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The grass is still growing ever so slowly in the FDA’s injunction cases against U.S. and California Stem Cell Clinics

The grass is still growing ever so slowly in the FDA’s injunction cases against U.S. and California Stem Cell Clinics

Since my last update about these cases in early August, not much has happened, which is to be expected in federal civil litigation. Nonetheless, here is an update.

Let’s start with what hasn’t happened

1. There has been no announced agreement in either case that the defendants have stopped treating patients with their SVF, stem cell therapy which the FDA claims are unapproved new drugs, adulterated and misbranded, pending the final decision by the judges in these injunction actions.

2 The FDA hasn’t filed a motion for a preliminary injunction against either company to stop them from treating patients until the judges’ final rulings.

The FDA sure isn’t litigating these cases like these clinics are a big public threat. There are a few well-publicized cases of harm from U.S. Stem Cells patients, and there is much made of the fact that California group was using a dangerous toxic substance in processing their “drug” product. But as I’ve said in some previous posts, the FDA has bigger fish to fry.

See my post at:

http://www.rickjaffeesq.com/2018/08/01/update-on-the-fdas-stem-cell-injunction-cases”>http://www.rickjaffeesq.com/2018/08/01/update-on-the-fdas-stem-cell-injunction-cases”>http://www.rickjaffeesq.com/2018/08/01/update-on-the-fdas-stem-cell-injunction-cases

Of course, it’s a complicated subject for a federal judge, and maybe the FDA is worried about losing in the abbreviated hearing process of a preliminary injunction motion. Maybe the thinking is “do it right and take your time.” If so, I can’t argue with it.

Here is what has happened

U.S. Stem Cell

The defendants filed an answer in August. It largely parallel’s the answer in the California case, which isn’t surprising since the same big firm is lead counsel in both cases. Here is the Answer:

09261800

There is one big difference: U.S. Stem Cell’s answer contains a demand for “a jury trial as permitted by law.”

No such request was contained in the California Stem Cell Treatment answer. Getting the case away from a judge and into a jury’s hands would be a good thing for a defendant in this type of case, so did the California lawyers miss an opportunity?

I don’t think so. Injunction cases aren’t decided by juries; they are decided by judges. I think the Florida lawyers just tossed out a jury request and the docket just mechanically picked it up and the mechanical/automated software spit out the jury trial forms deadline. My guess and prediction is that down the road the jury trial issue will be addressed and rejected by the judge, even if the case gets that far.

The case is set for trial during a two week period starting June 10, 2019.

The more relevant deadline is March 11, 2019, which is the summary judgment motion deadline. Seems a safe bet that the FDA will file a summary judgement motion for a final judgment. (FYI: That’s how the Regenerative Sciences case was resolved). The feds will do some discovery, nail down via admissions and depositions what the company does and doesn’t do – most notably, being cGMP compliant – which establishes adulteration. The feds will get in admissible form the label instructions for use, which establishes misbranding, and obtain admissions and deposition testimony of the facts of how the product is processed, and how/for what indications it’s being used, which should establish non-compliance with the main regulatory requirements for drug status, i.e., more than minimal manipulation and non-homologous use, (at least under the FDA guidance documents.)

With those facts established in admissible form in discovery, there probably won’t be any factual issues to be tried by the judge (or jury). That makes the case amenable to resolution via summary judgement.

The defenses challenge is to find a disputed issue of fact on which the judge has to hear factual testimony from the parties at a trial. In this case, it will be a challenge, but there are some possibilities. The defense has smart lawyers and will figure it out, if there’s something to be figured out. And who knows, they might even come up with a legal basis to move the case sideways.

I’d look to have the defense seek a delay to filing papers in opposition to the summary judgment motion, figure a month. (Anything beyond that would probably interfere with the early June trial setting.) That would make a decision on the summary judgement motion in May. That’s how and when I’d see this case wrapping-up unless defense counsel figures out a way to derail or slow down the proceedings. Speaking as a defense lawyer, sometimes delay is the best you can hope for, because who knows what the future will bring. This point is aptly made in a fable I related at the beginning of my chapter on cancer doctor Stanislaw Burzynski’s several decades war with the FDA and the Texas medical board in Galileo’s Lawyer. It’s a good story. Here it is for those who have an immediate need for a smile.

mendal

Sometimes horses learn to fly, and a year or two could present an entirely new regulatory reality.

California Stem Cell

The parties filed a joint preliminary statement, which sets forth the claims and defenses, lists the witnesses, and the documents (and of course it can be amended as more information becomes available through discovery), and sets forth a proposed case schedule. The parties are looking at a trial in late July to early August, subject to the Court’s availability. They are proposing a motion deadline of late May. Here is the joint statement. castemcelljtdiscovery

There is a scheduling conference with the judge on Tuesday, October 1, 2018, at which point proposed deadlines will be adopted or changed.

The legal issues related in the joint statement are as expected and as discussed in prior posts, namely whether the defendants’ procedure is an unapproved new drug or not regulated by the FDA because it’s a same day surgical procedure, with not more than minimally manipulated autologous cells, given for a homologous use and all the practice of medicine and lack of jurisdiction stuff thrown in. The relevant trial documents are the 483 inspectional observations, communications between the parties and the final guidance documents pertaining to these issues, as well as patient complaints. Predictably, the defense seems to want to have some patients testify, and I’m always in favor of that. Look to the government to seek to stop that, because hey, that’s how they roll.

Yawn. I warned you it’s like watching grass grow.

Since the discovery process does not normally result in the publishing or making public, documents or other information revealed in discovery, I think nothing exciting is going to happen in these two cases (or nothing we will hear about) until summary judgement papers are filed (unless the lawyers come up with an interesting delay strategy). The Florida judge did refer the case out to mediation, but that’s a non-starter. U.S. Stem Cell isn’t stopping, and the FDA isn’t going away until it stops the Florida operation.

So any more news from the FDA in the stem cell field will be about other lawsuits or collateral things, like its cracking down on private stem cell clinics using clinicaltrials.gov to promote their clinics via patient funded clinical trials, per a recent post by the big dawg. https://ipscell.com/2018/09/fda-outlines-potential-crackdown-on-clinicaltrials-gov-offenders/

(And for the record, I don’t have a problem with the feds restricting clinicaltrials.gov to IND clinical trials, or at the very least, requiring disclosure that the trials are not FDA approved and that the “participants” pay for the treatment. That seems fair and reasonable.

I’m also very much in favor of the private stem cell clinics providing accurate and complete information about their operations, including that their treatments are not FDA approved, are not considered to be safe and effective by institutional authority, and that anecdotal evidence is not considered scientifically reliable, or even disclosing that there is no government review or verification that the statements made by the clinics on their web sites are true (like what the supplement manufacturers have to state). And I also don’t have a problem with the FDA or the FTC going after any health care facility which puts out materially false information to fraudulently induce patients to undergo the treatment. I’m all about providing the patients with accurate and complete information and let them make an informed choice, because it’s their bodies and their body parts we’re talking about).

So in sum about the status of the FDA’s two pending injunction cases: the millstones (wheels) of justice grind exceeding slow . . . . (you know the rest).

Rick Jaffe, Esq.
www.rickjaffe.com
rickjaffeesquire@gmail.com

For those who don’t: “The wheels of justice grind exceeding slow, but they grind exceedingly fine.” The odds favor the millstone over Mendal in these cases, so per Damon Runyon, “The fight isn’t always to the strong, or the race to the swift, but that’s the way to bet.”

RAJ

Hard choices for the stem cell defendants in the FDA’s injunction cases

Hard choices for the stem cell defendants in the FDA’s injunction cases

As recently reported, the FDA filed permanent injunction actions against the two highest profile stem cell clinic/operators, US Stem Cells Clinic and Cell Surgical Network/California Stem Cell Treatment. See my post at http://wp.me/p7pwQD-dz

As an FDA attorney who has worked on civil and criminal stem cell investigations and cases, I can tell you that these defendants are facing a major decision: whether to stop treating patients during the pendency of the permanent injunction action.

Here’s what I believe to be the decision tree/analysis:

Factors weighing in favor of stopping operations pending the judge’s final decision:

1. The FDA can seek a preliminary injunction barring treatment pending the outcome of the case

The FDA has not yet moved for a preliminary injunction, but of course it can do so.My guess is that the FDA didn’t give either clinic advance notice that it intended to file the permanent injunction action, and that the FDA decided to file first then discuss with the operators their ceasing operations pending the judge’s decision on the permanent injunction. I would guess that these discussions are currently going on now or has just concluded. If they agree to close down, expect a FDA press announcement soon.

To obtain a preliminary injunction, the government has to prove 1. Likelihood of success of on the merits, 2.irreparable injury, and 3. balance of equities in favor of the government and the injunction pending a final decision.

These are flexible standards. Regrettably, recent case law is on the government’s side, making it likely they can show likelihood of success on the merits.

Both complaints cite cases of actual harm in the form of side effects the some patients. That will present a challenge to the operators, but it’s not insurmountable.

As to the balance of the equities, again it’s a challenge but there are arguments to be made in support of the operators.

A preliminary injunction motion is a mixed blessing. The advantage is that it’s a dry run, in that will give the operators a sense of the judge’s thinking early on in the case. If they lose, they could decide to fold up their tents, which will save them big bucks as opposed to trying a long and expensive permanent injunction case. The downside of course is losing, and that means operations stop, and there are other negative consequences explained below.

In my mind, the government’s threat of filing a preliminary injunction, while serious, should not be a determining factor in deciding whether to stop operating.

2. Potential criminal prosecution

This is where the rubber meets the road. The government is claiming that these operators are introducing into interstate commerce an unapproved new drug, and that the drug id adulterated and misbranded. These are both civil and criminal violations. And here’s where it gets interesting.

The FDA criminal statutes are both misdemeanors and felonies. The difference is intent or knowledge that what you’re doing is illegal. Based on the operators’ prior receipt of the warning letters in late summer 2017, and more importantly, the fact that the operators are now being charged with FDA violations in a civil action, well that goes a long way towards proving they had intent or knowledge that what they are doing is illegal.

And that puts the operators in Felony Land!

And once you’re in the land of felonies, that makes it more likely that the criminal division of the US attorney’s office will get involved, because they are basically “felony factories”, meaning they typically don’t prosecute cases involving only misdemeanors, because most people who plead or get convicted of misdemeanors get probation. (And what’s the fun of that for the prosecutors!) But most people who get convicted of felonies go to jail.

Of course, the operators can take the position that they are entitled to assert their legal defenses in the civil case. However, their lawyers are surely telling them that to do so creates a risk of criminal prosecution and a greater risk of actual incarceration upon conviction. That’s a tough thing for most successful doctors and business folk to risk.

Which is probably why when the FDA filed a permanent injunction action against Regenerative Sciences and its physician owner, Chris Centeno, he decided to stop treating patients with his expanded cell, stem cell procedure pending the outcome of the case. Turned out he made the right decision since he lost both at the district and appellate court levels. I suspect that no criminal charges were brought against him in no small part because of that decision.

Factors weighing for not closing down pending the end of the case:

1. There’s been no decision by a judge yet, and everyone is entitled to present a defense.

2. Their case is different from Chris Centeno’s case in the following ways: ____________,_______,______ (the defendants will have to fill in the blanks.

3. These folks are very, very motivated to seek vindication. Both Berman and Comella have been quoted in the stem cell press as expressing a high degree of motivation and belief in the righteousness of their actions, and caving-in just might not be in their DNA.

4. And here is the biggest factor and the consideration which could carry the day if they decide not to close down pending the outcome of the case:

Both operators have networks of physicians or franchisee physicians providing stem cell treatments throughout the country. (And that’s a big part of the reason why the FDA chose to go after these two first).

I don’t know the details of how these folks operate, but there are many physicians in the United States who treat patients with stem cells associated with these two operations. I suspect, but don’t know for sure whether they supply any stem cell products or supplies to their networkees/franchisees. But if they do, then agreeing to stop operations now might cause the cessation of all the associated clinics. (Hey these Feds aren’t so dumb!) Because the decision could involve so many other people involved in business with them, I think this could be the dispositive factor, if either or both decide not to close their operations right now. One way or the other, there might be some collateral legal/liability issues between the operators and their networkees.

What happens if they don’t close down now?

The decision to remain open during the pendency of this permanent injunction case will certainly have consequences. There is discovery in a civil case, and the defendant should expect to be deposed. There is no Fifth Amendment privilege in a civil case, so the defendants are going to have to answer every question fully, or ultimately, their formal answer to the injunction complaint will be stricken by the court and judgment will be entered against them.

On the other hand, if they do answer questions, the answers will be admissible in a criminal case, whether or not they take the stand in a criminal trial. This is just another wrinkle to what has to be a very hard decision.

Having defended medical mavericks for a long time, my guess is that at least one of them (and probably both) is going to stay open, but we’ll see. It would be hard to overestimate the impact of these cases as they wind their way through the courts.

Rick Jaffe, Esq.
www.Rickjaffe.com
rickjaffeesquire@gmail.com

The FDA’s injunction complaints against US Stem Cell Clinic and California Stem Cell Treatment Center

The FDA’s injunction complaints against US Stem Cell Clinic and California Stem Cell Treatment Center

Yesterday, May, 9th the FDA filed complaints seeking permanent injunctions in Florida and California federal courts against the two highest visibility U.S. stem cell operations. For the interested, here are the complaints.

comella

bermancomplaint

What’s in the complaints?

It’s pretty much as I said in yesterday’s post. The two complaints are substantially identical and no doubt prepared in Washington, primarily by the FDA with input from Main Justice (or vice versa).

Both entities were inspected by the FDA, after which they received 483 inspection observations indicating Good Manufacturing Practices violations and the fact that they were illegally manufacturing unapproved new drugs which makes the products adulterated and misbranded under federal law.

The clinics responded with basically the same legal argument that the FDA didn’t have jurisdiction to regulate them because they were doing a surgical procedure/just practicing medicine which the FDA cannot regulate.

The FDA then issued warning letters rejecting the lack of jurisdiction argument. That was back in late summer 2017. Since that time, both companies continued their rejection/defiance of the warning letters via public statements about the FDA’s lack of jurisdiction over their clinics’ medical practices.

It was just a matter of time.

The complaints go through the FDA standard argument that the products are drugs and biological products, and not covered by the same surgical procedure exemption (21 CFR 1271.15, which I’ve discussed in many of my previous posts:
See my post at: http://wp.me/p7pwQD-bB )

The complaint against US Stem Cell points out that the solutions the company uses to separate the fat from the stem cells and to wash the product are labeled for “research purposes only” and “not for human therapeutic use.” Ooops! (While that’s mostly just CYA on the part of the suppliers, it won’t sit well with the federal judge, and I predict, the suppliers’ limitation language will be in the judge’s final opinion.)

The complaint against California Stem Cell Treatment Center points out that its stem cell product (actually stromal vascular fraction (SVF) contains a small pox vaccine, Vaccinia Vaccine, Live, which carries a black box warning “designed to call attention to serious or life-threatening product risk, including swelling of the heart tissues, brain or spinal cord.” Yikes! Expect a lot of discussion about that in the summary judgement papers.

Both complaints relate serious adverse events associated with the products, which in the case of US Stem Cell are the notorious three cases of blindness (or partial blindness) resulting from injecting the SVF into the eyes of patients (a practice which US Stem Cell mercifully doesn’t do anymore, according to its co-owner).

So what’s next?

The good news is that there is no motion for a preliminary injunction which means that the cases will take some time, months, at least. The companies will file an answer raising all their arguments. A scheduling conference with the judge will be held, and the government will press for setting up a summary judgement briefing schedule.

The companies need to do something different, because we know how summary judgement proceedings go in this type of case; just ask Chris Centeno and the Regenerative Science folks. So defendants, try something different. Searching for a factual issue would be the place to start. There’s only heartache and loss in summary judgement in this kind of case, followed by an affirmance by the Circuit court. (Here is the legal precedent what has to be worked around, https://caselaw.findlaw.com/us-dc-circuit/1656447.html )

So do something different!

Rick Jaffe, Esq.
www.rickjaffe.com
rickjaffeesquire@gmail.com