50 Couples to Get $10 Million to End UCI Fertility Clinic Suits

The University of California has agreed to a $10-million settlement with 50 couples who had been enrolled in UCI’s now-closed fertility clinic and sued after learning that doctors had allegedly stolen eggs from unsuspecting female patients, plaintiffs’ attorneys announced Friday.

The accord, which the attorneys said must be approved by an Orange County judge, would end in one stroke about half of the more than 100 civil lawsuits filed after the fertility scandal broke in the fall of 1994.

The new settlement would raise to roughly $14 million the total that university officials have agreed should be paid to 72 couples in connection with the scandal, said plaintiffs’ attorneys Lawrence S. Eisenberg of Irvine and Melanie R. Blum of Orange.

University of California officials would not confirm the amount of the settlement announced Friday.

The scandal centers on three UCI doctors who allegedly stole eggs harvested from women undergoing fertility treatments in four Southern California medical facilities from the late 1980s through the early 1990s, implanting some of the eggs in other women and funneling others into research.

In some instances, children were conceived and born without the knowledge of the women whose eggs were taken.

Ricardo H. Asch and Jose P. Balmaceda, the two principal doctors accused in the case, have left the country and would face criminal charges if they return.

Asch is in Mexico and Balmaceda in Chile. Their colleague, Dr. Sergio C. Stone, is under house arrest in Villa Park. All have been indicted on federal charges of mail fraud and income tax evasion in connection with the scandal. They have denied wrongdoing.

Balmaceda’s attorney said he is pleased with the settlement package.

“It removes Dr. Balmaceda from potential liability,” said attorney Dan Callahan of Irvine, who speaks with his client periodically by telephone from Santiago, Chile, “but I’d still like to see him have his day in court.”

Details of the settlement, including the identity of the couples and how much money they will receive, were not disclosed Friday as UC officials and plaintiff attorneys stood behind a court order that allowed them to withhold the information from the public.

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Senior officials for the UC system confirmed that settlements had been reached but declined to release details, citing a stay issued late Thursday by the state Supreme Court. The court said that the issue involved--the public’s interest in how taxpayer money is spent versus the privacy rights of the couples--eventually will be decided by the high court’s justices.

Late Friday, UC General Counsel Jim Holst, who managed the settlement proceedings for the university, said the state court order prevents him from disclosing the amount of the settlement deal.

But Holst confirmed that the university has been involved in settlement negotiations for “a number” of the 102 lawsuits he said were filed in the wake of the scandal.

Holst, UC’s top lawyer, said the university would continue seeking “fair and appropriate resolution” of remaining suits. He added that settlements would be disbursed from self-insurance funds the university keeps.

Byron Beam, a private attorney in Santa Ana representing UCI, said university officials consider the settlement a “good deal” for the UC system, and are eager to settle the remaining cases by the end of the year.

Eisenberg and Blum said the complex settlement package had been approved by the UC Board of Regents in its June and July meetings.

The two plaintiffs’ attorneys, who together negotiated the deal with UC lawyers, claimed a victory for their clients in a news conference at a hotel across the street from the UCI Medical Center in Orange. They said the facts of each case had been considered individually, though they were presented as a package.

“These women are being justly compensated, although their pain will never go away,” Eisenberg said.

“The damage is unbelievable,” said Blum, noting that at least 15 births had resulted from the misappropriation of eggs alleged in the 50 malpractice suits. “These children were robbed of their heritage. The parents were robbed of their children.”

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Lt. Gov. Gray Davis, an ex officio member of the Board of Regents, called the settlement deal “yet another example of California taxpayers footing the bill to clean up a UC management fiasco.”

“I do not begrudge restitution to the innocent victims of this scandal,” Davis continued. “But this money could have paid for a lot of outreach and a lot of scholarships for deserving UC students. We simply must bring UC’s managerial and fiscal controls up to the high level of its academic standards.”

It was unclear how much UC will ultimately pay from the $10-million settlement described Friday.

Blum and Eisenberg said that about half of the 50 cases involved couples who were treated by the UCI doctors while they were working out of a hospital in Garden Grove, and the rest at the UCI Medical Center facility known as “Pavilion II.” They said they understand that the owner of the Garden Grove hospital recently agreed to share some of the liability with UC. But that could not be confirmed Friday.

About two dozen civil suits are still pending against the university and the three doctors.

Walter Koontz, a Newport Beach attorney representing five couples with active lawsuits, said Friday the 50-suit settlement could speed the resolution of the others.

“It’s always good news when people can get together and resolve their differences and stop the bleeding, as far as the animosity that’s created by litigation like this,” Koontz said. “It will be saving a substantial amount of money that the people of California [would be] stuck with picking up the tab for. . . .”

But some California officials saw the settlements as a black eye for the state and defeat for the public.

State Sen. Tom Hayden (D-Los Angeles), who led a hearing into the fertility scandal in 1995 and sponsored legislation last year that made the theft of human eggs, sperm and embryos a crime, lamented Friday that the full facts may never be known.

Such settlements, Hayden said, are “a way in which a whole system is spared adverse publicity, but the public suffers from never knowing exactly what happened and who is responsible. . . . There is no trial, no deposition, no face-to-face encounter, no airing of the issue for the benefit of the public.”

Plaintiffs involved in the 50-suit settlement were difficult to reach for comment on Friday, in part because some of them hadn’t yet heard the news.

Elizabeth Shaw Smith and Gary Smith of Tustin were among the plaintiffs in the settlement. “I just wish [the money] had come out of Asch’s pocket instead of UCI’s,” Shaw Smith said.

Jeff and Sheri Nerland, who have been represented by Blum in a fertility-related lawsuit, were not part of the settlement.

“We just want to put the whole thing behind us,” said Nerland, who lives in Orange County. He blamed the doctors more than the university. “You had some rogues out there who were operating with their own sense of morals and what was right,” he said.

But the deal described by attorneys Friday mentioned nothing of payments from the three accused doctors. Instead, money would apparently be drawn from the university system’s self-insured medical malpractice fund.

Rick Malaspina, a UC spokesman, said that a settlement would increase the premiums UC Irvine Medical Center pays into that fund.

The fund, known as the Professional Medical and Hospital Liability Program, is funded by premiums paid each year by each of the five UC medical centers around the state, Malaspina said. It is administered by the university.

Malaspina would not say how much money is in the fund. “This, obviously, will affect UC Irvine’s premium in future years,” he said.

Also contributing to this report were Times staff writers Nancy Cleeland, Thao Hua, Julie Marquis, Michael G. Wagner and Janet Wilson.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Settling the Fertility Scandal

A $10-million settlement of 50 lawsuits stemming from the UCI fertility clinic scandal was announced Friday by attorneys for the plaintiffs.

The couples sued after learning that doctors at the clinic allegedly stole the eggs of women who had gone to the clinic for help in conceiving a child, and implanted them in other female patients without the donors’ consent.

“The damage is unbelievable. These children were robbed of their heritage. The parents were robbed of their children.”

--Melanie Blum

STATUS OF THE DOCTORS

Ricardo Asch

He was named in 1996 in a 35-count indictment on federal mail fraud charges, and in 1997 on federal income tax charges. Asch fled to Mexico City in 1995, where he is teaching and researching. No formal extradition procedures have been requested.

Jose Balmaceda

Also named in federal mail fraud and income tax charges, he sold his Corona del Mar home in the summer of 1995 and returned home to Santiago, Chile. He resumed his fertility work. No formal extradition procedures have been requested.

Sergio Stone

He has remained in his Villa Park home under “house arrest” and will stand trial Sept. 16 in U.S. District Court on mail fraud and income tax charges. He is generally regarded as having had little to do with the alleged theft of eggs or embryos.

Clinic Scandal Chronology

1994

* February: UCI receives whistle-blower complaint accusing Drs. Ricardo H. Asch, Jose P. Balmaceda and Sergio C. Stone, staff physicians at the UCI Center for Reproductive Health, of underreporting income at the clinic the doctors operated at the university. Complaint also charges Asch imported, prescribed and sold the drug HMG Massone to patients, although it was not approved by the U.S. Food and Drug Administration.

* September: Another whistle-blower complaint suggests doctors implanted human eggs into patients without donor consent, repeats allegations of financial misconduct and improper prescription of Massone.

* October: UCI launches investigation, appointing clinical panel of doctors and hiring auditing firm KPMG Peat Marwick to look into financial misconduct allegations. Panel finds “plausible evidence” doctors implanted eggs without donor consent, a practice one expert calls “the most serious violation of ethical trust” ever in the field of reproductive technology. Asch admits dispensing Massone to two patients; panel finds evidence he gave it to at least nine. Doctors refuse to provide documents to Peat Marwick.

1995

* February: Doctors tell UCI they will cooperate with investigation, promise to deliver research records, agree not to conduct further research pending investigation.

* April: Doctors allegedly remove records from clinic, transfer them either to Outpatient Surgery Center of Fountain Valley Regional Hospital or Saddleback Memorial Medical Center in Laguna Hills.

* May: University files suit against doctors alleging misconduct, contending among other things that Asch used a woman’s eggs for research without her consent, then asked her to sign a retroactive approval form. Doctors placed on leave pending outcome of investigation; Asch resigns.

* June: UCI audit concludes doctors pocketed thousands of dollars in violation of university agreements, filed false insurance claims and were careless in obtaining patient consent and tracking human eggs. Corona del Mar couple file suit against UCI, claiming their embryos were stolen and implanted in a Newport Beach woman who gave birth to twins. More couples sue in following months.

* November: Investigators raid Asch’s Newport Beach home and Santa Ana office, but he has already departed for Mexico City. Balmaceda, his partner, has left the U.S. for his native Chile.

1996

* April: Balmaceda and Stone are indicted on multiple mail fraud charges stemming from filing of allegedly fraudulent insurance claims. Stone taken into custody and released on $3-million bond.

* October: UCI settles two suits for more than $1.1 million.

1997

* July 18: University of California agrees to a $10-million settlement with 50 couples who were patients at UCI fertility clinic and had sued after learning clinic’s doctors allegedly stole eggs from them and implanted the stolen eggs in other women.

Source: Times reports