UCI Medical Center Bosses Fired : Investigation: Executive director, deputy allegedly tried to hide fertility clinic misdeeds and retaliated against whistle-blowers. They must leave within week.

The beleaguered executive director of UCI Irvine Medical Center and her chief deputy were fired Thursday amid allegations they had retaliated against whistle-blowers and tried to cover up an erupting scandal involving the university’s once-vaunted fertility clinic.

Medical Center chief Mary Piccione and deputy Herb Spiwak, a team that until recently brought financial stability and prestige to the young university, must leave UCI by next Friday, according to a brief announcement released Thursday by UCI.

“It’s called cleaning out the stables,” said Glenn Campbell, a member of the UC Board of Regents.

Wendell C. Brase, 48, vice chancellor for administrative and business services and a former administrator at UC Santa Cruz, will take over as the medical center’s acting executive director.

The ousters came with no explanation from UCI Chancellor Laurel L. Wilkening, who made the decision but repeatedly has refused to discuss the most serious scandal in UCI’s history. UCI spokeswoman Fran Tardiff said, however, that Wilkening terminated the two after considering “the body of information” about their roles in the fertility clinic crisis.

UCI has been bombarded with national news coverage in the month since the university accused three of its most prized physicians of stealing human eggs from patients and implanting them in others without permission.

Drs. Ricardo H. Asch, Jose P. Balmaceda and Sergio Stone also are accused of research misconduct, insurance fraud and financial wrongdoing. All have been placed on leave from the faculty. They have repeatedly denied doing anything improper. Piccione and Spiwak did not return calls for comment Thursday, but both previously denied punishing whistle-blowers. After a grilling by a state Senate panel last week, Piccione tearfully blamed two of the three whistle-blowers for her predicament, calling them “opportunists,” and said she had not retaliated against them.

Frank Quinlan, the personal attorney for Piccione and Spiwak, protested the firings as unfair to two dedicated administrators who have worked financial wonders at UCI since their hiring in 1988.

“The firing . . . deprives the university and the county of the services of two dedicated health care leaders who have changed UCI from a bankrupt, disorganized entity hemorrhaging $12 million of red ink . . . to a much more respected institution which operates in the black,” he said in a prepared statement.

The firings stood in sharp contrast to personal notes the pair received last week from Executive Vice Chancellor Sidney H. Golub, expressing support for them in the wake of the scandal.

“You’re a real pro,” he wrote to Piccione, expressing “concern and affection.”

Wilkening’s action was praised by some as an essential first step out of the crisis, which has threatened UCI’s reputation and research funding. Lt. Gov. Gray Davis, who serves as a UC regent, said the firings had “begun to balance the scales of justice” at the school.

Davis said Wilkening faced the wrath of the regents--irate at being left out of the loop on the growing scandal--if she didn’t take “decisive action” to clean up the mess.

“I believe the regents sent her home with a clear message last week: UCI’s actions to date had been unfair at worst and not in the best interests of the university at best,” Davis said.

The regents were particularly troubled, Davis said, because the university’s handling of the scandal “had the makings of a cover-up and because it appeared that the wrongdoers had thus far gone unscathed while the truth sayers were kicked out.”

The final blow for Piccione and Spiwak was their failure to respond by a deadline Wednesday to a scathing management audit released last week. The 88-page audit, conducted by two San Diego law professors, concluded that Piccione and Spiwak retaliated against whistle-blowers and managed the medical center by “fear.”

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Their UC-paid attorney, Gary Overstreet, said the university did not give them sufficient time to prepare a defense.

But Tardiff said, “The chancellor had given them time to respond, and when they did not, she took what she considered was the appropriate action.”

Wilkening devoted her prepared statement Thursday to praising interim director Brase, making scant reference to the woman he would be replacing and her deputy. Only two years ago, the chancellor had endorsed hefty raises for both Piccione and Spiwak because she said she was afraid of losing their talents. Piccione, one of the highest-paid female administrators in the UC system, draws a salary of $176,500 a year. Spiwak’s salary is $132,500.

“I have great confidence in vice chancellor Brase and in his demonstrated ability in personnel administration, financial management and information technology,” Wilkening said in her statement.

Several UC regents and legislators said Thursday that Piccione and Spiwak had to be removed for the university to regain its stature and public trust.

“I think [Wilkening] is to be commended,” Regent Campbell said. “I know she was urged by some of the regents to fire them last week, and fire those doctors too. I assume that will be next.”

UC Irvine “is finally waking up. The whistle-blowers should be commended, not retaliated against,” Campbell said. “They should be reinstated . . . if they’d come back.”

Whistle-blower Marilyn Killane said the news of the firings “absolutely made my day.”

“I don’t want to see anybody lose their job, but in this particular case I think Orange County should raise a flag and maybe [UCI Medical Center] could be run like the rest of the state university system,” she said.

Killane said she was angry about the retaliation against herself as much as distressed with the way Piccione and Spiwak ran the medical center.

“The taxpayers are entitled to more than they were getting there, and certainly the patients were,” said Killane, whose job was threatened after she alleged financial improprieties and unauthorized use of a fertility drug. She later received a confidential settlement of $325,000 from UCI.

Debra Krahel, the senior administrator who pushed complaints from Killane and another whistle-blower forward, reacted similarly.

“I commend the university in taking this action and I think it opens the way for the medical center to start a healing process and for the employees to increase quality care and [start] rebuilding morale,” said Krahel, who was paid $495,000 in her confidential settlement.

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But some associates inside and outside the university sympathized with Piccione and Spiwak. “I’m sorry to hear it,” said Richard Butler, chief operating officer of Fountain Valley Regional Hospital and Medical Center. “I feel bad for both of them. They are both knowledgeable and intelligent individuals.”

Piccione “has been a leader in this county. She made hard decisions, and when you do those things you don’t make a lot of friends, but those were decisions that had to be made.”

The administrators leave the university without severance packages, but will receive their salaries for the next two months, Tardiff said.

“I feel sorry for them,” said Dr. Michael Brodsky, chairman of the human research review committee at UCI. “Yes, they’ve antagonized a number of people, but they’ve done some good too. . . . I don’t think it’s fair to blame them for all the problems.”

Thursday’s action marks a devastating fall for Piccione, known for turning around the misfortunes of troubled hospitals. She stabilized the faltering budget at University Hospital in Brooklyn, N.Y., then served a stint at the State University of New York system.

In 1988, she was lured west by then-UCI Chancellor Jack Peltason, who now heads the UC system, to work the same financial wizardry at the teetering UCI Medical Center. By most accounts she succeeded. But Piccione’s world began to publicly crumble when rumblings of the fertility clinic scandal surfaced in May.

Piccione and Spiwak’s alleged early role in the scandal was detailed in an October, 1994, letter from a former senior administrator at the medical center to auditors.

In her letter, Stephany Ander contended that the pair were informed of a host of clinical problems more than two years before UCI launched formal investigations of the center in September.

At the time, Ander wrote, Piccione said she worried that the allegations might disturb “the halo effect” that the clinic’s Asch brought to UCI.

Spiwak, who also worked as Piccione’s right-hand man in New York, learned of egg misuse at the clinic nearly 1 1/2 years earlier, Ander told auditors in July 1994. Auditors concluded that Spiwak had “done nothing about it.”

Ander told the auditors that Spiwak often referred to the medical center faculty as “a piece of [expletive] and blocked efforts to “move issues forward.”

Brase, 48, will take over as acting executive director of the medical center July 1. Brase came to UCI in 1991 and oversees administrative, financial and business services.

Wilkening has directed Vice Chancellor Golub to lead the search for Piccione’s permanent replacement. Brase and College of Medicine Dean Thomas Cesario are creating an interim administrative team.

Times staff writer Nancy Wride contributed to this report.

* FACULTY MORALE AFFECTED

Anger expressed over UCI’s handling of clinic crisis. A37

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Hospital Discharge

UC Irvine Chancellor Laurel L. Wilkening fired the two top executives at UCI Medical Center in the latest fallout surrounding the fertility clinic controversy. Both had been with the medical center since 1988. * Mary Piccione Position: Executive Director Age: 60 Salary: $176,500 * Herb Spiwak Position: Deputy Executive Director Age: 49 Salary: $133,500 * Background: A management audit released June 14 found that Piccione and Spiwak created a “climate of fear” and retaliated against employees who reported misconduct at the fertility clinic.

Reaction

“It made my day. There is justice in this world. I was beginning to doubt it.”--Marilyn Killane, one of three whistle-blowers

“The firing of Mary Piccione and Herb Spiwak deprives the university and the county of the services of two dedicated health care leaders....”--Newport Beach attorney Frank Quinlan, representing Piccione and Spiwak

Wendell Brase

Vice Chancellor Wendell Brase is poised to take over leadership of the UCI Medical Center. * Came to UCI: 1991 * Current job: Vice chancellor for administrative and business services * Next job: Acting executive director, UCI Medical Center * First day on new job: July 1 * Previous job: 13 years at UC Santa Cruz, where he served as vice chancellor of finance, planning and administration * Age: 48 * Education: Undergraduate and master’s degrees, Sloan School of Management at MIT * Family: Married to Janet Mason, UCI director of capital planning * Residence: Irvine * Support: “I have great confidence in Vice Chancellor Brase and in his demonstrated ability in personnel administration, financial management and information technology. All of these areas are important to the future of the medical center.”

--UCI Chancellor Laurel L. Wilkening Source: UC Irvine