Wagner, the executive director of Family Health Centers Inc., which runs seven health centers in Louisville, was elected interim chairman of the board. Wagner was the only candidate to be nominated for Cook's job, Wagner said.
The Passport board, which met for nearly two hours Wednesday behind closed doors, also approved the firings of Turner and Gaines and the hiring of interim CEO Mark Carter.
Carter will be leased from his current firm of Dean, Dorton, Ford. Wagner said the group will pay $37,500 a month for Carter's services, but that amount includes salary, benefits and other costs and is not only Carter's salary per month. Wagner said the organization will be able to afford those costs because it no longer has to pay the salaries of Turner and Gaines.
Carter said the board Wednesday also authorized him to begin looking for a firm to do internal auditing and to begin proceedings to hire a corporate compliance officer, two key areas that Passport must address.
Beshear has asked that Passport respond in writing by Dec. 13 to tell the state how it plans to address Beshear's 11-point corrective action plan. Wagner and Carter said they plan to meet that deadline and have had nearly daily discussions with Beshear's administration.
Wagner said the board is committed to ensuring that "these problems do not re-occur."
"I was disappointed," Wagner said of the findings of the audit. "There were some surprises."
Some of those surprises included about $230,000 in travel, food and gifts over three years by two executives, Wagner said. The audit also found questionable fund transfers between the Passport and its five main investors.