Former health agency CEO suing Alberta government, alleges coverup

EDMONTON — The former head of Alberta’s front-line health authority is suing the province and health minister alleging she was fired for looking into high-level government interference and overpays on multimillion-dollar contracts.

Athana Mentzelopoulos, the former CEO of Alberta Health Services, or AHS, also accuses Health Minister Adriana LaGrange of twice trying to shut down an investigation into questionable deals and conflicts of interest before engineering what she describes as her illegal dismissal last month.

She alleges LaGrange signed off on a fee structure that represents “significant” overpays for surgery contracts.

Mentzelopoulos made the allegations in a statement of claim filed in court Wednesday.

The allegations have not been proven in court and a statement of defence has not been filed.

The lawsuit mirrors a letter sent last month by Mentzelopoulos and her lawyers to AHS seeking restitution to avoid a lawsuit.

Parts of the letter were revealed last week in a report by the Globe and Mail. In response, LaGrange and Premier Danielle Smith launched an internal review. Alberta’s auditor general is also investigating.

Earlier Wednesday, before the lawsuit was made public, Smith told reporters in Washington, D.C., that LaGrange has her confidence.

Critics including the Opposition NDP have said a full independent judicial inquiry is needed as the allegations touch on LaGrange and the premier’s inner circle.

Mentzelopoulos took over the top job in late 2023 and had it for just over a year. She was tasked with helping the agency transition to a new governance model and with signing off on contracts for chartered surgical facilities.

These facilities are private but do work covered by medicare under contract to the province and are a keystone in the government’s goal to reduce wait-lists.

The statement of claim alleges that throughout 2024, Mentzelopoulos was pressured by various provincial officials, including Marshall Smith, then the premier’s chief of staff, to sign off on contracts for private surgical facilities despite her concerns over how much was being paid and who was benefiting.

Marshall Smith left the government last fall.

The suit says Mentzelopoulos had concerns with “significantly increased costs” on a contract with the private provider Alberta Surgical Group compared with similar providers.

The document also alleges conflict of interest surrounding an AHS staffer, who the claim says also had an email account with private supplier MHCare Medical while involved in negotiating a contract with the company for children’s pain medication.

MHCare and its CEO, Sam Mraiche, made headlines after they were awarded a $70-million contract to procure the medicine from Turkey.

Alberta received about 30 per cent of the order, despite paying the full cost. Hospitals later stopped using the medication that it did get because of safety concerns.

Following that contract, Mraiche also provided multiple cabinet ministers and government staff with luxury box tickets to Edmonton Oilers playoff games. The lawsuit says AHS estimates Mraiche-related firms have completed $614 million in contracts for goods and services.

According to the statement of claim, as Mentzelopoulos learned more about these inflated contracts and conflicts of interest, she decided to take action.

At one point, the lawsuit says, an AHS board member urged Mentzelopoulos to be cautious about her personal safety.

Mentzelopoulos stopped signing deals and launched a probe that later escalated into a full forensic audit. At the same time, the lawsuit alleges she faced pressure from Marshall Smith and LaGrange’s ministry to sign off on new surgical facilities at what she determined to be unjustified, inflated prices.

In a late November meeting about the investigation, the lawsuit says LaGrange told Mentzelopoulos to “wind it up.”

Three weeks later, a health staffer told Mentzelopoulos that LaGrange was “dismissive of the need to continue the internal investigation,” says the document.

According to the claim, Mentzelopoulos plowed ahead anyway. On Jan. 7, the lawsuit says LaGrange tried to have the AHS board fire Mentzelopoulos, but the board refused.

The next day, the document says, Mentzelopoulos was fired by Andre Tremblay, LaGrange’s deputy minister. The lawsuit says it was an illegal dismissal because it was not done by the board.

The dismissal came two days before Mentzelopoulos was scheduled to meet with the auditor general to share the contents of her investigation, says the lawsuit.

Three weeks after that, the entire AHS board was also fired.

Tremblay now operates as CEO.

The lawsuit further alleges LaGrange overpaid for health contracts last October by setting payment fees for surgical facilities that Mentzelopoulos deemed excessive, thereby opening the door to “significantly increased costs to AHS – and potentially hundreds of millions in profits for the (private clinic) owners.”

In the past week, LaGrange and her office have challenged allegations from Mentzelopoulos, saying her dismissal was not linked to the probe but to operational efficiency and that the Health Ministry was being stonewalled by AHS for months in its own attempt to uncover wrongdoing.

LaGrange said in a statement that many of the allegations in the lawsuit are “clearly false, while others will need to be investigated further as part of the auditor general’s work and the government’s internal review of this matter.”

Marshall Smith, in a statement, said: “These allegations are outrageous and false. I am eager to meet with officials investigating this matter and I will have a more fulsome statement to make in the days to come.”

The Alberta Surgical Group and MHCare issued statements rejecting the accusations when they surfaced last week.

The lawsuit seeks $1.7 million in pay owed on Mentzelopoulos’s contract and aggravating damages.

This report by The Canadian Press was first published Feb. 12, 2025.

Jack Farrell and Lisa Johnson, The Canadian Press