LHSC alleges fraud cost hospital $60 million— expert suggests what might have gone wrong

Allegations of a decade-long fraud contained in a pair of lawsuits filed by the London Health Sciences Centre (LHSC) have many Londoners questioning why concerns didn’t come to light sooner.

During the period in question (2013-2024), the hospital’s leadership structure included a CEO and team of executives overseen by a Board of Directors.

Western University political scientist Martin Horak believes governance issues at public institutions often have a common solution, “The remedies to that really are transparency and accountability.”

“There’s often a tendency in big bureaucracies to accumulate power or accumulate resources, and that can create an environment where governance can go wrong,” Horak adds. “Situations where people can begin, and the organization can begin pursuing their own interests.”

In a statement of claim, LHSC is first seeking $50 million in damages, plus an additional $1.5 million in punitive damages, against former executive Dipesh Patel, Derek Lall and Neel Modi, as well as director of BH Contractors Paresh Soni and construction firms BH Contractors and GBI Construction.

The hospital alleges the group conspired to manipulate procurement processes, submit fraudulent documents, inflate invoices and improperly award contracts to companies with undisclosed conflicts of interest; actions LHSC believes amount to civil fraud, breach of fiduciary duty and unjust enrichment.

In their second statement of claim, London Health Sciences Centre is also suing three former executives and a consulting firm for $10 million, alleging they ignored or concealed evidence of fraud that may have cost the hospital millions of dollars.

LHSC filed a statement of claim in Ontario Superior Court, accusing former CEO Jackie Schleifer Taylor, former CFO Abhijeet Mukherjee, former executive Bradley Campbell and consulting firm Corpus Sanchez International, of breach of fiduciary duty, negligence and willful misconduct.

None of the allegations made in the statements of claim have been tested in court, however, public reaction suggests a potential impact on the level of trust Londoners will place in future hospital governance.

“When trust is undermined, it does take a while for it to be restored. It’s a complicated process,” admits Horak.

In September 2024, the entire LHSC Board of Directors voluntarily resigned.

Provincially-appointed Supervisor David Musyj is temporarily leading the hospital and reporting directly to Ontario’s Health Minister.

Horak warns against over-tightening rules in response to a governance shortfall.

He says other public institutions have responded by implementing overly complex, time consuming and costly processes that ultimately hinder an organization long into the future.

“It’s not so much about keeping organizations like that on a tight leash, it’s about making sure that those organizations are open and transparent about what they’re doing and how they’re doing it.”

Statements of Defence have not yet been filed by any of the individuals being sued by LHSC.