A controller-implemented method and system for operating a multi-level bridge power converter connected to a power grid in a fault-tolerant operational mode, the power converter including a first converter coupled to a DC link, the first converter including a plurality of switching devices. The method and system determine an on/off scheme for the switching devices in the first converter when one or more of the switching devices has failed in a shorted state, wherein the on/off scheme is dependent upon phase current direction through the first converter. The phase current direction is indirectly determined by sensing a pole voltage of the first converter and implementing the on/off scheme in the fault-tolerant mode when the pole voltage changes from zero to a +/−value indicating that the phase current through the first converter has switched direction.