Confidentiality of Payments Like UCI’s Targeted

A group of state lawmakers, angered over UC Irvine’s payment of more than $900,000 to three whistle-blowers at the university’s renowned fertility clinic, are considering legislation to prevent public institutions from paying secret settlements.

Led by Sen. Tom Hayden (D-Santa Monica) and Assemblywoman Jackie Speier (D-Burlingame), legislators expressed outrage Thursday that UCI and other public agencies routinely attach “confidentiality clauses” to legal settlements.

Legislators contend that the clauses unfairly keep the public in the dark about important issues.

“First and foremost, it’s taxpayer money that is used to settle the claims and yet it precludes them from knowing about [settlements],” said Speier, who took part in a Senate Select Committee on Higher Education hearing on the UCI fertility clinic Wednesday. “It’s fundamentally wrong.”

In the past two months, UCI agreed to pay settlements to three women who leveled allegations of financial and medical misconduct against a trio of doctors at the university’s Center for Reproductive Health.

The whistle-blowers say they were retaliated against by top university administrators and later received $919,370 in confidential settlements. The settlements carried stiff monetary penalties if they discussed the case publicly.

University attorneys and UCI Chancellor Laurel L. Wilkening could not be reached for comment Thursday. Officials have repeatedly refused to disclose basic details about the source of funding for the settlements.

But UCI officials defended the confidential agreements in a press release distributed at Wednesday’s hearing, pointing out that the agreements still allowed the three to talk with investigators and in a court of law.

“These settlements were mutual, amicable agreements to settle employment issues,” the UCI release stated. “The employees agreed to keep terms of the agreements confidential to protect the privacy rights of patients and to protect the integrity of the ongoing investigations.”

Further, defenders of the secrecy clauses contend that the provision provides public agencies with a valuable tool for curtailing costly lawsuits. They say that without it, some would-be whistle-blowers would not settle for fear their identities would be made public. Proponents also say that confidential agreements spare public embarrassment to those falsely accused.

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But critics counter that confidential agreements can create the appearance of impropriety.

“On the face of it, [confidential agreements] seem absurd because the appearance is hush money,” said Hayden, who chaired Wednesday’s hearing. “I don’t understand how it’s good from the point of the public interest. For this practice to continue, I need to have some justification for it and I have not heard a justification.”

Some lawmakers, such as Sen. Bill Leonard (D-Upland), were surprised to learn this week that state agencies commonly use confidentiality agreements. Leonard, who backs restricting the use of such clauses, said such legislation stands a good chance of passing in the wake of the recent fertility clinic scandal.

The university has sued Drs. Ricardo H. Asch, Jose P. Balmaceda and Sergio Stone, alleging they took human eggs from patients and transferred them to others without consent. In court papers, UCI has also accused the physicians of failing to report income to the university, conducting improper research and using a fertility drug that has not been approved by the U.S. government.

Asch, Balmaceda and Stone have repeatedly denied any wrongdoing.

“Because of UCI, there is probably more support for [limiting confidentiality agreements] than there might otherwise be,” said Leonard, who also served on the Senate panel probing the allegations. “There’s just no substantial reason for the clause.”

But Leonard voted against a bill proposed by Speier in August, 1992, that would have prohibited public agencies from writing confidentiality clauses into discrimination and sexual harassment settlements.

Leonard said he will support a new bill if it allows a whistle-blower the option of remaining anonymous.

News of possible legislation limiting confidentiality agreements won praise from UCI whistle-blowers and their attorneys Thursday. Attorney Michael Maroko, who represents whistle-blower Debra Krahel, argued that the agreements are “antithetical” to the spirit of public institutions.

“They are totally one-sided in favor of a university or governmental agency,” Maroko said. “They use it as a club to prohibit freedom of expression on the part of the litigants.”

Krahel, a former clinic employee, received a $495,000 settlement from UCI officials, who stipulated that she must forfeit $100,000 if she spoke out about the deal. The Senate committee’s subpoena, however, superseded the university’s confidentiality clause.

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Fellow whistle-blower Marilyn Killane, 56, said the agony of the complaint process--and the retaliation that she said accompanied coming forward--often forces a settlement.

Killane, the first of three whistle-blowers to trigger investigations at the Center for Reproductive Health, settled with the university for $325,000 on May 22. She faced a $50,000 penalty if she spoke about her complaint.

Under a special agreement releasing her from the confidentiality clause, Killane said she was “appalled that they would ask me to do such a thing. . . . I’m appalled that taxpayers have to pay for this, really.”

UCI officials told her the promise of confidentiality was “the way they did it there. That was the rule,” Killane said. “From what I’m told it was the only way we could end it.”