Fertility Doctor Denies Plotting Insurance Fraud

Dr. Sergio C. Stone testified in his own defense Friday, denying that he had plotted to dupe insurance companies and evade taxes but saying he was unable to explain why hospital records reveal that he had used foreign unlicensed doctors in some surgeries.

Stone spent about four hours on the witness stand, trying to deflect prosecutors’ contentions that he had hidden some of his earnings and had conspired with two partners at UCI’s now-defunct Center for Reproductive Health to overbill insurance companies.

Stone is charged with 23 counts of mail fraud and income tax evasion. In presenting their case, prosecutors contended that Stone and his partners--Dr. Jose P. Balmaceda and Dr. Ricardo H. Asch--had taken in more than $250,000 in cash that was not declared on their income tax returns.

The doctors, who were world-renowned for their treatment and research involving infertile women, also routinely used unlicensed personnel, including students and foreign research fellows, to help perform medical procedures, and then billed the insurance company as if the work had been performed either by another partner or by another licensed physician, the prosecution contends.

The charges came out of an investigation into allegations that human eggs and embryos were stolen from patients and implanted in other women or shipped to laboratories.

Asch and Balmaceda left the country shortly after the scandal broke in fall 1994.

Under questioning by defense attorney John Barnett, Stone acknowledged that he and other doctors at UCI had billed insurance companies for doctors who were not present, insisting he was simply following the university’s policy. He also denied ever having used foreign fellows to assist in any operation.

Rebutting the tax evasion allegations, Stone said he had tried to file an amended tax return after he learned that he had not paid tax on cash payments that had been taken from the clinic and divided among the partners.

Under cross-examination by assistant U.S. Atty. Thomas H. Bienert Jr., Stone acknowledged that he had tried to file an amended tax return only after newspaper reports about the UCI egg and embryo scandal mentioned that the doctors had allegedly skimmed cash payments from the fertility clinic.

Bienert showed Stone copies of operating room records revealing that so-called foreign fellows had assisted Stone with surgeries. The prosecutor presented bills for the same surgeries that claimed that Dr. Asch--not the foreign fellows--had been present for the operations.

Stone acknowledged that “this is what [the record] represents” but still denied that he had used foreign doctors and billed for their work.

Under cross-examination, he also acknowledged that both Asch and Balmaceda had been reprimanded by the university for using foreign doctors to treat patients, but denied he had done so.

Bienert began to read from a letter “reprimanding” Stone for having used a “non-credentialed” person in an operation, but U.S. District Judge Gary L. Taylor disallowed the question, ruling the letter hearsay evidence.