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Alberta Health has dropped objection to paying full severance to fired CFO Allaudin Merali

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Allaudin Merali

Alberta Health Services has thrown in the towel on a key point of the legal dispute with Allaudin Merali and offered to pay its fired executive vice-president and chief financial officer the full severance agreed to in his contract.

"AHS has acknowledged that it will pay the severance required by the Employment Contract once the Plaintiff has complied with the obligations imposed on him by the Employment Contract," AHS says in its statement of defence filed in response to Merali's $6.1-million March 14 lawsuit alleging breach of contract and defamation. Merali’s unpaid severance is reported to be in excess of $500,000.

However, Merali's lawsuit continues at this time. In addition to his argument he is entitled to the severance pay set out in his contract, the point AHS has now accepted, Merali is seeking damages for what his statement of claim described in part as "the utmost bad faith in conspiring to induce breach of employment contract,” plus compensation for loss of income, as well as damages from former health minister Fred Horne for defamation.

Merali was fired on Aug. 1 2012, hours before the Canadian Broadcasting Corp. was scheduled to broadcast a report that the senior executive had filed high expense claims while employed in a similar senior position by the Capital Health Region between January 2005 and August 2008.

The statement of defence for Alberta Health Services says "AHS has communicated to the Plaintiff that AHS is prepared to pay the severance contemplated by the Employment Contract on the following conditions:

"As contemplated by paragraph 28 of the Employment Contract, the Plaintiff is required to provide a Release in a form satisfactory to AHS in exchange for the severance payment …

"The Plaintiff is required to provide AHS with details of any alternate employment obtained during the 12 months following the termination of his employment so that AHS may make the appropriate adjustment to the severance in accordance with paragraph 30 of the Employment Contract. …

"AHS will pay interest on the severance payments in accordance with the Judgment Interest Act …"

At the time the AHS statement of defence was filed, it went on, "the Plaintiff has not provided the Release … nor the information about alternate employment … "

The statement of defence also said that by April 2014, "AHS determined that the termination of the Plaintiff's employment was properly characterized as a termination without cause."

This is not exactly new information. The AHS statement of defence was filed with the Alberta Court of Queen's Bench in Edmonton on May 2, 2014, where it could be viewed by anyone for a $10 fee.

Still it will come as a surprise to most Albertans, especially those who recall the very strong language used by both Horne and former premier Alison Redford once Merali's expense claims had become a topic of controversy.

The firing of Merali and the things Redford and Horne said about him, took place despite the fact Merali's expenses, submitted to the CHR in 2008 and 2009, appear to have been within the rules of that organization at the time and to have been approved by the Capital Health CEO, Sheila Weatherill. They also appeared to have had nothing to do with Merali's employment as CFO of AHS, the post from which he was fired.

Nevertheless, on Aug. 6, 2012 -- less than a week after the CBC story appeared and Merali was fired -- a Government of Alberta news release was published over Horne's name stating in a headline, "No severance to be paid to AHS executive."

The same day, AHS also indicated Merali would not be paid the severance in his contract. This was widely reported by media.

The government news release quoted Horne as stating, "like all Albertans, I was outraged to learn of these events," which he also referred to as "unacceptable expense claims" and "unacceptable practices."

In a media conference that day, Horne said "I am outraged as is the government by what has been revealed here … I am dumbfounded."

That remark became the basis of Merali's defamation argument. According to his statement of claim: "The Defamatory Statement … was intended by the Minister, and was understood by all recipients thereof, to mean the Plaintiff was untrustworthy, dishonest, underhanded and unethical. … The Defamatory Statement was false and made by the Minister with malice and with the deliberate intention of discrediting the financial and personal reputation of the Plaintiff."

The statement of claim also alleged: "The Minister’s further purpose was to make the Plaintiff the scapegoat for the government and to deflect adverse public criticism from himself, from other members of the government, and from others in AHS who had continued to be employed in various capacities, including those close to then politicians whose expenses were questioned at the same time."

Horne's legal counsel filed a separate statement of defence, also on May 2, in which "the Minister denies each and every allegation contained in the Statement of Claim" and "in answer to the whole of the Statement of Claim, at all material times the Minister acted with good faith and without malice in the course of discharging his Ministerial duties and responsibilities."

Merali's reply to the defence filings, made on May 27, states that from Aug. 1, 2012, to May 14, 2014, "AHS continuously and publicly denied its obligation to pay severance to the Plaintiff, thereby intending it to be understood that the Plaintiff had been guilty of conduct justifying termination for just cause."

The May 2 AHS communication, this document also argues, was "made on conditions which AHS well knew could not be reasonably accepted by the Plaintiff."

None of these statements by the various parties have been tested in a court of law.

On the topic of whether the government would pay Merali's contractual severance, Redford's commentary in the media was very clear:

"We are not going to voluntarily do anything with respect to his severance," Redford, herself a lawyer, told a columnist for the Calgary Sun on May 20, 2013. "We are not going to simply sit back and take a look at what he may or may not feel he's entitled to without resisting that. It’s not acceptable.

"Simply because someone alleges they're entitled to something doesn't mean we have to agree they are and we’re not going to agree," Redford stated.

No court dates were included in the Court of Queen's Bench public file on Merali's lawsuit. But then, given the state of affairs today in Alberta, a court appearance may no longer be required to settle this matter.

This post also appears on David Climenhaga's blog, Alberta Diary.

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