U.S. Jury Indicts Former Director of UCI Fertility Clinic

LOS ANGELES — Ricardo H. Asch, former director of the fertility clinic that plunged UC Irvine into an international scandal, was indicted Thursday on federal charges that he engaged in a fraudulent insurance billing scheme.

The 35-count mail-fraud indictment by a federal grand jury in Los Angeles is the first against the scandal’s central figure, accused by the university and patients of stealing eggs and embryos from scores of women and implanting them in other patients. But, as with previous indictments against his two partners, Drs. Jose P. Balmaceda and Sergio C. Stone, the charges do not touch on the issue of egg stealing.

Rather, the new indictment incorporates fraud charges against all three doctors, accusing them of stealing from insurance companies from 1991 to 1993 by falsely claiming they were assisted by other licensed physicians when performing fertility procedures. In fact, they were not assisted by anyone or were aided by non-licensed physicians, such as medical residents or foreigners, whose services could not legitimately be billed, according to the indictment.

The doctors deny knowingly engaging in any wrongdoing.

Asch’s criminal defense attorney, Ronald G. Brower, said Thursday that the narrow scope of the charges is tantamount to vindication.

“Isn’t it amazing that . . . multiple federal agencies spent a year investigating and all they can find is some alleged insurance fraud? It certainly is not what they thought they had when they began. As we’ve said all along, in the area of embryos and eggs and fertility fraud, these doctors committed no crimes. The limited indictment is proof of that.”

Federal prosecutors were tight-lipped Thursday about their strategy, hinting only that other charges against the doctors may follow.

“I think saying the investigation is continuing speaks for itself,” said Assistant U.S. Atty. Wayne Gross.

Asch left the country more than a year ago, about the time investigators raided his Newport Beach home and Santa Ana office, and is now living and practicing in Mexico City.

But Brower said his client is “very seriously considering” coming back to the United States to face the charges.

“It’s become apparent that there was no criminal misconduct. . . . The fraudulent insurance charges are not true. That being the case, he’s considering coming back.”

Asch originally was accused by UC Irvine not only of egg stealing but of research misconduct, illegal importation of fertility drugs and insurance fraud. Authorities also were investigating possible tax evasion. Asch, his partners and the University of California have been sued by more than 80 former patients, alleging everything from egg theft to fraud.

Judging from previous cases, extraditing Asch could prove difficult, should he resist. The same is true for Balmaceda, who was indicted in June but left before Asch did, to live and practice in his native Chile. Only Stone remains in the United States.

Professor Edwin M. Smith, an expert in international law at USC Law School, said that to be successful, prosecutors would have to show that mail fraud is a crime in the South American counties.

“I have never heard of anyone pursuing extradition for mail fraud,” Smith said. “An extradition is usually pursued for some very serious crimes like murder and robbery. The general principle is, you would have to get experts to see what the law is, if there is any law, on mail fraud in the other countries.”

Patients’ attorneys, government leaders and UCI administrators greeted the federal action as a step in the right direction. But some said it falls far short of what the doctors deserve.

“The central moral default is not being addressed,” said state Sen. Tom Hayden, author of a bill signed into law this year that specifically makes egg and embryo stealing a crime.

“Mail fraud is a kind of technical violation. The real fraud was perpetrated on these unsuspecting families who really were victims of egg theft. I understand the indictment as an attempt to get Dr. Asch on something, and in that sense it’s welcome. In the future we will not see any more of this and if we do, it should prosecuted as the theft of someone’s eggs.”

UCI Chancellor Laurel L. Wilkening was glowing in her praise of federal investigators.

“Today’s criminal indictments by the U.S. attorney are a major step toward achieving justice,” she said in a written statement. “It is gratifying that the U.S. attorney is forcefully pursuing the criminal aspects of this tragic episode. Above all, it may provide patients with additional resolution for any wrongs they may have suffered through these doctors’ actions.”

At least one prominent university critic was equally pleased.

“I think finally there is some vindication, some justice coming out of this ugly situation,” said Debra Krahel, a former UCI Medical Center administrator who was one of three whistle-blowers in the scandal. “It might seem like little consolation to the patients, but I think that this is a very significant continuation of the government’s efforts.”

Patients’ attorneys were left to speculate on the government’s motives and plans. Larry Feldman, an attorney who recently negotiated civil settlements totaling $1.1 million for two couples caught in the scandal, said prosecutors probably went after Asch’s partners first in part because they were hoping for some cooperation from the one or both in the case. Stone was indicted first, in April, on 10 mail-fraud counts, and Balmaceda was indicted with Stone on 30 counts in an amended complaint in June. Stone has pleaded not guilty, but Balmaceda has not returned to face the charges.

Melanie Blum, another patients’ attorney, said mail fraud charges might later be used to encompass allegations more directly related to the central issues in the scandal--for example, improperly billing patients for unapproved egg donations.

“I’m glad to see they’re making progress on this,” she said.

Other attorneys said the charges were limited to mail fraud because these are easiest to prosecute. “It’s because of the tangibility of evidence and the [established] value of what was stolen. In the embryo cases, there is a much more difficult determination of what the values are,” said plaintiffs’ attorney Walter Koontz.

The charges carry a penalty of up to five years per count, or a fine of up to $250,000. The indictment covers procedures performed at the former UCI Center for Reproductive Health in Orange and the former Saddleback Center for Reproductive Heath in Laguna Hills, which was directed by Balmaceda. The charges were filed as mail fraud because the insurance bills were sent through the mails.

The allegedly defrauded insurers include Blue Cross/Blue Shield, Aetna Life Insurance Co., Connecticut General Life Insurance Co., Metropolitan Life Insurance Co., CIGNA and Blue Cross of California. None of the counts involves more than a few thousand dollars.

John Barnett, defense attorney for Stone, said he had not seen the new indictment, “but I can tell you from the documents I have reviewed, it’s clear that Dr. Stone committed absolutely no criminal wrongdoing. I feel when all the evidence is presented, it will show that.”

The allegations are only a rehash of previous charges against Stone and Balmaceda, an attorney for Balmaceda said Thursday.

“It’s the same story,” said Paul Raymond. “After well over a year of investigation, is this all they have been able to come up with?”

Raymond said he believes extradition of his client is “unlikely,” but refused to elaborate.