Audit Says Effort Made to Fire Whistle-Blower : Investigation: Medical center director reportedly viewed allegations as incitement of conspiracy against management.

By MICHAEL G. WAGNER and ANNA CEKOLA

June 15, 1995 12 AM PT

TIMES STAFF WRITERS

SACRAMENTO — In an apparent attempt to quash reports of serious irregularities, the executive director of UCI Medical Center tried to fire a key whistle-blower who complained that human eggs had been used without the donors’ consent and that unauthorized drugs had been administered at the university’s world-renowned fertility clinic, according to a university audit.

Executive Director Mary Piccione ordered the termination of Debra Krahel a week after Krahel complained to university auditors that Piccione had told her to keep her “loose lips” sealed.

The finding is contained in an 88-page internal audit prepared by University of San Diego law professors Charles Wiggins and Allen Snyder, who concluded that UCI Medical Center officials retaliated against Krahel and two other women for complaining about questionable practices at the fertility clinic.

Piccione and other university officials Wednesday denied at a state Senate hearing that they retaliated against any employees.

Under California law, the university must formally investigate complaints of retaliation against whistle-blowers. Last fall, Daniel John Yakoubian, a San Diego attorney who was representing all three women at the time, filed just such a complaint. The university later paid the three women a total of $919,370 in settlements.

An edited version of the internal audit was released at a Wednesday hearing of the California Senate Select Committee on Higher Education, which is looking into the scandal. All the names had been replaced by numbers in the version made public, and numerous passages had been deleted. But from statements at the hearing and earlier interviews, several medical center officials and all three whistle-blowers can be identified.

Krahel, the former senior associate director for ambulatory services at the medical center, was paid $495,000 by the university in a settlement, the terms of which prevented her from speaking out publicly about her experiences until she was subpoenaed to testify here Wednesday.

In an emotional appearance before the committee, Krahel testified that she received a call from Piccione last July 27 telling her she was being placed on administrative leave. “When I asked her the basis for the leave, the phone went dead,” Krahel said.

Unbeknown to Krahel, two days earlier Piccione had told personnel officials at the medical center to start the process to fire Krahel. Piccione told others she wanted Krahel “off the premises” because of Krahel’s “incitement” of a conspiracy against senior medical center management.

When investigators asked Piccione why she had tried to fire Krahel, the director said it was because of Krahel’s poor job performance. But the investigators found her explanation hard to believe, noting that Krahel had been moved into a new position only five weeks earlier and had received no negative feedback on her performance.

Piccione apparently tried to justify the action against Krahel by writing a critical performance evaluation more than six weeks after Krahel was placed on leave. The investigators found that such efforts by Piccione had “a distinct aura of self-serving justification for questionable practices and decisions. . . .”

At the Senate hearing, Piccione defended her actions, saying, “I have not retaliated against any of the three people alleged to be whistle-blowers.”

She said the investigators did not include in their audit report personnel information that would have supported her actions. She described Krahel and another whistle-blower as “opportunists.”

The retaliation against Krahel and the other women, the two law professors wrote, was spawned by a climate fear of and distrust at the medical center--where “employees perceive that loyalty to senior managers is crucial [and] dire consequences befall those who pass from favor.”

The medical center’s supervisory style, one employee told the investigators, was “management by fear.”

Krahel got a taste of that firsthand. Described by investigators as a “strong, assertive, opinionated” person herself, Krahel had been recruited from the private sector where she was accustomed to questioning authority. Part of her responsibility involved overseeing operations at the Center for Reproductive Health.

In February, 1994, Marilyn Killane, manager of the center, told Krahel that some of the center’s patients were receiving an unapproved fertility drug, and also complained about the center’s lax system of accounting for thousands of dollars in cash.

Krahel immediately took Killane’s allegations to Herb Spiwak, deputy director of UCI Medical Center, the investigators wrote.

Spiwak had been described by several people interviewed by the investigators as “a loud man” who “frequently responds to interruptions and bad news by telling someone to ‘get out’ of his office.” After listening to Krahel relate Killane’s story, Spiwak “told Krahel to ‘get rid of’ Killane because she was a ‘troublemaker’ or a ‘problem.’ ”

Krahel told Spiwak she couldn’t do that because Killane, as a whistle-blower, “could not be fired for being the bearer of bad news.”

Spiwak then asked another medical center official, identified only as witness 9, to join their conversation. Although Krahel told investigators she didn’t recall Spiwak using the phrase “fire her” about Killane, she quoted him as saying “get her out of here,” and “keep that woman quiet.”

Spiwak told investigators that after hearing Krahel’s allegations, he called the university’s general counsel, sought advice, and reported the drug allegations to the university’s internal auditor. He also told investigators that he told Krahel to find Killane “a new place to work.”

Spiwak told investigators he never suggested that Killane be fired.

Because Krahel got the impression that Spiwak was trying to “brush her off” about the allegations, Krahel told investigators, she attempted to meet with Piccione.

Around March 14, 1994, at the conclusion of a meeting about an unrelated subject, Krahel said Piccione told her to stay out of areas that weren’t her concern, “like CRH [the Center for Reproductive Health.]”

Krahel said that “a heated exchange followed,” with Piccione quoting Spiwak as telling her Killane was a “troublemaker” and that Krahel should “get her out of here.”

But Piccione’s story to investigators was that she never talked with anyone about Killane. “She does recall that someone from Human Resources mentioned to her that Killane was unhappy,” investigators wrote. “She states that she first learned of the Killane’s complaints ‘late, when it became a big issue.’ ”

Killane went on leave, and Krahel began trying to find her another job. As she did, another official whose name was deleted from the report wrote a letter saying Killane would not be allowed to return to her old job at the center. So Krahel asked Spiwak about placing Killane in another job.

“Great, she can go there and we’ll do away with the position in the spring,” Krahel quoted Spiwak as saying. “Krahel then told Spiwak that she was not going to let Killane go; if Spiwak wanted to fire Killane, he could do it, but Krahel would not,” the investigators wrote.

Piccione, the investigators concluded, believed Killane was a troublemaker “whose actions threatened one of the [medical center’s] most visible programs.”

But more critically, investigators wrote, “Piccione’s statement denying knowledge of activities to reassign Killane until some later time is not credible.”

Killane was paid a $395,000 settlement for the retaliation.

The investigators were left with impression that Piccione was more concerned in protecting the reputation of Dr. Ricardo H. Asch, fertility expert, than allegations about his alleged misconduct.

“Piccione’s cautious concerns about Asch are significantly different than her offhand condemnation of Killane,” investigators wrote. “Piccione’s evaluation that Killane was ‘just disgruntled’ was repeated, despite [her] being shown information that seriously undermined the factual underpinnings for this conclusion.”

Investigators also looked into allegations that the third whistle-blower, Carol Chatham, was subjected to retaliation.

Chatham began working at UCI Medical Center in late 1993 and was terminated July 27, 1994--the same day Krahel was placed on leave.

The investigators said they were unable to determine if Chatham was protected under the UCI whistle-blower policy, but she nonetheless received a $98,000 settlement from the university.

Krahel, the two investigators concluded, was put on leave “in substantial part because she openly criticized policy and practices at a large, public institution.”

They continued, “The mere fact that she questioned what senior management said seems to have been translated to mean that she did not ‘fit’ within the organization.

“This reveals the limit of debate and discussion allowed within this . . . institution. When people disagreed, they seemed to resolve disagreements based on power and position, not on the weight or wisdom of argument.”