Fertility doctors’ competition spawns lawsuits

Dr. Joel Batzofin founded the Huntington Reproductive Center in Pasadena in 1988 and turned it into the biggest fertility practice in the West.

By undercutting competitors’ prices, he drew patients from around the world to his Southern California clinics. By 2001, Batzofin and the five partners he brought in shared a yearly profit of more than $5 million.

But in a drama vaguely reminiscent of Julius Caesar’s, his partners took a secret vote the next year, ousting him from his own empire.

The result was an explosion of litigation. Batzofin filed an arbitration claim against his former partners. They sued Batzofin and his new partner. Then his new partner sued his old partners and their lawyer.

Along the way, private detectives posed as fertility patients. In search of damning evidence, at least one female gumshoe submitted to an ultrasound of her uterus and ovaries. A doctor submitted his own sperm sample to his crosstown rival, pretending it was the aspiring father’s.

The legal brawl went on for six years, revolving largely around whether Batzofin was abiding by a settlement agreement not to compete with his former colleagues when he opened a new practice.

The clash among fertility titans underscores just how intense the competition has become in the multibillion-dollar business of baby-making. Because fertility treatments usually are not covered by insurance, clinics vie for customers with advertising, discounts, websites or supposedly special techniques, much as plastic surgeons do.

“The way somebody in this field becomes wealthy is to corner the market,” said Kirk O. Hanson, an ethicist at Santa Clara University who studies the business aspects of medicine.

Southern California has one of the highest densities of fertility clinics in the world, with more than three dozen clinics competing for patients.

“It’s a cutthroat business,” said Batzofin, 56. “There is a lot of greed.”

Batzofin got into the business early, starting Huntington 10 years after the first test-tube baby was born. In vitro fertilization then was a revolution for infertile couples.

As business grew, Batzofin brought in new partners and gave them full voting rights. But, as he tells it, the group soon was riven by the drive for money.

“Doctors were starting to compete with each other for the next patient that walks through the door,” he said.

Dr. Michael Feinman, who joined the practice in 1998, had a different take. He described Batzofin as “a strong-willed guy who didn’t like to share power.”

The breaking point came in the fall of 2002, when Batzofin made disparaging remarks about a partner during a fertility society dinner, according to court records. He acknowledges being critical but says he was engaged in a quiet conversation; his partners said he was too loud.

The partners met -- without Batzofin -- at a Doubletree hotel and voted him out. “I did not understand how evil people could be,” Batzofin said.

He filed a complaint. In an arbitration settlement, the partners agreed to buy his share of the business, valued at more than $1.5 million. Batzofin agreed not to practice fertility medicine in Los Angeles, Orange, San Bernardino or Ventura counties for five years.

The agreement was specific about the contact he could initiate with former patients: One holiday card a year.

Batzofin had received only the first installment of his buyout when he decided to open a clinic in New York City. It was a joint venture with the Sher Institute of Reproductive Medicine, a chain of 10 fertility centers run by one of the earliest practitioners of in vitro fertilization, a fellow South African named Dr. Geoffrey Sher.

His move set the stage for battle: Huntington (www .havingbabies.com) versus Sher ( www.haveababy.com).

Batzofin’s former partners cut off his buyout payments. His new employment violated the “non-compete” agreement, they argued, because Sher’s chain had a clinic in Glendale. They prepared to sue both Batzofin and Sher for breach of contract.

Huntington’s lawyer on the case called David Batza, a private investigator in Valencia. His assignment: Infiltrate Sher’s clinics with women posing as patients to show that Batzofin was steering business to the Glendale office, or perhaps seeing patients there himself.

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Private eye’s wife

One of the women was the private eye’s wife, Michelle. “We both feel very comfortable in you handling this treatment for us,” the 37-year-old Michelle Batza wrote in an e-mail to Batzofin. “The money is not even an issue to us -- we just want to have a baby!”

Batzofin, then working at Sher’s Las Vegas clinic in preparation for the New York opening, wrote back that she could have tests anywhere in Los Angeles. She chose the chain’s Glendale office.

There Michelle Batza had an ultrasound of her uterus and ovaries. She was surprised that it was an invasive procedure, she later said in a deposition. In addition, she received an injection of iodine dye to illuminate her uterus and fallopian tubes for a series of X-rays.

Her husband, the private detective, accompanied her on one visit and secretly videotaped it, he said in a deposition. But when the doctors requested a semen sample, he had a problem: He’d had a vasectomy.

The lawyer turned to Dr. Bradford Kolb, the newest of the Huntington partners, who agreed to provide a sample, according to Kolb’s deposition. Kolb declined to comment for this article.

In May 2004, after Michelle Batza had been approved for in vitro fertilization, she abruptly dropped out of touch with Batzofin, only to resurface months later as a witness in Huntington’s breach of contract suit.

In a declaration to the court, Michelle Batza did not divulge that she and her husband were on an assignment as private detectives. Huntington’s lawyer presented her simply as a patient whom Batzofin and his staff had referred to the Sher chain’s Glendale office for tests.

But the spy operation ultimately proved to be of little value in making the case that Batzofin was violating the non-compete agreement, as the evidence showed that it was Michelle Batza’s idea to go to the Glendale office.

At least three other women working for David Batza also posed as patients, records show. It is unclear how many of the women underwent invasive tests.

Neither David nor Michelle Batza returned calls seeking comment.

Feinman, 54, said that he and other Huntington partners didn’t know the full extent of the undercover assignment their lawyer had arranged. “We were mortified when we found out,” he said.

He blamed the lawyer, Lawrence Silver, for convincing the partners to target Sher in their lawsuit. “Nobody wanted to hurt Dr. Sher,” Feinman said.

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‘Egos get bruised’

But the case had gathered its own momentum. “It’s just doctors behaving badly,” Feinman said. “The egos get bruised back and forth.”

Silver did not return calls for comment.

Sher, 65, said he saw the legal attack in part as an attempt to derail his plans to expand his company’s market share in Southern California.

“In one fell swoop, they felt they could nullify us as competitors in the area,” he said.

Sher and Batzofin spent hundreds of thousands of dollars defending themselves; they recovered some of it after a judge issued a summary judgment in their favor in late 2005.

Sher then sued the Huntington Reproductive Center and Silver, the lawyer, for “malicious prosecution.” After two more years of legal wrangling, a judge in December 2008 ruled that the charge was baseless.

One part of the suit, though, remains alive: an “invasion of privacy” complaint by Dr. Brian Acacio, who was running Sher’s clinic in Glendale. He claims to have suffered “severe emotional distress and mental anxiety” after learning of the ruse that caused him to perform unnecessary invasive medical procedures on at least one phony patient, the private detective’s wife.

He has since parted ways with Sher to run his own fertility clinic in Orange County.

The wheels of litigation came full circle when Batzofin split with Sher, claiming in a lawsuit that Sher was stealing his patients. A judge ruled in Sher’s favor.

Batzofin opened his own clinic in New York in 2007; it is struggling because of the recession. He’s cut prices to compete.

As for Sher, he said the lawsuits nearly destroyed his business. He recently hired a new doctor to rebuild an L.A.-area practice. “We are resurrecting it now and will become a dominant force,” Sher said.

Feinman, one of Sher’s erstwhile adversaries from the Huntington group, said he wished him luck.

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