Reprinted from The News & Observer of Raleigh

BY MARK JOHNSON

The News & Observer

Former state legislator Richard Morgan has done what seemed impossible: He has rallied Republicans to defend the administration of Democratic Gov. Bev Perdue.

Morgan, who as co-speaker of the House infuriated his fellow Republicans by cooperating with Democrats, filed an ethics complaint last week against Lanier Cansler, secretary of the Department of Health and Human Services.

The complaint says it is illegal for Cansler to receive debt payments from his former consulting firm because that firm secured no-bid contracts for a client from DHHS.

The complaint, which drew the spotlight to Morgan's state Senate campaign, unleashed a torrent of criticism from Republicans, some of whom branded him a hypocrite.

"I've always known Lanier to be a very forthright, ethical person, and I am mystified at this argument," said House Republican Leader Paul Stam, of Apex. "I don't see what Lanier allegedly has done, other than serve the public."

Other Republican leaders, including GOP benefactor Art Pope, lashed out at Morgan on Friday, saying he is not trying to clean up government but to keep money flowing to himself and his wife.

The dustup has refreshed bitter feuds within the Republican Party that have lain largely dormant for four years. Morgan and a handful of GOP allies became dissidents in 2003, when they blocked the Republican House majority from naming a speaker. Morgan and his crew instead forged a coalition with Democrats, making Morgan and Democrat Jim Black co-speakers.

"Richard has always been vindictive," said Rep. Leo Daughtry, a Johnston County Republican who would have been speaker if not for Morgan and his allies. Cansler was a Daughtry ally when he was in the legislature.

Rep. John Blust, a Greensboro Republican, blasted Morgan for his role in blocking legislation when he was co-speaker that would have required small tobacco companies to set aside hundreds of millions of dollars in escrow accounts in case of lawsuits. At the time, one of those companies, S&M Brands, gave $100,000 to a political action committee that Morgan ran. Donors associated with the company also gave $77,000 to the campaigns of Morgan and his allies.

"Pay-to-play was the rule when [Morgan] was a co-Speaker of the House," Blust wrote in an e-mail message. "Who is Morgan to question the ethics of anyone else? If Morgan is campaigning as the only legislator to stand up against this kind of stuff, he is being hypocritical and dishonest, as there were some of us who stood up against him doing worse things than he is accusing Cansler of doing."

Morgan's Interests

Pope and other Republicans say they think Morgan filed the ethics complaint against Cansler to try to preserve the cash flow that Morgan and those around him get from the home and hospice care industry.

Morgan received $250 from the industry's political action committee in 2008 in his unsuccessful campaign for state schools superintendent. Morgan's wife, Cindy, is a vice president with the industry's trade group. And Morgan's friend and adviser, Carter Wrenn, is a lobbyist for the industry.

"Richard Morgan should look in the mirror," Pope said. "It's hypocritical for him to accuse someone else of being involved in pay-to-play on this issue. The home care association has donated money to Richard Morgan. It employs Cindy Morgan, and the association pays Carter Wrenn as a lobbyist on this issue."

Morgan replied that "if that's the best comeback that can be found, it's just not going to wash." He added that he is not currently an elected official, so there is no conflict in his wife's job or campaign contributions from the industry.

"I feel real good about those years I was in the legislature that I championed the cause of hospice and home care and nurses," Morgan said.

Morgan's complaint with the state ethics commission says Cansler has been violating state law against public officials enriching themselves through their office.

Cansler, who was appointed in January 2009, has been receiving $3,000 a month from a consulting firm that he helped found, at the same time that the firm helped land $30 million in no-bid contracts for a client from DHHS.

Cansler said he has recused himself from any contracts involving the firm and that the payments are not income but debt repayment for his share of the firm, which he sold to his partners before taking office.

Cansler's old firm was the lobbyist for the Carolinas Center for Medical Excellence. That company was awarded contracts from Health and Human Services to help determine whether Medicaid recipients are qualified to receive in-home nursing care or specialized outpatient therapy - staples of the home and hospice care business.

The programs are expensive, and Cansler is pushing to save the state money by making sure services go only to those entitled to them. Fewer people in the program mean less money for the home and hospice care industry.

Cansler declined to comment Friday but has previously characterized Morgan's ethics complaint as "clearly politically motivated and without merit."

Perdue's Delight

Perdue, who has defended Cansler and said she knew about his financial relationship with his former firm, enjoyed seeing Republicans come to the aid of one of her Cabinet secretaries.

"Well, miracles do happen!" Perdue said, through a spokeswoman. "Now if only [N.C. Republican Party Chairman] Tom Fetzer would come on over to my side."

Pope politely clarified his position: "I'm not defending a Democratic administration. I'm defending following the law, saving the taxpayers money and a good man with whom I have a personal friendship, Lanier Cansler, who happens to be a Republican."

News & Observer Staff writers Benjamin Niolet and Michael Biesecker contributed to this report.