2 UCI Fertility Doctors Face Mail Fraud Counts

Two of the three physicians accused of stealing eggs and implanting them in unsuspecting women at UC Irvine’s now-defunct fertility clinic were each indicted Thursday on 30 counts of federal mail fraud for allegedly submitting false claims to insurance companies.

The indictments handed down by a federal grand jury accuse Drs. Jose P. Balmaceda, 47, and Sergio C. Stone, his former partner at UCI’s Center for Reproductive Health, of illegally billing more than half a dozen insurance companies for medical services between 1991 and 1995.

Stone, 54, who remains under house arrest in his Villa Park home in connection with 10 counts of federal mail fraud filed against him April 25, now faces additional counts. Stone, free on a $3-million bond, pleaded not guilty to the initial allegations.

Balmaceda fled to his native Chile last year, after the scandal broke, and is not expected to be extradited or return to the United States on his own to face the charges.

Attorneys for both doctors vigorously denied the claims Thursday.

Federal prosecutors were reluctant to discuss the latest action or to speculate whether more charges would be filed against the doctors. “All I can say is we are continuing with our investigation,” Assistant U.S. Atty. Thomas Bienert said.

Walter M. Koontz, an attorney representing more than a dozen clients connected to the fertility scandal, said the indictments are “a signal . . . that the U.S. attorney’s office is very serious about their efforts to prosecute criminal wrongdoing. It’s the handwriting on the wall.”

Stone’s criminal attorney, Allan H. Stokke, reiterated his client’s innocence in wake of the new allegations. “It was a stretch when they investigated him before,” Stokke said. “There’s always disagreement when it comes to billing. This just appears to be more of the same.”

Balmaceda’s criminal attorney, Paul Raymond, denied the accusations but would not comment further until he discussed the nine-page indictment with his client.

Like the previous charges against Stone, the new indictment makes no mention of human egg-stealing--the core allegation in the scandal. Further, the indictment does not include Dr. Ricardo H. Asch, the fertility clinic’s director, whom many regard as the key figure in the case.

UCI officials have accused Stone, Asch and Balmaceda of stealing eggs and embryos from scores of women and implanting them in others, some of whom gave birth. At least 70 patients may have been victimized at the clinics at UCI and affiliates at UC San Diego and in Garden Grove, officials allege.

Attorneys representing former clinic patients speculated Thursday that Asch will be indicted next.

“Today, we saw a widening of the case, and it’s going to get wider,” said attorney Melanie Blum, who has filed 25 lawsuits on behalf of clients who claimed to have been wronged by the doctors at UCI. “Asch will be next. Sometimes, you save the best for last.”

However, state Sen. Tom Hayden (D-Santa Monica) had mixed reactions to the indictments, arguing that the doctors should be culpable for more than just mail fraud.

“It’s good these doctors are being held accountable, but unfortunately they are being pursued for infractions of a secondary nature,” Hayden said. “In reality, they should be charged with a very serious crime.”

Hayden has introduced legislation, SB1555, to criminalize the transfer or implantation of human eggs or embryos without consent. The bill has passed the Senate and is scheduled to be heard by an Assembly committee Tuesday.

Federal prosecutors said mail fraud was committed because the doctors sent bills that allegedly overcharged the insurance companies. Most of the bills were around $1,500, prosecutors said.

The indictments, which cover a period from July 1991 to March 1995, allege that Stone and Balmaceda filed false insurance claims stating that they were assisted by other licensed physicians while performing medical procedures. In fact, they were working alone or with trainees whose services cannot be billed, according to the indictments.

If convicted, Stone and Balmaceda could face a maximum of five years in prison and a $250,000 fine on each count.

Stone, who wears an electronic surveillance anklet, will remain under house arrest, authorities said.

The grand jury allegations cover activities at the UCI Center for Reproductive Health and at an affiliated clinic at Saddleback Memorial Medical Center in Laguna Hills.

Stone’s attorneys have said that the doctor, an endocrinologist, did not regularly perform egg transfers. Asch said in a February interview in Mexico City, where he is now living, that Stone had “zero responsibility” for any “errors” in egg transfers.

Attorneys for former patients say no evidence has emerged linking Stone to illicit egg transfers. But Balmaceda’s role in egg transfers is less clear.

Although Balmaceda’s attorneys vehemently deny it, university officials and other attorneys believe Balmaceda played a substantial part in misappropriating eggs. He has returned to Chile to practice at a Santiago clinic.

A joint task force assembled to probe the fertility scandal is looking into possible smuggling of unapproved fertility drugs as well as tax fraud and financial irregularities. The team includes representatives from the California Medical Board, the FBI, the U.S. Food and Drug Administration, U.S. Customs, the Internal Revenue Service, the Defense Criminal Investigation Service and the UCI Police Department.

In a related action Thursday, Balmaceda’s attorneys filed a motion in Orange County Superior Court to force the University of California to pay for Balmaceda’s legal defense.

The university has refused to pay for any of the doctors’ legal costs related to the misconduct allegations, contending the trio acted outside the scope of their employment.

But an Orange County Superior Court Judge earlier this month ordered the UC regents to pay for Stone’s defense in at least one lawsuit stemming from the scandal.

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Anatomy of Alleged Scam

A federal grand jury indicted Drs. Jose P. Balmaceda and Sergio C. Stone on 30 counts of mail fraud each. Here’s how prosecutors allege the crime was committed:

* Doctors performed medical procedures but overbilled insurance companies by claiming physicians were present when they were not. Or, companies were billed for the services of medical trainees.

* Fraudulent bills were sent to insurance companies through the U.S. mail, a federal crime.

* Each count of mail fraud carries a maximum penalty of five years in jail and up to a $250,000 fine.

Source: U.S. attorney’s office