Wordpress MU categories not showing hierarchically

Does anyone know how to fix this problem in the display of categories in the post editor?

We have lots of categories. There are 2 top level categories, one has only one level of sub-category under them, they display hierarchically. The other has 2 levels of sub-categories under it, and they all display alphabetically. Is there only one level of sub-categories supported in the post editor category selector? Is there a plugin or some way to extend that?