London, Ont., hospital accuses former CEO of failing to act on evidence of alleged $50-million contract fraud

Globe and Mail

11-07-2025

One of Ontario's largest hospital corporations is taking the unusual step of suing its former chief executive and two senior administrators, alleging they failed to act properly when they were presented with evidence of a procurement fraud.
London Health Sciences Centre, which manages three hospitals and more than 15,000 employees, announced two lawsuits this week stemming from an investigation into an alleged $50-million fraud scheme. The hospital network alleges inflated contracts were steered to companies with ties to a former vice-president of London Health Sciences.
Early signs of the alleged scheme, which the hospital corporation says played out over more than 10 years, were brought to the attention of top administrators in April, 2022 – information not shared with auditors or the board of directors, the hospital corporation has alleged.
London Health Sciences is now suing Jackie Schleifer Taylor, its former president and CEO; former administrative executive Brad Campbell; and former chief financial officer Abhi Mukherjee for breach of fiduciary duties. It's seeking repayment of $10-million, according to a statement of claim made public Wednesday.
Ms. Schleifer Taylor, who was paid more than $800,000 in salary and benefits in 2023 and who left the hospital network last year, could not be reached for comment. Mr. Campbell declined to comment when reached by phone. Mr. Mukherjee, who did not respond to a request for comment, filed a wrongful termination lawsuit in March over his dismissal last year.
The legal action was filed in conjunction with a separate lawsuit against Dipesh Patel, London Health Science's former vice-president of facilities; his wife, Varsha Patel; business partner Paresh Soni; and two other hospital employees who reported to Mr. Patel, Derek Lall and Nilesh Modi. None of them could be reached for comment.
That lawsuit alleges the defendants used aliases and forged documents to secure millions of dollars in hospital contracts, money that was later used to buy dozens of properties in Ontario.
In one instance, a company directed by Mr. Soni called BH Contractors was paid nearly $22-million for a window replacement contract – more than $10-million beyond what the company had bid for the work, the lawsuit alleges.
The allegations have not yet been tested in court and the parties have yet to file statements of defence.
The hospital corporation says all staff involved in the alleged misconduct are no longer employed there and it has passed its findings onto the London Police Service, which began an investigation in 2024.
'This action arises from a prolonged, deliberate, and co-ordinated fraud orchestrated by the defendants to systematically defraud LHSC of tens of millions of dollars through deception, concealment, and the abuse of trusted positions,' the procurement fraud lawsuit alleges.
Facing a $150-million deficit in its last fiscal year, London Health Sciences was placed under the control of a supervisor by the Ontario government in September, 2024. The supervisor, David Musyj, addressed the allegations in a public statement, calling them 'a deeply disappointing moment' for the health care network.
Mr. Musyj said the network is improving its oversight, and financial and governance practices to 'make sure this never happens again.'
Judge points to 'tainted' process in Toronto's St. Michael's Hospital bidding process at Bondfield trial
The allegations in this case are not an isolated problem, said Matthew Lerner, a partner at Lenczner Slaght LLP, the law firm representing Zurich Insurance, the multinational surety pursuing recovery on its losses from an alleged fraud at St. Michael's Hospital in Toronto.
In October, an Ontario Superior Court judge is scheduled to deliver a verdict in the fraud trial of Vas Georgiou, the former chief administrative officer of St. Michael's. Mr. Georgiou has been accused of colluding with co-accused John Aquino, the then-president of Bondfield Construction Co. Ltd., to help the company win a $300-million hospital redevelopment contract. Both men have pleaded not guilty.
In 2016, The Ottawa Hospital dismissed two of its facilities officials and sued them, alleging they had received improper benefits from hospital vendors. The former hospital officials countersued.
In 2018, Yanai Elbaz, a former executive at Montreal's McGill University Health Centre, was sentenced to 39 months in prison for accepting a $10-million bribe from the engineering company then known as SNC-Lavalin.
All executives in the public sector have a duty to diligently investigate and report evidence of misuse of public funds – while given some leeway how they address those allegations, Mr. Lerner said.
What makes the allegations in the London Health Sciences lawsuit rare is that the senior executives are alleged to have done nothing to formally investigate the allegations, nor pass the information about possible fraud onto outside auditors nor report to the hospital's board, he said.
'This lawsuit is not so much about the manner in which they handled investigating, documenting and reporting on these allegations, but is predicated on an allegation that they failed to do anything at all,' he said. 'They're alleged to have done nothing, and that's a very serious allegation that I assume the hospital is going to pursue vigorously.'
The lawsuit raises larger questions about the lack of oversight within public hospitals, where executives and volunteer board members are responsible for hundreds of millions in taxpayer funds. He said the level of scrutiny and accountability should be no different at hospital corporations than it is in the private sector, where companies are dealing with shareholders' money.
'It ought to be alarming to taxpayers that this could happen without somebody noticing,' he said. 'The perpetrators were allegedly accumulating substantial wealth, obviously through various corporations or family members, but I find it hard to believe that someone didn't notice something was off.'