An out-of-court settlement this week appeared to end the six-year-old tragic drama of Paul Lozano and Dr. Margaret H. Bean-Bayog '65.

The family of Lozano, a Harvard medical student who committed suicide last year, was pursuing legal action against Bean-Bayog for what they called inappropriate treatment that led to the suicide.

Bean-Bayog, a psychiatrist and an assistant clinical professor at Harvard Medical School, treated Lozano for depression from 1986 to 1990. Her insurance company agreed to pay the Lozanos $1 million, according to Pilar Williams, Paul Lozano's sister.

The case made headlines in late March, when the Lozanos made public hundreds of pages of documents in which Bean-Bayog described what appeared to be an intensely sexual relationship with Paul Lozano.

Among the documents were letters and notes the family said were written by Bean-Bayog to Lozano--one refers to "phenomenal sex." The family charged that a sexual relationship between doctor and patient led directly to Paul Lozano's suicide.

Bean-Bayog, on the other hand, said the references to sex were taken out of context and, in addition, that many of the "letters" were in fact her private journals in which she recorded dream fantasies about Lozano. She said that her patient had stolen the journals from her office.

Bean-Bayog claimed to be a scapegoat in the case of a severely depressed medical student, whom she described as violent and dangerous. Lozano's suicide came three months before hewas scheduled to graduate from medical school.

Andrew C. Meyer, counsel for the Lozanos, saidyesterday that the settlement will send a messagethrough the medical community, prompting review ofpsychiatric techniques.

"I think a certain amount of analysis is goingon, creating stronger standards of review," Meyersaid.

Both Meyer and the Lozanos said that thoughtheir case sets no legal precedent, it couldencourage other victims of medical malpractice tocome forward. Meyer also said the settlement wouldhelp psychiatry.

"I'm not concerned about their facing legalramifications--it will help keep them on thestraight and narrow," he said. "Doctors only havesomething to fear if they stray off the beatentrack and by doing so put patients is jeopardy."

However, Dr. Thomas G. Gutheil '63, a professorof psychiatry at Harvard Law School, stronglydisagreed.

Gutheil, who acted as the expert advising forthe defense in the case before the state medicalboard, said he thought the decision would harmpsychiatry and psychiatric patients.

"There will be a lot more 'silting' up ininstitutions--dangerous patients will accumulateand overcrowding will result," he said. Gutheil'sreference to dangerous patients echoedBean-Bayog's description of Lozano.

Bean-Bayog said Lozano "harbored homicidal,violent and delusional thoughts" and "manypsychiatrists would not have even attempted totreat him."

Bean-Bayog said she engaged in unconventionaltherapy with Lozano because his case was extreme.

Gutheil, who said he read all documentsrelevant to the case, said he believed thatBean-Bayog had done nothing wrong in her treatmentof Lozano, describing her as an excellentphysician and teacher.

"I interviewed Lozano myself twice," Gutheilsaid. "This was a very lethal guy--people wouldhave to have guts to treat him. The Lozanofamily...was able to pretend that, instead ofbeing a dangerous, suicidal junkie, he was abright young man."

Gutheil said he believed Bean-Bayog could havewon the case if she had told her story before themedical board. Bean-Bayog resigned her license onSeptember 18, the day she was supposed to presenther case before a state medical board.

This week's settlement did not include anadmission of guilt on the part of Bean-Bayog, butthe Lozano family has said they are satisfied.

"The Lozano family believes that in light ofDr. Bean-Bayog's recent resignation on the eve ofher prosecution by the Board of Registrationtogether with this settlement, justice has beenserved," read a statement released by the Lozanosthrough the Boston law firm of Lubin and Meyer