Alberta fires back in wrongful dismissal suit, says ex-health boss was incompetent

EDMONTON — Alberta’s health minister has filed papers in court to formally reject allegations from a former health leader who says she was fired for investigating sweetheart deals, collusion and high-level political arm-twisting.

Adriana LaGrange, in a statement of defence filed Thursday, says Athana Mentzelopoulos was not let go in January from her job as the head of Alberta Health Services for investigating corruption.

LaGrange’s defence claims Mentzelopoulos was fired because she was not only failing in her job, she was working to stop mandated health reform in order to retain the power and “personal prestige” of her position.

It claims the firing came after “months of mounting frustration.”

Alberta Health Services has been in charge of all health delivery in the province but has, in the last year, been wound down to become just one piece of a new multi-agency model.

The statement claims Mentzelopoulos was “either unable or unwilling to carry out the mandate imposed by the province to decentralize care away from AHS.”

In her statement of claim, filed last month, Mentzelopoulos said her termination was politically motivated.

She alleged she was fired because she balked at signing overinflated contracts with private surgery providers and for investigating questionable dealings with how health contracts were being signed.

LaGrange’s defence calls that account a “dramatic tale and false narrative” meant to squeeze more money out of the government in a lawsuit on top of an annual salary approaching $600,000.

Mentzelopoulos is seeking $1.7 million in lost pay and damages, while LaGrange is asking that the suit be dismissed, with costs.

Mentzelopoulos was fired one year into a four-year contract.

She alleges she faced political pressure, including from Premier Danielle Smith’s then-chief of staff Marshall Smith, to sign off on deals despite outstanding questions surrounding excessive costs and who was benefiting.

Marshall Smith has called the allegations “outrageous and false.”

The health minister’s statement says Marshall Smith was acting in good faith and within his role to seek answers on when health deals the province had already committed to would be finalized, adding that the delays were threatening thousands of surgeries.

The lawsuit also accuses Mentzelopoulos of muddying the legal fight with unrelated issues, including an ill-fated $70-million children’s medication contract from 2022. That deal with Edmonton-based MHCare Medical saw the province only receive 30 per cent of the order despite paying the full cost.

Following that contract, MHCare Medical CEO Sam Mraiche provided multiple cabinet ministers and government staff with luxury box tickets to Edmonton Oilers playoff games.

MHCare has called Mentzelopoulos’s allegations “unwarranted and unjustified.”

Mentzelopoulos said that AHS had contracts with MHCare or companies associated with Mraiche totalling $614 million, but LaGrange said procurement with MHCare “was not an active issue” when Mentzelopoulos was employed by AHS.

None of the allegations from either side have been tested in court.

LaGrange said her government had no choice but to act, saying Mentzelopoulos had lost her way by failing to sign off on critical surgery contracts and implementing other critical reforms while pursuing a fantasy corruption investigation.

“(Mentzelopoulos) was infatuated with her investigation which failed to uncover any evidence of wrongdoing,” LaGrange said.

She also alleges that Mentzelopoulos needed help to complete her own work and clashed with senior officials within government — conflicts that went as far as her verbally berating them.

Mentzelopoulos said her termination on Jan. 8 was illegal because it was done by LaGrange’s office and not by the proper authority — the AHS board of directors. LaGrange’s statement says proper procedures were followed and that weeks prior the AHS board chair signed off on the decision to fire her.

Soon after Mentzelopoulos was fired, the entire AHS board was dismissed.

Since the matter became public, the RCMP has launched an investigation into AHS. Auditor general Doug Wylie has announced his own probe, and the province has initiated a third-party investigation, spearheaded by a former judge.

Alberta NDP Leader Naheed Nenshi has called for a full, judicial-led public inquiry into the matter, and on Thursday said the lawsuit, and the latest statements, still don’t give Albertans the answers they need.

In a statement Thursday, Mentzelopoulos said the premier and LaGrange’s recent public statements make it clear they aim to harm the former CEO’s reputation and “deflect from the truth.”

“As CEO of AHS, I came to realize that my career would end either because I went along with this government, or because I did not,” she wrote.

Her lawyer, Dan Scott, told The Canadian Press they can prove “pretty much everything” in LaGrange’s defence to be false.

Scott added, “Mentzelopoulos is looking forward (to) filing her formal reply in response to the defence, and she will be very comfortable proceeding to trial on an expedited basis — should the province have the courage to do so.”

This report by The Canadian Press was first published March 13, 2025.

Lisa Johnson and Jack Farrell, The Canadian Press