NC insurance commissioner ran against ‘good ol boy’ politics. Critics say he embraced it [The Charlotte Observer]

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In 2019, state Insurance Commissioner Mike Causey looked every bit a maverick politician.

As a Republican candidate, he said he’d fight the “good ol boy” system that infected politics. He appeared to do just that after winning the job. Causey was celebrated as a noble actor in an FBI sting that resulted in the federal criminal charges against a billionaire political donor and one of the state’s biggest GOP luminaries, former Congressman Robin Hayes.

But after narrowly winning on his fifth try, Causey did not take long to play the game he said he’d steer clear of, The News & Observer has found. The insurance commissioner:

Created a cadre of regional director positions, starting with three and expanding to nine, which he used to hire people with personal and political ties. One was Causey’s former 2016 campaign manager, who the department could not show did substantial work. Two had worked for his old boss, a former GOP NC governor.

Placed the directors in regional districts with boundaries he often shifted, sometimes to accommodate his hires. In one case, he split a coastal county in half, making two districts accessible to two district directors living in the same beach town.

Moved three regional offices, previously opened by his predecessors to make department staff more accessible to North Carolinians, from cities to smaller communities. Visitor logs The N&O reviewed show few people signing in.

Hired a potential political rival who said he got paid but Causey’s department expected little work in return over years. Causey’s department recently fired the man for not working, but five years into his tenure.

Causey’s regional operation spends $1 million annually on salaries, offices and other costs. Former employees who The N&O reached out to say that’s taxpayer money that could be saved or better spent on the department’s wide array of services. The department’s 435 employees set insurance rates for consumers, help seniors navigate their Medicare benefits, oversee firefighter training and regulate manufactured housing, bail bondsmen, insurers and their agents.

Despite multiple requests, Causey declined to be interviewed about criticisms regarding his regional operation and other issues. But in an interview with The N&O in June he described his approach to regional outreach.

“There’s so many people across the state that have issues,” he said, ticking off needs such as help with insurance claims, navigating Medicare or inspecting buildings. “We’ve found that these regional offices are a good way to serve the public without people having to drive all the way to Raleigh.”

An altered agency

Causey, 73, is a former small business owner who has sold farm equipment, produce and antiques. He’s also a former lobbyist and insurance agency owner who ran as the GOP nominee for insurance commissioner in 1992, 1996, 2000 and 2012 and lost.

When he ran for Congress in 2014 to represent Greensboro, where he lives, and nearby communities, Causey didn’t survive the primary, finishing a distant seventh. But when he ran again for insurance commissioner in 2016, a Republican wave helped him past incumbent Democrat Wayne Goodwin by less than a percentage point.

Mike Causey is not a household name in North Carolina, though a recent spat with state legislators over his control of the Office of State Fire Marshal recently thrust him into news headlines.

When he took office, Causey started with three regional directors in 2017 and expanded the number to nine by 2021. Eight make roughly $69,000 a year, while the head regional director makes more than $81,000.

All the positions are designated as “exempt policy-making” under state law. That means they are not subject to the normal hiring and firing requirements. The positions do not need to be posted and the commissioner can terminate his appointees at will, which means a cause does not have to be identified and no appeal is available.

These kinds of designated hires are common in state, federal and local government, said Juliet Sorensen, a Northwestern University law professor who has written about political patronage.

“It really is a way to consolidate power by the public official that’s doing this,” Sorensen said. “This is loyalty-based hiring and the objective is to engender greater loyalty, with the ultimate objective of consolidating and retaining power.”

Such positions should be limited to a “close, core group” of advisers who help leaders carry out their objectives, she said. Going beyond that creates the possibility that jobs requiring relevant training and experience go to people who lack it, she said, which hurts the public.

Two of Causey’s first insurance department regional director hires were among several people from Gov. Pat McCrory’s administration, which Causey worked for over three years as the full-time head of the NCDOT’s Adopt-A-Highway road cleanup campaign.

April Riddle, who Causey made his regional director for western North Carolina, had been McCrory’s western regional director. Jarrod Lowery worked as a regional director for McCrory out of Robeson County. Causey moved him into a similar role in an insurance department district that stretched from Richmond to Johnston counties.

Mendy Greenwood, Causey’s 2016 campaign manager, won a regional director’s job that straddled the Triad and the Triangle, while then Wayne County GOP Chairman Brent Heath took over a district that ran from Duplin County up into northeastern North Carolina. Heath does have experience as an insurance agent and volunteer firefighter.

Heath and Lowery each ran unsuccessful campaigns for state representative seats while regional directors. Lowery, who left his regional post in 2019, won election to the state House in 2022.

Causey hired other regional directors with personal connections. Debra Turbeville, who was initially hired as a receptionist, had occasionally worked in a small antique shop he used to own in Jamestown in the 1990s, he said. She covers a district that runs from Davidson to Ashe counties.

Causey said he knew Ken Green, who succeeded Riddle last year, through his brother Tommy and the body shop the two brothers owned together. Causey lobbied for auto body shop owners at the legislature in the 2000s.

Only two regional directors – Marcia Kelly and Kirby Rhash – were insurance department employees prior to Causey’s tenure. Several directors Causey hired had little insurance industry experience. Causey said in the interview in June that experience didn’t matter.

“They’re the public face of the Department of Insurance,” he said. “So they don’t have to know how to solve the problem, they just know where to take it to.”

Sue Best worked for the department for 17 years, serving as a special assistant to Causey before she retired in 2019. Now a Causey critic, she too questions the regional directors’ value to taxpayers.

The directors did not understand some things well enough to explain the department’s services when asked to give presentations, she said.

“Regional directors were responsible for that, but I would go and some others who worked in consumer services would go and do the presentation because the regional directors did not have the experience to do the presentation.”

Former Regional Director Hygan Kapikian worked out of the Charlotte and Gastonia offices and was supposed to supervise the other regional directors. But she said she had little authority over them.

“Everybody was either politically connected or had some personal connections,” Kapikian said.

Causey terminated her without explanation on June 28, three weeks after The N&O interviewed him.

Missing activity reports

The regional directors are supposed to be roving ambassadors in their districts, Causey said in June. They visit businesses, community organizations and local officials, as well as attend public events to inform them of the department’s services. The department requires them to fill out weekly activity reports that log where they went, who they saw and what they did.

The N&O requested the regional directors’ weekly activity reports, weekly schedules, travel expenses and mileage logs since the time Causey took office. The department could only produce six activity reports from Greenwood, his former campaign manager who he hired in 2017. There should have been at least 200. Only three weekly schedules were released.

Greenwood has had a state vehicle since May 14, 2018, according to the state Department of Administration. The insurance department released eight monthly mileage reports for her, none dated earlier than July 2022. It produced two expense reports, one from January 2018; the other from January 2023 involving a trip to Raleigh for a regional directors’ meeting.

Greenwood left the regional director position six months ago, but remains with the department.

The department produced 19 activity reports for Rosemary Parker, another regional director who Causey hired in 2018, and seven for Riddle, the former McCrory aide. Both had routinely filed expense reports or mileage logs showing their travels for the department.

Asked about the lack of accountability, the department, in a written response not attributed to an individual, said Causey didn’t have daily oversight of the regional directors.

Heath’s activity reports and expense reports were much more numerous and showed that he often reported driving more than 1,000 miles a week across his northeastern district, by far the most of any other director. A thousand miles a week translates to more than 16 hours driving at 60 miles per hour.

Heath said he was allowed to use his personal vehicle, which meant he was reimbursed for his mileage during those four years as a regional director. His expense reports during that time totaled more than $55,000, with the majority of that money going toward mileage.

The State Budget Manual says state agencies should maximize the use of state vehicles whenever possible. The department did not explain why Heath wasn’t assigned a state vehicle, as most regional directors were.

Some activity reports showed directors spending much of their week traveling to insurance offices, fire departments, local government offices, pharmacies and other medical businesses to introduce themselves and hand out business cards. Often, the business owners or officials they had planned to meet weren’t present or were too busy to see them, the reports show.

Pressing the flesh

When roaming their districts, regional directors also hand out brochures and other department paraphernalia with Causey’s name and title, encouraging attendance when he makes public appearances and lining up interviews with local media, department records show.

Until legislators took the job from Causey last month, the insurance commissioner was also the state fire marshal. In that role Causey visited scores of fire departments to hand out grants, congratulate retirees and pay tribute to firefighters’ heroic deeds.

Heath’s weekly activity report for the second week of June 2020 notes, for example, he spent nearly the entire time contacting fire officials and insurance agents to let them know Causey would be in their areas to hand out $5,000 checks to volunteer fire departments. The money came from a $500,000 Blue Cross Blue Shield North Carolina grant.

NCDOI news releases document that Causey traveled across the state delivering the BCBS checks to dozens of fire departments in rural counties in 2020. All told, 94 departments in 36 counties received BCBS checks; Causey told a BladenOnline reporter he planned to deliver all of them in person.

News coverage from local media across the state showed Causey posing multiple times with local fire department officials as they hold giant-sized $5,000 insurance department checks with Causey’s signature.

Ted Brown, a former senior advisor to Causey, first suggested to state Senate leader Phil Berger in an email on Dec. 20 that the state fire marshal’s office be separated from the Insurance Department. That was a month after the commissioner terminated Brown with little written explanation.

Brown told Berger in a follow-up email on April 25 that Causey’s fire department visits were politicking at public expense.

“It is very difficult to watch a chauffeur driven car being used for unnecessary trips across the state,” Brown wrote in the April 25 email.

Brown supported legislation that three state senators filed in March that would remove the Office of State Fire Marshal from the insurance department and make it an independent agency.

“OSFM should be independent and certainly not a part of DOI,” Brown wrote in the email. “More importantly, a non-firefighter should never be head of OSFM.”

The department said Causey’s fire department visits are “part of his desire to bring Raleigh to the citizens of our state.”

Instead of passing the bill, lawmakers tucked it in the state budget that became law in October. Causey would have the power to appoint the state fire marshal, but it would need lawmakers’ confirmation.

Lawmakers subsequently passed legislation protecting the office’s leaders, but Causey dismissed three of them Tuesday, including Chief State Fire Marshal Brian Taylor, and appointed new leadership before the legislation became law.

Taylor, in an interview Tuesday, called the moves the latest in a “family feud” between Causey and the legislature over the office.

Causey has made clear that he opposed losing his fire marshal position and leadership in a September press release.

“The lack of communication with the Department of Insurance and no input or discussion allowed on changes to the Office of the State Fire Marshal is very disturbing,” he said in the release.

State Sen. Jim Perry, a Lenoir County Republican, sponsored the legislation. He said he wasn’t aware of Brown’s concerns until after he filed it. He said few states have the fire marshal under their insurance departments, and an expert ought to lead the office.

Moving offices

The state insurance department had three offices in cities outside Raleigh, where most staff is based, when Causey took office in January 2017. They served as outposts for people and businesses in those areas to save them the trouble of driving to Raleigh, Goodwin said.

They now stand in the smaller, more Republican-friendly communities of Archdale, Gastonia and Whiteville. Another is soon to open in North Wilkesboro, northwest of Winston-Salem. Causey’s department has sought a fifth location near the Tennessee border in Murphy, records show.

“I get Asheville, I get Charlotte, I get Wilmington if you have to have an office at all,” Brown said in an interview. “But I don’t understand moving to these locations that really no one travels to and no one really knows the office is there.”

Causey had reasons for closing the three former regional offices in Asheville, Charlotte and Wilmington, he said in June. The Charlotte office’s downtown location made it difficult for people to get to, Causey said, and an office more inland would be more accessible than coastal Wilmington. Employees worried about crime near the office in downtown Asheville, which also had sewage backups, he said.

The communities where Causey has opened offices are lower profile statewide but one is a place where Causey has personal and political ties.

Archdale is where one of Causey’s paid drivers, longtime friend Roger Blackwell, lives and serves as a town councilman. He’s a former insurance adjuster and Randolph County sheriff’s deputy, who made contributions totaling $10,000 to Causey’s campaigns from 1995 to 2020.

Causey lives 20 miles from the office, according to Google Maps. It’s the only regional office with a small studio for him to do media interviews on camera via the Internet. John Cable, the deputy commissioner who oversees bail bond regulation, has his office there and lives in the adjacent town of Trinity. Greenwood, the former campaign manager, lives less than a 15-minute drive away.

Log books examined by The N&O at the offices in Archdale, Gastonia and Whiteville showed few visitors signing in. The Archdale office was locked with no buzzer or sign telling visitors to knock, The N&O found during a visit in May.

Causey’s insurance department opened the Whiteville office at a former bank branch in January. Three months later, on April 13, a local businessman held a fundraiser for Causey at the “Bumminhole” in Whiteville, according to an invitation.

Campaign finance records show county residents contributed $9,500 over the subsequent eight days. The building’s co-owner, Jonathan Cox, contributed $1,000, as did Yvonne Norris, whom Causey hired to be the regional director, campaign records show.

In June, Causey said he didn’t ask for the fundraiser and he isn’t influenced by the contributions. He leaves fundraising to his campaign treasurer, he said.

Two years ago, Causey approached Rep. Jeffrey Elmore, a top House budget writer, seeking money to open two more offices. Causey offered North Wilkesboro, located within Elmore’s legislative district, as one location, Elmore said. He and other House budget writers gave Causey a recurring $200,000 appropriation.

Boundary shifts

Causey has changed the boundaries of his department’s regional districts, which the regional directors lead, multiple times. These districts are not evenly distributed by territory or population.

In 2019, Causey split Brunswick County into two districts, he said. That made the boundary of those districts a short drive from Oak Island homes owned by regional directors Kelly and Parker. Parker had moved to Oak Island from Wake County, Causey said.

Frank Williams, a Republican Brunswick County commissioner, knew Kelly served his county. Williams had invited Causey to his campaign fundraiser on May 6, and she appeared in Causey’s place, Williams said.

“It does help for us to have someone that we can call when we have a question that knows something about our part of the state,” he said.

But Williams had no idea that Parker served part of his county or that both regional directors live three miles apart on Oak Island.

The department said Kelly was not paid for the appearance.

Challenges ahead for Causey

As Causey considers a third run for insurance commissioner in 2024, he faces challenges and criticism from multiple corners. He has a primary opponent in former Rep. Robert Brawley, a longtime insurance agent from Mooresville.

David Wheeler of Spruce Pine, a self-professed muckraker who dug up dirt on Republican Congress members Madison Cawthorn and Lauren Boebert, has filed to run as a Democrat. He’s started attacking Causey.

The insurance commissioner has declined N&O requests to discuss some of his personal stumbles in years past, which political rivals may emphasize if he runs for re-election.

In 1986, for instance, a Mecklenburg County judge ordered Causey to pay child support to a woman who gave birth to Causey’s child, court records show. By then he was married to his current wife.

The woman returned to the court over the next several years to press Causey to continue meeting his obligations to the child, including the year before his first run for insurance commissioner in 1992 and after, the court records show.

Also, Causey’s tractor business went bankrupt in 1989, court records show. He filed for personal bankruptcy in 1990.

Causey today faces challenges that are political not personal. The fact that legislators stripped him of his fire marshal status without consulting him suggests that the commissioner is on shaky ground with powerful Republicans in the state legislature.

And the billionaire Causey recorded secretly for the FBI? He’s trying to rewrite the widely accepted narrative that Causey performed a public service when he secretly recorded him and others.

Greg Lindberg was convicted of public corruption and bribery charges in 2020 after federal agents said he tried to bribe Causey while seeking decreased regulation of his insurance business. Former state GOP Chairman Hayes pleaded guilty to lying to the FBI.

An appeals court threw out Lindberg’s conviction, finding the trial judge had wrongly instructed jurors. The case is set for a retrial in May.

Since then a federal grand jury indicted Lindberg on what prosecutors call a “massive” $2 billion fraud scheme. But in a series of press releases and interviews, Lindberg alleges that the insurance commissioner acted unethically, not him.

Politics reporter Kyle Ingram and database editor David Raynor contributed.

Map by Susan Merriam.

How we reported this story

The News & Observer began looking into the NC Department of Insurance’s regional operation several months ago, prompted in part by the opening of an office in Whiteville. The N&O visited that office and those in Archdale and Gastonia before interviewing Insurance Commissioner Mike Causey at his office on June 6.

The following day, The N&O requested public records, including activity reports, schedules and mileage reports that would show what work the regional directors performed. The department began releasing records on July 21, but many weren’t provided until Oct. 19. John Hoomani, the department’s general counsel, said those records fulfilled the remainder of The N&O’s requests.

Initially, regional directors at the Gastonia and Whiteville offices spoke with The N&O during the visits. But after the interview with Causey and the records requests, the department’s public information office told regional directors to decline interviews and to have any questions forwarded its way.

The N&O asked Barry Smith, the deputy communications director, on July 14 to arrange interviews with the regional directors. Smith did not respond.

On Sept. 18, The N&O asked for a second interview with Causey to talk about the regional offices, the hiring and firing of John Woodard, and financial issues Causey faced before he became commissioner. Smith said Causey declined to be interviewed and required all questions be submitted via email. The N&O asked Causey to reconsider, but he declined. The N&O emailed questions on Sept. 24 and 26.

The department responded in writing on Oct. 19. None of the responses were attributed to a department official. Without specifying who wrote what, Hoomani said the following people were consulted for information: Mike Causey, Brian Taylor, Rob Roegner, Jerry Daniels, Brent Heath, Debra Turbeville, Marcia Kelly, Barry Smith, Jason Tyson, John Hoomani.

On Oct. 23, The N&O emailed several follow up questions based on the department’s response and the records provided. The department did not respond to the questions before publication.