Alberta Health Services alleges the wrongful dismissal suit of the organization’s former CEO is “groundless” and an attempt to extract a larger severance payment.

In a statement of defence filed Friday in Edmonton’s Court of King’s Bench, the provincial health agency says it terminated former CEO Athana Mentzelopoulos because she wasn’t fulfilling her duties.

The claim says Mentzelopoulos’s lawsuit in response to her January termination is “ill-founded, groundless and vexatious.”

Mentzelopoulos, a former Alberta government employee who has served as deputy minister of finance, filed the suit against AHS and Health Minister Adriana LaGrange last month.

She claims she was fired two days before she was scheduled to meet with Alberta’s auditor general about surgical contracts she says had links to government officials. 

She alleges she was terminated, in part, because she had launched an investigation and forensic audit and was reviewing the prices of surgical contracts. Her examination was underway as a contract for orthopedic surgeries with Edmonton’s Alberta Surgical Group (ASG) was set to expire.

Her claim says she had concerns about conflicts of interest in procurement, and was politically pressured to extend contracts she worried weren’t in taxpayers’ best interests.

Mentzolopoulos widened the AHS investigations to include the health authority’s procurement with medical supply company MHCare. The company secured a $70-million contract in 2022 to import children’s pain medication from Turkey during a national drug shortage. Much of the medication has never been delivered, and most of the product was never used and is now being stored by AHS.

Her statement claims the AHS board members were concerned enough about her potential conflict of interest findings that they recommended she take her findings to the RCMP.

Within days, Mentzelopoulos alleges a government official ordered her to “wind up” her investigation and transfer all the information about contracting to Alberta Health.

Her allegations have not been tested in court.

Lost confidence

In its Friday statement of defence, AHS says the organization lost confidence in Mentzelopoulos’s abilities.

“The plaintiff’s allegations that her employment was terminated because of the investigation and audit she initiated into various AHS surgical facilities contracts is a diversion from the plaintiff’s own inadequacies and the plaintiff is solely responsible for the termination of her employment,” the document says.

AHS hired Mentzolopoulos in December 2023 as the government had begun breaking AHS into four new organizations.

The province had planned to transfer some of AHS functions, such as contracting, procurement, and information technology, to new provincial entities. The plan envisions AHS becoming a service delivery provider focused on acute care.

The statement of defence said although Mentzelopoulos was hired to lead this work for AHS, including the transfer of some staff and duties to other agencies, she was allegedly ineffective in the role.

The statement alleges Mentzelopoulos displayed an “alarming lack of strategic vision” that stood in the way of making reforms.

“The plaintiff’s repeated unwillingness or outright refusal to meet the expectations and priorities set by the health minister not only stalled essential progress, but actively disrupted the operational and structural advancements required for the refocus plan,” it said.

The statement alleges the former CEO refused to present and balance budgets, engaged in “unprofessional conduct” with government employees, failed to relay information to the board and communicate changes to AHS staff, among other concerns.

AHS denies wrongdoing in the statement, and says people in the organization had no knowledge of some of the communications between Mentzelopoulos and government officials.

The agency also denies the health minister demanded the AHS board to fire Mentzelopoulos or that the board refused any demand.

In a statement of defence filed in court on Thursday, Health Minister Adriana LaGrange also denied allegations levelled against the provincial government.

That claim says Mentzelopoulos was unwilling to implement the government’s plan to break apart AHS, and became “infatuated” with the internal investigations into suspected wrongdoing.

In a statement to CBC News, Dan Scott, the lawyer representing Mentzelopoulos, said both the government and AHS have sidestepped key issues in the statement of claim.

“[They] are now attempting to smear Ms. Mentzelopoulos in an effort to deflect attention from what happened,” reads the statement.

He said that there was never any suggestion of “supposed performance issues” during Mentzelopoulos’s tenure.

“The re-focus was led by government and AHS leaders had little authority to communicate with AHS staff about the re-focusing except with the express approval and script from government,” reads the statement.

“The budget results during Mentzelopoulos’s time speak for themselves. As for other allegations, they are incredibly vague and general to the point of being meaningless.”

The Alberta RCMP and Alberta’s auditor general are now investigating the allegations. The province has appointed a former chief judge from Manitoba to lead a third-party investigation into procurement by AHS and Alberta Health.

It says Mentzelopoulos is entitled to more than $580,000 in severance pay. The former executive is seeking a $1.7-million settlement. 

Both AHS and LaGrange are asking for the lawsuit to be dismissed and the plaintiff ordered to pay all legal costs.