Letter Told of Practices at Fertility Clinic : Medicine: Accusations of ‘illegal and improper’ procedures by physicians led to investigation by UC Irvine. Meanwhile, Assembly panel assails university’s supervision of researchers.

In a letter that prompted UC Irvine to launch a full-scale investigation of its scandal-plagued fertility clinic, three whistle-blowers painted a graphic picture of what they call “wrong, likely illegal and highly improper” procedures by the facility’s doctors, according to documents obtained Tuesday by The Times.

Most of the accusations involve Dr. Ricardo H. Asch, the head of the internationally renowned Center for Reproductive Health. The letter describes him as having consistently disregarded “the dignity and rights of patients,” occasionally “to pursue his own entertainment.”

Scandal erupted three weeks ago at the clinic when the university abruptly cut its ties to the facility and put three of its doctors--Asch, Jose Balmaceda and Sergio Stone--on leave from the faculty. In an unusual lawsuit, the university later accused them of transplanting eggs without permission, using patients in research without their approval, committing financial improprieties and blocking their investigations into the issue.

UC Irvine officials say eggs have been stolen from women in at least two cases, and perhaps as many as five. In addition, the National Institutes of Health, which has threatened to pull $14 million in federal research grants from the university, contends that in at least six studies at the center, doctors did not obtain necessary approval for human research.

The whistle-blowers’ letter, signed by San Diego attorney Daniel John Yakoubian, who at one time represented all three, alleges that:

* Asch often kept patients waiting or anesthetized for hours while he finished watching sporting events on television. At other times, the letter says, he delayed or canceled scheduled treatments to leave and pursue his own interests.

* A staff member of the center “was requested, on the spot and without any screening, to donate sperm to fertilize a CRH patient’s eggs.”

* Asch and his partners operated an unlicensed sperm bank, submitted false insurance claims and failed to report cash payments to the university.

While corroborating most of the whistle-blowers’ charges, a three-member clinical panel appointed by UC Irvine noted in an independent audit that it could not substantiate allegations of an unlicensed sperm bank or of a staff member donating sperm.

Asch, Balmaceda and Stone have denied misconduct allegations and say they intend to vigorously contest them in court.

Asch’s attorney, Ronald G. Brower, said Tuesday night he had not seen the whistle-blower letter, but reiterated that his client had never knowingly misused his patients’ embryos.

Meanwhile, in Sacramento, members of an Assembly committee and other legislators on Tuesday blasted UC Irvine officials for what one lawmaker called an “astounding” lack of oversight of research programs and a failure to move promptly to correct obvious problems.

During the first of what is expected to be a series of legislative sessions on the scandal, members of the Assembly Higher Education Committee asked how UC Irvine could have failed to notice the center’s failings for so long.

“If the whistle-blowers had not whistled, how would you ever have found out about problems with the center?” demanded an exasperated committee Chairwoman Marguerite Archie-Hudson (D-Los Angeles).

Committee members questioned two UC Irvine officials on their supervision of human-subject researchers and suggested that profit-making ventures on campus may encourage institutions to turn a blind eye to their practices.

University officials said that until they received the whistle-blower letter, dated Sept. 10, 1994, they lacked enough information to investigate allegations that eggs were misappropriated from one woman to another without consent.

The whistle-blowers--all former UC Irvine Medical Center employees--reached financial settlements with the university between April 26 and May 22. As part of the agreements, the women agreed to return medical records and other documents.

Debra Krahel, a former senior administrator, received a lump sum of $495,002. Marilyn Killane, the former manager for the center, received $325,436 to be paid over the next eight years. Carol Chatham, a former ambulatory systems manager, received $98,930. The women will forfeit a portion of the money if they discuss the agreements or their complaints unless they are subpoenaed to testify.

UC Irvine Executive Vice Chancellor Sidney Golub has denied that the settlements were meant to “hush up anything” and said they were intended to protect patient confidentiality. But in a written statement, university officials said the agreements “were reached to settle any liability the university had for claims of retaliation and to avoid litigation over [Center for Reproductive Health] matters” under investigation.

Yakoubian states in the letter that, because of their efforts to expose “the pervasive and serious nature” of “gross misconduct and malfeasance” by Asch and his colleagues, the whistle-blowers were subjected “to a common scheme of retaliation.”

Later, Yakoubian writes, “It appears that full investigation and action on this issue may have been suppressed . . . in order to protect Asch.”

Yakoubian could not be reached for comment Tuesday on the document.

The letter also accuses Asch and his colleagues of “failure to report cash payments and make required payments” to the UC Irvine College of Medicine; of filing false insurance claims; of misappropriating UC Irvine Medical Center property, and of “economically wasteful and legally questionable” practices.

Times staff writer Julie Marquis contributed to this story.