Ok, let me get this out of the way up front. I predicted publicly and privately that the California federal court judge would follow the reasoning and result of the Florida federal judge who granted summary judgement to the FDA and issued a permanent injunction barring the Florida stem cell operation from using its SVF (stromal vascular fraction) product in humans.

I am very happy to report that I was wrong, (at least for now and until there is a trial).

Here is the judge’s opinion

stemcelldecision

The bottom line is that the California federal judge found a disputed issue of fact which requires a full trial. The issue of fact and how the judge got there is important and could foreshadow a result which the FDA and the stem cell institutional mafioso won’t like.

So, what is the issue of fact?

Here is the judge’s words and they are short and simple:

“The parties dispute whether the SVF Procedure alters the SVF cells (citation to brief omitted). Because both parties have submitted competing evidence on this point, there is a triable issue of fact and summary judgement is not appropriate.”
(Order at last page).

Why is it important/critical/dispositive whether or not the SVF Procedure alters the SVF cells?

The FDA argued that the procedure creates an unapproved, adulterated and mislabeled new drug.
The Defendants argued that they are doing a surgical procedure which falls under the single surgical procedure (“SSP) exception to full drug regulation of HCT/P’s under 21 CFR 1271

If the SSP exception applies then the FDA loses. If it does not, the FDA wins.

Here is how the judge phrases it:

“While the SSP exception could apply to a procedure that removes SVF cells by removing adipose tissue from a patient and implants only extracted SVF cells back into the same patient, it only applies if those cells remains unaltered.”
The count then concludes with the language first quoted.

There are prior steps to the judge’s reasoning/conclusion, relating to whether you compare the total product removed (adipose tissue which includes fat and other stuff) versus what is reimplanted (SVF), or do you look at the target of what is sought to be removed (the SVF) and compare that to what is reimplanted (the same SVF, according to the defendants).

The judge choose the latter, which required him to dig deeper into whether the cells were altered, i.e. whether they were the same as what was taken out.

He determined that the parties had different views about that. In other words, there was a factual dispute about a critical element of the case, and factual disputes are resolved by trials, not by summary judgment. Hence the denial of the government’s summary judgment motion. This is a big loss, (albeit interim) for the FDA.

Something else that the feds won’t like is that the judge did not show the almost universal deference given to an administrative agency’s interpretation of its own statutes and regulations. The judge thought that the agency’s view of “what is taken out of the body” was overly broad and didn’t make any sense. Basically, the judge accepted the defense view on this, and then held that there is no deference to an agency’s opinion which is not realistic and doesn’t make sense. Ouch!

Something else the judge didn’t like, and something which I found really offensive about the government’s efforts, was its attempt to bar defendants Berman and Lander from testifying either as an expert or any way else. I think the judge was offended by that whole argument and called out the government on it, at one point castigating the government for wasting the his time. Really Big Ouch on that one.

So, what’s next?

Per a court approved December 2019 joint stipulation, the parties have 14 days to submit a proposed schedule for the trial and whatever else has to be scheduled, but perhaps the government might try something else. We’ll see.

What is the effect of this order?
As a lawyer on the side of the private stem cell clinics, this is very good news for these clinics. I happen to think that the SVF taken out is the same SVF put back in, because ultimately all the process does is strip out the fat and the structure from the remaining SVF. If the judge thinks so too, then the government is going to lose the injunction case, at least based on the judge’s analysis in his order today.

This could set up an appeal by the government, and could result in conflicting decisions between the Ninth and Eleventh Circuits (home of appeals from Florida).

This is also good news for the Florida clinic because a federal judge has accepted the argument it had made, but unfortunately, it was not the federal judge on its case. Still that’s why they have appellate courts.

This is also welcome news to the customers who have banked their SVF with the Florida operation, to the extent the material had not been destroyed (and last I checked a few months ago, it hadn’t been).

Finally, it is very, very good news for the physician affiliates of the Cell Surgical Network, as well as other physicians using SVF, (at least outside the Southern District of Florida.) The judge’s opinion is a clear indication that the only legal hurdle left is whether the SVF coming out is the same SVF going back in. If it is, and the judge so finds, then there’s going to be a substantial uptick of SVF procedures being offered in this country (outside of the Southern District of Florida). But then again, I’ve been wrong before, so we will just have to see what happens.

A shout out to federal Judge Jesus G. Bernal for this important decision standing up to the government, and to the very excellent work of defense counsel, the very venerable Venerable law firm.

Rick Jaffe, Esq.