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.