UCI FERTILITY SCANDAL : Saddleback Medical Center Severs Fertility Clinic Ties

Saddleback Memorial Medical Center will sever all ties with its branch of the Center for Reproductive Health because of alleged insurance fraud, misappropriation of funds and misuse of drugs at the main clinic at UC Irvine, a spokesman said Thursday.

But attorneys for the clinic’s doctors dug in their heels, contending that Saddleback has not filled contractual obligations to provide their clients with grounds for termination and an opportunity to remedy any perceived problems.

“We won’t leave--there’s no legal grounds to force us to leave and we have no intention of leaving,” said Patrick Moore, an attorney for Dr. Jose P. Balmaceda, director of the Saddleback clinic.

A spokesman for Saddleback’s parent company said the decision, which follows a similar move by UCI more than three weeks ago, is final.

“What we really want is to no longer manage this practice,” said Ron Yukelson of Memorial Health Services of Long Beach.

“We made the cancellation notice in response to the reported findings in the news media and [of] the . . . investigative panels appointed by the University of California,” he said.

The cancellation is effective June 30, but Yukelson stressed that the date may be extended to accommodate the needs of patients. The action aims to end a six-year affiliation in which Saddleback leased office space to the physicians at its Laguna Hills campus.

Saddleback’s announcement follows a flood of coverage in the local and national news media on UCI’s allegations that three once well-regarded doctors transplanted eggs without permission, conducted human research without patient consent, took money owed to the university and engaged in insurance fraud.

The UCI center director, Dr. Ricardo H. Asch, who also practices at Saddleback, is also accused of giving patients a fertility drug not approved for use in the United States.

The doctors, including a third physician, Sergio Stone, have denied knowingly committing any wrongdoing. A fourth physician, Jane Frederick, also practices at the Saddleback clinic but is not accused of any misconduct by UCI.

Balmaceda’s attorney, Moore, said his client was “surprised” at Saddleback’s termination notice to the clinic, where Balmaceda has served as director since 1989.

“He found it very upsetting that these sensationalized, unproven allegations continue to cause him damage and undermine the confidence of the community in assisted reproduction technologies,” Moore said. “I hope it’s not the situation of the kitchen having gotten too hot and Saddleback deciding to leave.”

Yukelson said Saddleback’s actions are based on UCI’s allegations of financial and insurance improprieties and drug misuse, which he said had either been admitted to by the doctors or substantiated by the university. He said the allegations of egg stealing and research misconduct, however, had not been proven.

A report by a University of California Clinical Panel said that Asch had admitted to dispensing the unapproved drug HMG Massone in two cases, but that he actually did so in nine instances. Auditors with KPMG Peat Marwick said they had substantiated whistle-blower complaints of cash-skimming and insurance fraud.

Yukelson said Saddleback knew of no financial or clinical improprieties at the doctors’ Saddleback clinic, although he said a review team started work Thursday to examine the way the practice was run. He stressed that Saddleback does not oversee the doctors’ clinical practice; it only manages the business and supplies staff members.

Yukelson added that Balmaceda is “so confident” that there have been no research improprieties that the doctor called for an audit of research records himself.

Yukelson said the corporation naturally has “concerns about liability.” However, he said, that was not the impetus for the severance of ties.

At least three patients have named Saddleback in legal actions targeting the fertility center’s doctors. A Santa Ana woman this week notified UCI, Saddleback and UC San Diego that she intends to sue, alleging that four of her unfertilized eggs were given to a zoological researcher without her consent. The woman claims that the eggs were extracted by Asch at Saddleback.

Saddleback is also named in a May 23 claim in which a couple from north of Los Angeles allege that the woman’s eggs were used to impregnate another woman who now has a year-old boy in Mexico. The original procedure occurred at UC San Diego, but the unknowing donor was subsequently treated at Saddleback, her attorney said.

A Rancho Santa Margarita woman charged in a 1993 lawsuit that Frederick had inseminated her with sperm from an unknown man at the Saddleback center. The suit, which also names UCI Medical Center, was settled for an undisclosed amount.

Yukelson said Saddleback has offered to assist the doctors in their move, presumably to an office the physicians lease from Fountain Valley Medical Center. But the doctors do not have approval to perform in-vitro procedures there. Fountain Valley officials announced May 17 that they had halted negotiations to start an in-vitro clinic after learning of the problems at UCI.

Moore said he sent Saddleback’s attorney a letter Wednesday indicating that the termination of the agreement was “illegal.” According to the contract, Moore said, the agreement can only be terminated for cause, and even if a cause is stated, the hospital must give a period of time to “cure” whatever problem is cited.

Moore said that since the scandal broke, Balmaceda has been very busy at the Saddleback clinic, where he has worked “almost exclusively.”

Karen Taillon, Stone’s attorney, questioned whether the abrupt termination notice was hastened by UCI officials.

“It would sadden me to think the university would use its power to influence another institution to sever ties with my client,” she said.

But UCI spokeswoman Fran Tardiff said UCI’s affiliation with Saddleback played no role.

“UCI had absolutely no prior knowledge of, or part in, the decision of Saddleback Memorial Medical Center,” Tardiff said.

Ronald G. Brower, Asch’s criminal attorney, said he had not heard that Saddleback was cutting ties with the clinic and could not comment.

* COUPLE SUES CLINIC

Embryos were implanted in another woman, they say. A33

* SADDLEBACK CLAIM

Wrong sperm was used at clinic in 1992, lawsuit contended. A34