UC Officials Sued by 2 Fired During Fertility Clinic Crisis

In a stinging lawsuit filed Thursday, the former head of UC Irvine Medical Center said she and a former deputy were fired as part of a ruse by UCI Chancellor Laurel L. Wilkening to prove she was responding to the burgeoning fertility scandal “with diligence and dispatch.”

Mary Piccione and former deputy Herb Spiwak contend the chancellor and other top officials actually delayed a full investigation into the scandal for three months in 1994 by withholding information from them about possible human egg and embryo misuse at a UCI clinic.

Once informed of the allegations in July 1994, the suit states, Piccione ordered an immediate investigation.

The duo, much lauded before the scandal for bringing financial stability and prestige to the medical center, were fired last June after a management audit concluded that Piccione had retaliated against whistle-blowers in the scandal. The pair also were accused of poor oversight of the clinic and failure to remedy its financial and business problems.

UC Irvine officials Thursday stood by their actions and described the lawsuit filed in Orange County Superior Court as groundless.

“When all the facts come out, it will be obvious this lawsuit is nothing more than an act of sheer desperation,” said Fred Plevin, an outside attorney for the UC Board of Regents. “The university looks forward to all the facts coming out in the appropriate forum, which is the courtroom.”

Piccione and Spiwak contend in their suit that they took disciplinary action against whistle-blowers Debra Krahel and Carol Chatham for reasons entirely unrelated to the fertility scandal. According to the lawsuit, senior administrator Krahel had failed in her assigned task of improving ambulatory services at the medical center, and she had enlisted her underling, Chatham, to spread false rumors of “mass terminations” there.

It was for this “dishonest and destabilizing conduct” that Piccione decided, based on recommendations from the personnel department, that the two women should be terminated, according to the suit. The suit states that Piccione learned of Krahel’s status as a whistle-blower in the egg-stealing scandal on July 25, 1994, only after she had ordered personnel employees to begin termination of Krahel.

Krahel, Chatham and a third whistle-blower, Marilyn Killane, were instrumental in bringing forward allegations that three doctors at the university’s Center for Reproductive Health were stealing eggs and embryos from patients and giving them to other women, as well as engaging in research and financial fraud. Since then, officials have acknowledged that more than 70 women may have been victimized by egg and embryo misappropriation.

The doctors have denied any intentional wrongdoing.

Krahel and her attorney could not be reached for comment Thursday. But she has in the past described the motives of Piccione, Spiwak and their supporters in the personnel department as “suspect” and “self-serving.” She also has accused her detractors of continuing to execute a retaliation campaign against her.

Reached at her home in San Diego, Chatham said massive documentation released in the scandal’s wake does not support the claims of Piccione and Spiwak.

“This is another twist they want to put on this,” she said.

According to the suit, when Piccione learned that Krahel was a whistle-blower, she immediately sought advice from UC attorneys in Oakland, who advised her to place Krahel on paid administrative leave and to fire Chatham.

The regents never warned her “that she would place herself in peril of termination” herself if she did what they advised, according to the suit.

Piccione and Spiwak suggest in their lawsuit that Wilkening used the firings as a way to sanitize her own conduct in the scandal. They contend that shortly after the terminations, she falsely announced to the media that she had not known of possible egg-stealing at the clinic until July 1994, “thereby concealing the fact that she actually knew of it several months before Piccione or Spiwak.”

Wilkening has admitted that she erred in her initial estimate of when she learned of the allegations, acknowledging they came to her attention in the spring of 1994.

Piccione and Spiwak also contend they had no knowledge of large settlements later paid to the whistle-blowers in June 1995. The trio collectively received more than $900,000.

Spiwak and Piccione allege that two investigative panels looking into clinical and financial wrongdoing in the clinic scandal cleared them of any blame.

Further, an early draft of a management audit that ultimately led to their firings did not find they had retaliated against Krahel, according to the suit. It wasn’t until Wilkening “directed the authors to submit a supplemental report” that the audit included allegations of retaliation, according to the suit.

The suit by Piccione and Spiwak, which names Wilkening and the regents as defendants, alleges breach of contract, legal malpractice on the part of UC attorneys and defamation. The two contend that Wilkening, acting with approval from the regents, made statements to the press that exposed them to ridicule.