The Decibel - Alberta government alleged to have interfered in healthcare deals

Episode Date: February 19, 2025

Alberta Premier Danielle Smith’s government is facing scrutiny after serious allegations were in a wrongful dismissal lawsuit launched by Alberta Health Services’ former CEO, Athana Mentzelopoulos. The lawsuit alleges that government officials interfered with the health system on behalf of private firms. It also claims that Mentzelopoulos was fired because of “an internal investigation,” she was launched into how Alberta Health Services’ contracts are procured. Carrie Tait, one of The Globe’s reporters covering Alberta, broke this story. She explains the allegations made against the government, their ties to for-profit medical companies and what Smith’s government has said publicly so far. Questions? Comments? Ideas? Email us at [e-mail] this Decibel survey: https://thedecibelsurvey.ca/ and share your thoughts for a chance to win $100 grocery gift cards

A few weeks ago, Globe reporter Kerry Tait received a leaked letter. That letter was written by the former CEO of Alberta Health Services, and it had some serious allegations about government officials interfering in the health care system on behalf of private firms. Now there are multiple investigations into what actually happened and questions about how much the Alberta government knew. So today, Kerry joins us from Calgary to explain these allegations, how they relate to for-profit surgical facilities, and how people are responding

to The Globe's reporting. I'm Maenika Rammen-Wilms, and this is The Decibel from The Globe and Mail. Carrie, thanks so much for being back on the show. Thanks for having me. So Carrie, this story broke after you were leaked a letter written by former CEO of Alberta Health Services, Afana Menzelopoulos, and this has now become a lawsuit. So what are the allegations she is making in her lawsuit? Well, the former CEO alleges that she was terminated because she basically had launched multiple investigations

into things that concerned her at Alberta Health Services. The key concerns were around contracting and procurement. The most notable was government officials, particularly the Premier's then Chief of Staff, interfering and putting pressure on her to pursue, to finalize contracts for private companies, allegedly. Deals that would have benefited private companies is what she's alleging. And none of the allegations from the former CEO have been tested in court. Okay, so there's a few different elements to this here, but it sounds like at the center

of these allegations, this is around procurement. So this is basically when a government agency contracts out of service or buys a good. And I guess before we actually get into allegedly what happened here, Carrie, can you just help me understand how how is procurement supposed to work in this kind of thing? At one time, Alberta Health Services was this arms-length organization, or at least it was set up to be that way, you know, run the health care system, it does things like safety checks at restaurants. When the

E. coli breakout was happening, that falls under Alberta Health Services umbrella. Alberta Health Services during COVID was really strong on procurement because it is a provincial body. It had buying power and Alberta was able to acquire PPE in a way that some other places struggled because it was buying for the whole province, not just a region. It was supposed to be operating arm's length. Since COVID, that arm has gotten shorter and shorter. The government has been exerting more control over it. With Danielle Smith, she came to power on this.

This is not some nefarious thing she did. She said, I am going to strip power from Alberta Health Services because she argued bureaucrats and doctors and unelected people had too much power and were controlling and it was no longer correct. So she was breaking it apart into these four health organizations

and then moving procurement, which is a big deal. You're buying millions and millions and millions of dollars worth of goods and services. Move that into Alberta Health, which is the department. But right now, it's really hard to differentiate between Alberta Health and Alberta Health Services. Alberta Health Services does not do a whole lot without Alberta Health and Alberta Health Services. Alberta Health Services does not do a whole lot without Alberta Health's blessing. Okay, so the government kind of has to give their blessing for anything that AHS does it seems. When this procurement does happen, Carrie, can you just like really high level, how is this supposed to work? We shouldn't know anything about it. Like why should we know how a hospital or a hospital board

or a regional board buys gowns? And that is a good thing. We shouldn't know because it should be done to procure the best deal. The former CEO was operating as though she had that power. She was negotiating those deals. And we can see from her lawsuit, she alleges sort of over time that the government, Alberta Health, was asking for more power there. They had asked her at one point, according to her allegations, to sign a document that would have given Alberta Health, you know, basically procurement and negotiating power over chartered surgical facilities. She rejected that. What had happened then is the minister had issued a directive in October

basically asserting power over that and stripped her of that power. So the government stripped AHS then of that power to negotiate those contracts essentially? With respect to the chartered surgical facilities, yes. Okay. And we should say that chartered surgical facilities are privately operated and for profit. Yes. They basically perform surgeries on behalf of the province.

Okay, so Carrie, the former CEO of Alberta Health Services starts to look into these contracts. What prompted her to do this? What she says sort of triggered her was at the end of August, she met with one of the chartered surgical facilities, a major one called Alberta Surgical Group, and she alleges in her lawsuit that they made claims that kind of made her uncomfortable, like they weren't bound by the made claims that kind of made her uncomfortable, like they weren't bound by the existing volumes and pricing and you know she was kind of like, huh that doesn't seem right. So she went back and according to you know the story that she tells in her lawsuit started poking around just that one contract and she

alleges she found the prices in it for the surgeries that that firm was doing were notably higher than AHS's internal costs and what AHS was paying private competitors. And so as you said, this is specifically for a company called Alberta Surgical Group. So she's looking into this one company then right now. She's looking in not just to the one company, but to one contract. So she started very small, according to her lawsuit. And then because she was uncomfortable at that point, she put a pause on negotiations.

She alleges with Alberta Surgical Group, which was seeking an extension of its contract. One of the Premier's right-hand men at the time, his name is Marshall Smith. And- No relation to Danielle Smith, just the same last name. You got it. And the Premier trusted him quite a bit. And according to the allegations in the lawsuit, he had been reaching out to the former CEO asking about, you know, the status of negotiations on contracts. And at one point, she alleges he made comments like these are

really powerful businessmen, they're getting unhappy, that type of thing. And that's where she's laying out her allegations of pressure that she was feeling and alleging that the Premier's office was, you know, interfering in contract negotiations. Okay, so she's alleging that basically the Chief of Staff of the Premier, the former Chief of Staff at this point actually, was then putting pressure on her essentially to extend this contract for this Alberta Surgical Group, is that correct? For that, and then there was also the, in her allegations, theed surgical facilities that were negotiating deals that he was also allegedly pushing for information and for those to move along as well. So help me understand

this though Carrie why didn't Athena Menzelopoulos want the AHS to sign this contract with the Alberta Surgical Group? What she alleges bothered her was that the prices that were allegedly on the negotiating table were out of line with what it costs Alberta Health Services to perform the same, some of the same surgeries in-house and what Alberta Health Services had contracted to other private providers. So basically she was like, well, this is just too expensive. My job is to get good deals for the province. This is not a good deal.

I don't like it. That's the way she tells it in her lawsuit. Okay, well then on the other side of things then, why would the government allegedly want the AHS to agree to a contract that its chief executive thought was overpriced? Like why would she be allegedly getting pressure to do that?

I don't have a great answer for that. The government does intend to file a statement of defense in this lawsuit, so hopefully we'll see some answers there. So far the government has sort of said, well, we had been asking the former CEO for eight months for information and we didn't get information so we had to take charge. That's been the government's response. Part of the problem there is that the former CEO says that she didn't really launch her investigation until the beginning of September.

So it's unclear what that eight months is hanging on. Yeah, those timelines don't really seem to match up. Eight months would be like the spring. And in her allegations, she outlines all of the times basically she was like, and then I met this person, and then I did this. And you can tell in her lawsuit she's trying to make the case that what she did to tell them x, y, zed.

Now, keep in mind, there was also a board at this time and she was informing the board. The deputy minister of health was on it including some others within the health department and those people are on the board to be the eyes and ears of the government. So at one point in December according to the lawsuit the board recommended the former CEO take some of this to the RCMP. Wow. And has that gone to the RCMP? The RCMP has confirmed it received complaints and it is the word it's using right now is review. So it's not as though that's, you know, some sort of investigation with detectives, but it's moving through the phases of the Mounties bureaucracy.

We'll be right back. So, Carrie, we've talked about one set of allegations around government interference, but this lawsuit also mentions another company called MH Care. Tell me about that. So, MH Care is a name that's familiar in Alberta for people following Alberta politics. It is the company that Alberta worked with to import what was supposed to be $70 million worth of generic children's medication from Turkey. That was the Tylenol deal. This was during the global shortage in 2022. It was one of Danielle Smith's first big splashes. She wanted to bring in this medication. This company

got the deal. And then some of the medication got here. It came with risks for children. Alberta shelved it ages ago. So we never got the medicine. The medicine we got couldn't be used. And the owner of that company, his name is Sam Marais. And he has ties to the government. We have reported on him providing cabinet ministers and members of Premier Smith's

office with luxury gifts like tickets to the Oilers games. Now I want to be clear that is not against the ethics rules. The Alberta government changed the ethics rules. They loosened them prior to that. Oh, interesting. And so the former CEO of Alberta Health Services started digging and she alleges once she added it all up that company had received 614 million dollars worth of contracts from AHS. What she also

discovered was the person who was doing procurement at the time of the Tylenol deal had an email account, she alleges, with MH Care. So this is an individual who seemed to be working for this company, MH Care, and also working with Alberta Health Services at the same time? Well, the CEO alleges that, yes, he had the email address. She also does allege that he was providing advice to the companies that were trying to procure contracts and deals while also being the negotiator

on the provincial side. We've been talking about different people kind of involved in this area, but I wonder, Carrie, about Alberta Premier Danielle Smith herself. Do we know what she knew of these allegations before they became public through your reporting? So the premier has been very quiet on this. She was out of the country when the story first broke.

It broke on a Wednesday. By Saturday morning, she put out a statement on Twitter. The auditor general by then had confirmed that he is examining the issues. And she said, well, I'm going to ask the Auditor General to expedite his review. It should be noted that she's not the boss of him. That's an independent body of the legislature, but it is a good sign that she's saying we will cooperate.

We want this done quickly. That was in her statement and then she was in Washington with all the little Premiers as they try to keep trade open with the United States and there was a scrum with all of the Premiers and the Globe's Laura Stone was able to ask her what did you know and when did you know it? Premier Smith, when did you become aware of concerns over contracts at AHS and pick the RCMPG office? Well, I'm glad that we're going to have the Auditor General take a look at it. I first became aware of it when I saw the newspaper reporting on it, and we're interested in hearing what the Auditor General has to say. We've already set up a shared file so that they can get all of the

documents that we have to see if there is any wrongdoing. If there is wrongdoing, we'd like to get to the bottom of it. And if there isn't, we need to find out why AHS is standing in the way of Charter Surgical Centers. The premiere on her radio show kind of hinted that people need to put this in the context of the lawsuit and that the former CEO is suing for 1.7 million and that you need to take that into consideration. Okay so that's what we've heard from Alberta Premier Daniel Smith. We've also talked about allegations against a few other different individuals here, Carrie. Can you just give us a sense how have

the various people and companies that we've discussed in this story, how have they responded to these allegations? So Alberta Surgical Group, ASG, they initially had sent a statement saying they were dismayed by the allegations. They have been above board the whole time. MHCare and Samaraise, through their lawyers, have said that they're confident that they have acted properly throughout and they're going to refrain from commenting during the auditor general's investigation. The fellow who allegedly had the two email addresses, he has not returned any messages. And a key figure in this, Marshall Smith, the Premier's former chief of staff, he has not replied to any voicemails or text messages

as well to the Globe and Mail. He has to other media and said basically the allegations around him are bogus. What about the health minister? We haven't really talked much about her. This is Adriana LaGrange. Has she responded to any of this? She has said that she's going to file a statement of defense and that they're going to fight it, but they have not dealt with questions from reporters yet. And so, Carrie, what is happening now? You mentioned that the province's Attorney General is looking into things, the RCMP is potentially

reviewing a request as well. What exactly is underway here when it comes to investigations? Right, there's a few things now. So we have the Auditor General. Alberta Health Services has also said it is investigating. The Auditor General's investigation is going to be looking at Alberta Health Services and Alberta Health. Alberta Health Services has only said it's going to investigate Alberta Health Services.

But the allegations are essentially that it was Alberta Health and other government officials that were pushing through these rich contracts. So unless Alberta Health is also under the microscope, people will argue that the investigation wasn't even looking in the right spot. The Health Minister and the Premier have both mentioned that there will be a third party come in to do this investigation of Alberta Health Services. They haven't provided many details on that. They haven't provided who it is, how independent that party will be, how much information will be released. The Premier has said that the Health Minister will be removed from decisions related to those investigations, but chartered surgical facilities and procurement

involve so much of the health system. That's removing her from a lot of a portfolio. The RCMP is still at the stage, this sort of vague stage where they're reviewing complaints. And then inside government, a memo from one minister has leaked. And that minister wanted the health minister, And then inside government, a memo from one minister has leaked. And that minister wanted the health minister, Adriana LaGrange, to step aside during the

investigations. Not be removed from cabinet, just removed from health. LESLIE KENDRICK Just following on that, Keri, I guess I'm wondering about the political ramifications here. What has been the political fallout for the Alberta government so far? Well not surprising the NDP is called for everyone to be fired and you know a million investigations. That's expected. That's the official opposition in Alberta. Yeah that's their job. It's going to be really interesting because this is the first time since Nahed Nenshi has taken over

as leader, now he is the leader but he does not have a seat in the legislature, that there has been something that the NDP can really sink their teeth into. And as much as this is a test for the government, this is a test for the NDP. They're going to have to manage their own reaction to this. The legislature is at a session right now, but it is back next week. We'll have a budget on next Thursday. That budget is not going to be great. So you'll have a brewing controversy and probably a pretty ugly budget and an NDP that's really hungry and they will be back in the legislature.

And so we could have a pretty explosive start to the session. So we will see how both leaders and both caucuses manage. Carrie, thank you so much for your reporting and for being here today. Thank you for having me. That's it for today. I'm Maynika Ramon Wilms. This episode was edited and mixed by Ali Graham. Our producers are Madeleine White,

Michal Stein, and Ali Graham. David Crosby edits the show. Adrian Chung is our senior producer, and Matt Frainer is our managing editor. Thanks so much for listening, and I'll talk to you tomorrow.