UCI, Fertility Doctors Attempted to Cut Ties : Scandal: University says talks ended when specialists asked for cover-up. Lawyer calls allegation ‘patently false.’

UC Irvine and physicians involved in the fertility scandal at the Center for Reproductive Health made two attempts at ending their relationship earlier this year before university officials cut off talks aimed at reaching a settlement, according to documents obtained Friday.

Attorneys for Drs. Ricardo H. Asch, Jose P. Balmaceda and Sergio Stone--who have been implicated in the scandal and are now the target of seven separate investigations--stopped negotiations because of three key demands by UCI, according to the documents.

The documents showed that attorneys for UCI and the doctors reached an impasse over demands that:

* University officials retain the right to report information regarding the physicians’ alleged medical and financial irregularities to appropriate government agencies.

* The university be permitted to complete its own internal investigation of Asch, Balmaceda and Stone.

* The university not be required to give up the right to contact patients of the doctors and keep them informed of circumstances regarding their cases.

“Ultimately, it was clear to us that the doctors were not going to resign if we maintained those interests,” Donald A. Goldman, an attorney for the university, said Friday. “It was not in their interest to resign if we reported everything anyway.”

But Patrick K. Moore, who at one time represented the physicians’ partnership, said Friday that it was “patently false” to assume that negotiations broke down over what to report to government agencies.

“Furthermore, all of these discussions were conducted under an agreement of confidentiality, which is how settlement conferences are conducted,” Moore said. “But the university has breached that by voluntarily disclosing this to the press.”

In terms of reporting its findings to various boards and bodies, Moore said, “There was never any suggestion that the university not comply with its legal obligations. There were only questions over which agencies they were legally obligated to report to.”

The doctors have been accused of misappropriating eggs and embryos involving about 35 patients at several institutions. Legal action has been taken by more than 15 patients allegedly victimized in the scandal, which has raised unprecedented legal and moral concerns in the largely unregulated industry of making babies.

All three physicians have denied engaging in wrongdoing and say they intend to vigorously contest the allegations.

*

In a statement released Friday by UCI, university officials said talks completely broke down in March, two months before the scandal became public, when the doctors refused to grant access to patient records.

“We contemplated a settlement because it had become clear that separating this group of physicians from the university as soon as possible was in the best interests of UCI faculty, students and the patients,” UCI Chancellor Laurel L. Wilkening said in the statement.

“The continuing association of these physicians with UCI is damaging to the university,” Wilkening added. “However, we were not willing to compromise on the need to report our findings to appropriate agencies and to patients.”

Wilkening said in an interview Friday that Asch initiated settlement discussions in July, 1994, and that the university initiated the second round of talks in March. The chancellor said she was surprised to learn that the doctors would agree to sever ties with the school in return for UCI stopping the investigations.

“I said they must be kidding,” Wilkening said, “to think we would drop all the investigations, not report anything, just drop the whole matter. My response was just that--’You must be kidding.’ In my mind, that was the key sticking point.”

But Moore, representing the doctors, remembers the discussion differently.

“Mr. Goldman, the school’s attorney, said he didn’t feel the need to report the doctors to the California Medical Board but would report them to the National Practitioner Data Bank,” Moore said. “Well, if you’re going to report to that agency, you might as well report to the Medical Board. Our contention was that they only report what they were legally obligated to report--and nothing more.”

But correspondence between the doctors’ attorneys and UCI officials, dating to July, 1994, appears to support the university’s contention that it resisted demands by the doctors to keep the matter confidential.

In a letter dated July 26, 1994, Moore, acting on behalf of the partnership, asked the university to “terminate all inquiries, investigations, review or consideration of any of the foregoing issues.”

Moore’s letter came within weeks of three so-called “whistle blowers” telling the university that Asch and his colleagues were under-reporting income from various clinics and that Asch had sold and prescribed HMG Massone, a fertility drug that was not approved by the U.S. Food and Drug Administration.

“I suppose this exonerates us in the minds of those passing judgment,” Wilkening said. “But my approach on this has been to be very aggressive in investigating it and taking whatever actions were necessary. Once we knew what the truth was, our approach has been consistent all the way through.”

“That’s ridiculous,” Moore said. “Obviously, the chancellor knew this was going to go public. She knew about this well ahead of time. What the chancellor was trying to do was get the doctors to resign so she could say, ‘Aha! I got them to resign!’

“You want to know why the settlement didn’t go through? Because the terms the chancellor sought would have given the public the impression that the doctors are culpable, and they’re not.”

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Negotiations ended in April when the doctors objected to UCI’s demand that its findings be reported to the National Institutes of Health; the FDA; the California Board of Pharmacy; and to the patients of the Center for Reproductive Health.

Both sides signed an agreement in April terminating the agreement between the clinic and the UCI Medical Center. On April 27, the physicians removed records and frozen embryos from the clinic, the school said in its press release. UCI ended all discussions with the clinic by filing a lawsuit against the physicians in May.

Asch, Stone and Balmaceda were placed on leave from the university May 19. Asch has resigned from the medical staff but remains on the faculty, pending the outcome of the investigations. Balmaceda and Stone remain members of both the medical staff and the medical school faculty.