Alberta Premier Danielle Smith, right, and Minister of Health Adriana LaGrange provide an update on what steps the government is taking related to allegations by former Alberta Health Services CEO Athana Mentzelopoulos, in Calgary, Alta., Wednesday, Feb. 19, 2025.THE CANADIAN PRESS/Jeff McIntosh

By Canadian Press

AHS SCANDAL

Alberta health agency, in lawsuit, says it fired its CEO for ‘alarming’ incompetence

Mar 14, 2025 | 4:09 PM

Alberta’s front line health agency says it fired its leader earlier this year not because she was investigating corruption but because she was an “alarming” failure at her job.

Alberta Health Services and Alberta Health Minister Adriana LaGrange are being sued for wrongful dismissal by former AHS president Athana Mentzelopoulos.

In a statement of claim filed last month, Mentzelopoulos said she was fired for investigating sweetheart deals for private surgical contracts and had concerns about conflict of interest and high-level political intimidation that reached right into Premier Danielle Smith’s office.

Alberta Health Services, in a statement of defence filed Friday, makes many of the same points LaGrange gave in her own statement of defence filed the day before.

Both say Mentzelopoulos was failing badly in her mandate to downgrade the health authority from its role as the provincewide leader of frontline health delivery to one of many agencies that would oversee care under a new governance model.

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“Among other fundamental deficiencies, (Mentzelopoulos) displayed an alarming lack of strategic vision and leadership which severely hindered AHS’s ability to fulfil its mandate and implement critical health-care reforms,” reads the AHS statement of defence.

It adds the former CEO failed or was unwilling to balance the agency’s budget, form good relationships with staff and stakeholders, including LaGrange, or comply with orders given to her by the health minister.

It also claims Mentzelopoulos’s poor job performance contributed to “an environment of misinformation” and stress for employees while AHS underwent its transition to being strictly a hospital service provider.

Like LaGrange’s defence, AHS rejects Mentzelopoulos’s claim that she was illegally fired because she was let go by LaGrange’s chief bureaucrat rather than by the AHS board.

AHS says Mentzelopoulos was fired by the then-deputy health minister on Jan. 8 while he was acting in his role as an AHS board member rather than in his role as a bureaucrat.

The AHS statement of defence also backs LaGrange by saying the board chair signed off on the firing weeks prior. The entire board was dismissed soon after Mentzelopoulos was fired.

LaGrange’s defence calls Mentzelopoulos’s allegations 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 and AHS are asking that the suit be dismissed, with costs.

Statements from either side have yet to be tested in court.

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

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

The health minister’s statement says Marshall Smith, who has since moved on from government, was acting in good faith and within his role to seek answers on when those deals would be finalized.

It adds the province had already committed to them and the delay was threatening thousands of surgeries.

Marshall Smith has called Mentzelopoulos’s allegations “outrageous and false.”

LaGrange’s counterclaim 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 receive only 30 per cent of the order despite paying full price.

Following that contract, company 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.”

LaGrange said her government had no choice but to fire Mentzelopoulos, saying she 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.

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.

At an unrelated press conference, Premier Danielle Smith said Friday neither she nor any other high-level government officials have been interviewed by RCMP.

Smith said Mentzelopoulos was resistant to change and was getting in the way of government goals.

“Anyone who resists the very clear direction that we’re going to give them are going to face problems,” Smith said.

Mentzelopoulos’s lawyer, Dan Scott, said in an email that the statements of defence filed by LaGrange and AHS “have sidestepped key issues” in an attempt to smear his client.

“She is looking forward to filing her formal reply in response to the defence, and she will be very comfortable proceeding to trial,” Scott said.