Jury Orders Hospital to Pay $2.7 Million to AIDS Patients

Climaxing the first AIDS medical fraud case to come to trial in the United States, a Los Angeles Superior Court jury ordered North Hollywood Medical Center on Friday to pay $1.8 million in punitive damages for allowing an “unethical medical experiment” on five patients.

The decision brought total damages to $2.7 million after the same jury earlier this week found the hospital and two former doctors liable for negligence, fraud, conspiracy and violation of state medical codes in administering the controversial, homemade drug Viroxan.

In that earlier verdict, four of the five patients who brought the civil suit were awarded a total of $925,000 for their physical injuries as well as pain and suffering. Although the jury found that the fifth patient was also wronged by the hospital and doctors, he was not awarded damages because the jury felt he sustained no harm.

“The jury made it abundantly clear that the doctors were guilty of AIDS fraud and that the hospital conspired with them,” said Ray Henke, lawyer for the patients.

The $1.8-million punitive award will be divided between two of the patients, Mark Addy and Roderick Garcia. They were found to have been the victims of “oppressive, malicious or fraudulent” conduct, which made them eligible to collect the punitive damages.

Only the hospital, a 165-bed facility owned by American Medical Institute, was asked to pay punitive damages. Henke said that the former doctors--both of whom had their medical licenses revoked by state authorities because of the Viroxan treatments--would probably be unable to pay large punitive awards.

The patients charged that Dr. Valentine Birds and Dr. Rajindra Sethi, a surgeon, had given them the drug, which was invented by an Orange County radiologist in his home laboratory, to gather data on its effects. Viroxan has not been approved for any medical use by the Food and Drug Administration.

The suit charged the hospital with “indifference to its legal, ethical and professional duties,” in allowing the treatments.

The hospital’s lawyer, Alan Rushfeldt, placed the blame solely on the doctors. “The hospital was not at fault, not at all,” he said. “If you look at the initial verdicts, the jury said the hospital should pay only a small percent of the damages.

“The only reason they said the hospital should pay all the punitive damages was because the doctors said they were broke.”

The doctors and the lawyers representing them could not be reached for comment.

The patients who brought the suit are still alive, though none is currently in the hospital. But because their health is fragile, their lawyer said at least some of them may not live long enough to collect any money.

“If this goes to appeal, three of my clients will certainly not survive that, and the other two, it’s not sure,” Henke said. All five of his clients are infected with HIV, the virus that causes AIDS, and three of them have fully developed AIDS, he said.

Rushfeldt said his client would not base an appeal decision on the plaintiffs’ life expectancy. “It’s the legal issues that are important,” he said. “The money would still have to be paid out if we lost the appeal.”

But Henke charges that delays in this case and a drawn-out appeal process are part of a strategy to discourage AIDS suits.

“What they are saying to people with AIDS is that if you do sue, you probably won’t live to see your day in court,” Henke said. “And if you do, you certainly won’t collect because we can tie the whole thing up for years.”

The inventor of Viroxan, Dr. Stephen D. Herman, was arrested in 1990 in what state medical authorities said was the first action taken against AIDS quackery in California. He was later pressured by state officials into giving up his medical license.

Herman was originally named in the suit but was dropped from it on the eve of the five-month trial when he declared bankruptcy, complicating any action taken against him. He now lives in Florida.

The jury deliberated for almost a month before reaching the verdicts.