[Federal Register Volume 60, Number 186 (Tuesday, September 26, 1995)]
[Notices]
[Pages 49605-49609]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23796]
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FEDERAL TRADE COMMISSION
[File No. 942-3161]
Genetus Alexandria, Inc., et al.; Proposed Consent Agreement With
Analysis To Aid Public Comment
AGENCY: Federal Trade Commission.
ACTION: Proposed consent agreement.
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SUMMARY: In settlement of alleged violations of federal law prohibiting
unfair acts and practices and unfair methods of competition, this
consent agreement, accepted subject to final Commission approval, would
prohibit, among other things, a Virginia-based clinic and its operators
from misrepresenting the nature or extent of a physician's
participation in any treatment procedure, the safety or efficacy of any
treatment procedure, and the extent to which a treatment is covered by
a patient's medical insurance.
DATES: Comments must be received on or before November 27, 1995.
ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,
Room 159, 6th St. and Pa. Ave., NW., Washington, DC 20580.
FOR FURTHER INFORMATION CONTACT:
Sondra Mills or Eric Bash, FTC/H-200, Washington, DC 20580. (202) 326-
2673 or 326-2892.
SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the
Commission's rules of practice (16 CFR 2.34), notice is hereby given
that the following consent agreement containing a consent order to
cease and desist, having been filed with and accepted, subject to final
approval, by the Commission, has been placed on the public record for a
period of sixty (60) days. Public comment is invited. Such comments or
views will be considered by the Commission and will be available for
inspection and copying at its principal office in accordance with
Sec. 4.9(b)(6)(ii) of the Commission's rules of practice (16 CFR
4.9(b)(6)(ii)).
In the matter of Genetus Alexandria, Inc., a corporation, and
Galen Medical Centers, Ltd., a corporation, and George Oprean,
individually and as President and a director of Genetus Alexandria,
Inc. and Galen Medical Centers, Ltd., and Linda Huffman Oprean,
individually and as an officer and a director of Genetus Alexandria,
Inc. and as a director of Galen Medical Centers, Ltd.
Agreement Containing Consent Order To Cease and Desist
The Federal Trade Commission having initiated an investigation of
certain acts and practices of Genetus Alexandria, Inc., a corporation
(``Genetus''), Galen Medical Centers,
[[Page 49606]]
Ltd., a corporation (``Galen''), George Oprean, individually and as
President and a director of Genetus and Galen, and Linda Huffman Oprean
(``Linda Oprean''), individually and as officer and a director of
Genetus and as a director of Galen, and it now appearing that Genetus,
Galen, George Oprean and Linda Huffman Oprean, hereinafter sometimes
referred to as proposed respondents, are willing to enter into an
agreement containing an order to cease and desist from the use of the
acts and practices being investigated,
It is hereby agreed by and between Genetus and Galen, by their duly
authorized officers, George Oprean, individually and as President and a
director of Genetus and Galen, and Linda Huffman Oprean, individually
and as an officer and a director of Genetus and a director of Galen,
and their attorney, and counsel for the Federal Trade Commission that:
1. Proposed respondent Genetus Alexandria, Inc. is a corporation
organized, existing and doing business under and by virtue of the laws
of the Commonwealth of Virginia, with its office and principal place of
business located at 2843 Duke Street, Alexandria, Virginia 22314.
Proposed respondent Galen Medical Centers, Ltd. is a corporation
organized, existing and doing business under and by virtue of the laws
of the Commonwealth of Virginia, with its office and principal place of
business located at 2843 Duke Street, Alexandria, Virginia 22314.
Proposed respondent George Oprean is the President, Secretary,
Treasurer and a director of Genetus and is the President and a director
of Galen. He formulates, directs, controls and implements the policies,
acts and practices of Genetus and Galen. His address is 2843 Duke
Street, Alexandria, Virginia 22314.
Proposed respondent Linda Huffman Oprean is the Vice President and
a director of Genetus and is a director of Galen.
Together with George Oprean, she formulates, directs, controls and
implements the policies, acts and practices of Genetus and Galen. Her
address is 2843 Duke Street, Alexandria, Virginia 22314.
2. Proposed respondents admit all the jurisdictional facts set
forth in the draft of complaint.
3. Proposed respondents waive:
(a) Any further procedural steps;
(b) The requirement that the Commission's decision contain a
statement of findings of fact and conclusions of law; and
(c) All rights to seek judicial review or otherwise to challenge or
contest the validity of the order entered pursuant to this agreement.
4. This agreement shall not become part of the public record of the
proceeding unless and until accepted by the Commission. If this
agreement is accepted by the Commission it, together with the draft of
complaint contemplated thereby, will be placed on the public record for
a period of sixty (60) days and information in respect thereto publicly
released. The Commission thereafter may either withdraw its acceptance
of this agreement and so notify the proposed respondents, in which
event it will take such action as it may consider appropriate or issue
and serve its complaint (in such form as the circumstances may require)
and decision, in disposition of the proceeding.
5. This agreement is for settlement purposes only and does not
constitute an admission by the proposed respondents of facts, other
than jurisdictional facts, or of violations of law as alleged in the
draft complaint.
6. This agreement contemplates that, if it is accepted by the
Commission, and if such acceptance is not subsequently withdrawn by the
Commission pursuant to the provisions of Sec. 2.34 of the Commission's
Rules, the Commission may, without further notice to proposed
respondents, (1) issue its complaint corresponding in form and
substance with the draft of complaint and its decision containing the
following order to cease and desist in disposition of the proceeding
and (2) make information public in respect thereto. When so entered,
the order to cease and desist shall have the same force and effect and
may be altered, motified or set aside in the same manner and within the
same time provided by statute for other orders. The order shall become
final upon service. Delivery by the U.S. Postal Service of the
complaint and decision containing the agreed-to order to proposed
respondents' address as stated in this agreement shall constitute
service. Proposed respondents waive any right they may have to any
other manner of service. The complaint may be used in construing the
terms of the order, and no agreement, understanding, representation, or
interpretation not contained in the order or the agreement may be used
to vary or contradict the terms of the order.
7. Proposed respondents have read the proposed complaint and order
contemplated hereby. They understand that once the order has been
issued, they will be required to file one or more compliance reports
showing that they have fully complied with the order. Proposed
respondents further understand that they may be liable for civil
penalties in the amount provided by law for each violation of the order
after it becomes final.
Order
Definitions
For purposes of this Order, the following definitions shall apply:
1. ``Impotence'' means the inability of a man to attain and
maintain an erection of sufficient rigidity and/or duration to enable
him to engage in sexual intercourse.
2. ``Treatment procedure'' means any method of treating impotence
or any other medical condition, disease or symptom, including, but not
limited to, injections, drug therapy, hormone replacements, use of
devices to induce erections, vascular surgery, use or implantation of
devices, behavior modification, counseling, psychotherapy, or any other
method.
I
It is ordered That respondents Genetus Alexandria, Inc., a
corporation, (``Genetus''), Galen Medical Centers, Ltd. (``Galen''),
their successors and assigns, and their officers, and George Oprean,
individually and as President and a director of Genetus and Galen, and
Linda Huffman Oprean (``Linda Oprean''), individually and as an officer
and a director of Genetus and as a director of Galen, and respondents'
agents, representatives and employees, directly or through any
corporation, subsidiary, division or other device, in connection with
the advertising, promotion, offering for sale or sale of any treatment
procedure in or affecting commerce, as ``commerce'' is defined in the
Federal Trade Commission Act, do forthwith cease and desist from, in
any manner, directly or by implication:
A. Falsely representing in any manner, directly or by implication,
that each individual purchasing any impotence treatment procedure will
receive an examination by a physician, or otherwise misrepresenting the
nature or extent of physician participation in any treatment procedure;
B. Falsely representing in any manner, directly or by implication,
that each individual purchasing any impotence treatment procedure will
receive a medical diagnosis and treatment of the underlying cause of
his impotence, or otherwise misrepresenting the nature of extent of
medical diagnosis or treatment provided in connection with any
treatment procedure;
[[Page 49607]]
C. Falsely representing in any manner, directly or by implication,
the qualifications, credentials, or licenses held by any person
involved in providing any treatment procedure;
D. Representing in any manner, directly or by implication, that
Prostaglandin E1, Papaverine, or Phentolamine, or any combination
thereof, has no side-effects or contraindications, or otherwise
misrepresenting the side-effects or contraindications of any drug or
treatment procedure;
E. Falsely representing in any manner, directly or by implication,
that any impotence treatment procedure is unqualifiedly safe, or
otherwise misrepresenting the safety of any treatment procedure;
F. Falsely representing in any manner, directly or by implication,
that any impotence treatment procedure will arrest impotence, or
otherwise misrepresenting the efficacy or the duration of results of
any treatment procedure;
G. Falsely representing in any manner, directly or by implication,
the extent to which medical insurance will cover the costs of any
treatment procedure;
H. Falsely representing in any manner, directly or by implication,
that medical procedures were performed;
I. Falsely representing in any manner, directly or by implication,
that claims submitted to insurance companies were signed, or approved
for signature, by a physician;
J. Misrepresenting the safety, side-effects, or efficacy of, or the
extent, nature, or duration of results of, any treatment procedure.
II
It is further ordered That respondents and their officers agents,
servants, employees, attorneys, subsidiaries, affiliates, successors,
assigns, and all persons in active concert or participation with them
who receive actual notice of this Order by personal service or
otherwise, and each of them, shall take no further actions to collect
any payments from customers of Genetus on any outstanding accounts
receivable of Genetus; provided, however, that this Paragraph shall not
prohibit respondents from fulfilling any legal obligations arising out
of any bona fide pledge or assignment of such accounts receivable made
to third party creditors of Genetus prior to September 1, 1994.
III
It is further ordered:
A. That respondents Genetus, George Oprean and Linda Oprean shall
jointly and severally pay to the FTC as consumer redress the sum of
$250,000; provided, however, that this liability will be suspended,
subject to the provisions of subparts B and C below, upon the execution
and submission to the Commission of a truthful sworn declaration by
respondents Genetus, Galen, George Oprean, and Linda Oprean, in the
form shown on Exhibit A to this Order, no later than three (3) days
after the date of service of this Order, that shall reaffirm and attest
to the truth, accuracy and completeness of the financial statement of
each such respondent, each dated August 24, 1995, and previously
submitted to the Commission.
B. That the Commission's acceptance of this Order is expressly
premised upon the financial statements and related documents provided
by respondents to the FTC referred to in subpart A above. After service
upon respondents of an order to show cause, the FTC may reopen this
proceeding to make a determination whether there are any material
misrepresentations or omissions in said financial statements and
related documents. Respondents shall be given an opportunity to present
evidence on this issue. If, upon consideration of respondents' evidence
and other information before it, the FTC determines that there are any
material misrepresentations or omissions in said financial statements
and related documents showing that any of the respondents failed to
disclose the existence of assets in the financial statements, that
determination shall cause the entire amount of $250,000 to become
immediately due and payable to the FTC, and interest computed at the
rate prescribed in 28 U.S.C. 1961, as amended, shall immediately begin
to accrue on any unpaid balance of this amount. Proceedings initiated
under Part III are in addition to, and not in lieu of, any other civil
or criminal remedies as may be provided by law, including any
proceedings the FTC may initiate to enforce this Order.
C. That any funds paid by respondents pursuant to subparts A and B
above shall be paid into a redress fund administered by the FTC and
shall be used to provide direct redress to consumers who purchased
Genetus' services. If the FTC determines, in its sole discretion, that
redress to consumers is wholly or partially impracticable, any funds
not so used shall be paid to the United States Treasury. Respondents
shall be notified as to how the funds are disbursed, but shall have no
right to contest the manner of distribution chosen by the Commission.
IV
It is further ordered That for five (5) years after the last date
of dissemination of any representation covered by this Order,
respondents, or their successors and assigns, shall maintain and upon
request make available to the Federal Trade Commission for inspection
and copying:
A. All materials that were relied upon in disseminating such
representation; and
B. All tests, reports, studies, surveys, demonstrations or other
evidence in their possession or control that contradict, qualify, or
call into question such representation, or the basis relied upon for
such representation, including complaints from consumers.
V
It is further ordered That, for a period of five (5) years from the
date of entry of this Order, respondents shall distribute a copy of
this Order to each of their operating divisions, to each of their
managerial employees, and to each of their officers, agents,
representatives, or employees engaged in the preparation or placement
of advertising or other material covered by this Order and shall secure
from such person a signed statement acknowledging receipt of this
Order.
VI
It is further ordered that respondents shall notify the Commission
at least thirty (30) days prior to any proposed change in the
corporation such as dissolution, assignment, or sale resulting in the
emergence of a successor corporation, the creation or dissolution of
subsidiaries or any other change in the corporation which may affect
compliance obligations arising out of this Order.
VII
It is further ordered That, for a period of ten (10) years from the
date of entry of this Order, each individual respondent named herein
shall promptly notify the Commission of the discontinuance of his or
her present business or employment, with each such notice to include
the respondent's new business address and a statement of the nature of
the business or employment in which the respondent is newly engaged as
well as a description of respondent's duties and responsibilities in
connection with the business or employment.
[[Page 49608]]
VIII
It is further ordered That this Order will terminate twenty years
from the date of its issuance, or twenty years from the most recent
date that the United States or the Federal Trade Commission files a
complaint (with or without an accompanying consent decree) in federal
court alleging any violation of the Order, whichever comes later;
provided, however, that the filing of such a complaint will not affect
the duration of:
A. Any paragraph in this Order that terminates in less than twenty
years;
B. This Order's application to any respondent that is not named as
a defendant in such a complaint; and
C. This Order if such complaint is filed after the Order has
terminated pursuant to this Paragraph.
Provided further, that if such complaint is dismissed or a federal
court rules that the respondent did not violate any provision of the
Order, and the dismissal or ruling is either not appealed or upheld on
appeal, then the Order will terminate according to this Paragraph as
though the complaint was never filed, except that the Order will not
terminate between the date such complaint is filed and the later of the
deadline for appealing such dismissal or ruling and the date such
dismissal or ruling is upheld on appeal.
IX
It is further ordered That respondents shall, within sixty (60)
days after service upon them of this Order and at such other times as
the Commission may require, file with the Commission a report, in
writing, setting forth in detail the manner and form in which they have
complied with the requirements of this Order.
Exhibit A
In the Matter of Genetus Alexandria, Inc., a corporation, and
Galen Medical Centers, Ltd., a corporation, and George Oprean,
individually and as President and a director of Genetus Alexandria,
Inc. and Galen Medical Centers, Ltd., and Linda Huffman Oprean,
individually and as an officer and a director of Genetus Alexandria,
Inc. and as a director of Galen Medical Centers, Ltd.
File No.
Declaration of
Pursuant to 28 U.S.C. 1746
Pursuant to 28 U.S.C. 1746, I, __________________, hereby state
that the information contained in the financial statement of
______________, provided to the Federal Trade Commission on
______________, 1995, was true, accurate and complete at such time.
I declare under penalty of perjury that the foregoing is true and
correct.
Dated:-----------------------------------------------------------------
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[signature]
Analysis of Proposed Consent to Aid Public Comment
The Federal Trade Commission has accepted for comment a proposed
consent order with Genetus Alexandria, Inc. (``Genetus''), Galen
Medical Centers, Ltd. (``Galen''), George Oprean, and Linda Huffman
Oprean (``Linda Oprean''). Under the direction and control of George
Oprean and Linda Huffman Oprean, Genetus and Galen have marketed and
provided impotence treatment services through clinics located in
Virginia and Maryland.
The Commission has placed the proposed order on the public record
for sixty days for comment by interested persons. Comments received
during this period will become part of the public record. After sixty
days, the Commission will again review the agreement and decide whether
it should withdraw from, or make final, any or all of the proposed
order.
According to the complaint, impotence is frequently a symptom or
side-effect of serious diseases, such as arteriosclerosis, aneurysms,
high blood pressure, diabetes, strokes, kidney disease, and spinal cord
injuries. Impotence can also be a side-effect of various prescription
medications and alcoholism, and can also be caused by depression,
stress, anxiety, and other psychological factors.
The complaint states that impotence can be treated by various
methods. Some treat the underlying physical, psychological, or
behavioral, cause; others produce an erection without treating the
underlying cause. According to the complaint, the only treatment
offered by respondents Genetus, George Oprean, and Linda Oprean was the
latter. These respondents' sole treatment method consisted of injecting
the drug Prostaglandin E-1 or ``Tri-mix'' (a solution of the drugs
Prostaglandin E-1, Papaverine, and Phentolamine). If injected in
appropriate doses into the patient's penis, these drugs may cause an
erection but do not treat the underlying cause of the impotence.
The Commission's complaint charges that respondents Genetus, George
Oprean, and Linda Oprean deceptively promoted their impotence treatment
services. The complaint charges that Galen is also liable for other
respondent's deceptive practices because it is the successor
corporation of Genetus and the alter ego of Genetus and/or George
Oprean.
Alleged Misrepresentations Re: Treatments Provided. The
Commission's complaint charges that respondents Genetus, George Oprean,
and Linda Oprean falsely represented that each patient of Genetus would
be examined by a physician, that each patient would receive a medical
diagnosis and treatment of the underlying cause of his impotence, and
that each patient would be evaluated and treated by a physician or
other medical practitioner licensed to do so. (para. 7) The complaint
also specifically charges that respondents Genetus, George Oprean, and
Linda Oprean falsely represented that Linda Oprean was a ``nurse
practitioner'' under Virginia law. (para. 11) In fact, according to the
complaint, Linda Oprean was only a ``registered nurse'' under Virginia
law (para. 12), and many patients were examined, evaluated, and treated
only by her. (para. 8) Therefore, the complaint alleges that many
Genetus patients were not examined by a physician, and were not
evaluated or treated by a physician or other medical practitioner
licensed to do so. (para. 8) The complaint further alleges that
Genetus' patients did not receive a medical diagnosis or treatment of
the underlying cause of their impotence. (para. 8) The proposed order
prohibits all respondents from making the alleged false representations
in connection with any ``treatment procedure,'' (Paras. I.A., I.B.,
I.C.) defined to include not only procedures for treating impotence but
also those for treating any other medical condition, disease or
symptom. (Definitions Section, para. 2)
Alleged Misrepresentations Re: Efficacy and Safety. The complaint
also charges that respondents Genetus, George Oprean, and Linda Oprean
falsely represented that Prostaglandin E-1 has no side-effects or
contraindications, and that their treatment program was unqualified
safe and would arrest each patient's impotence. (para. 9) In fact,
Prostaglandin E-1 has possible side-effects, including priapism (a
prolonged erection) and fibrosis of penile tissue, and its use is
contraindicated for some patients. (para. 10) The complaint further
alleges that the treatment program provided by Genetus, George Oprean,
and Linda Oprean was not unqualifiedly safe, and that their treatments
did not arrest each patient's impotence. (para. 10) As a remedy, the
proposed order prohibits misrepresentations about the side-effects and
contraindications of any drug or treatment procedure, the safety of any
treatment procedure, and the
[[Page 49609]]
efficacy or duration of results of any treatment procedure.
(Paras. I.D., I.E., I.F.)
Alleged Misrepresentations Re: Billing Practices. The complaint
further charges that respondents Genetus, George Oprean, and Linda
Oprean misrepresented to patients and their insurance companies that
all medical tests and laboratory procedures billed by Genetus had been
performed, that all patients had been diagnosed and had services
performed or ordered by a medical practitioner licensed to do so, and
that all claims submitted by Genetus to insurance companies were signed
or approved for signature by a physician. (para. 13) The complaint also
charges that respondents Genetus, George Oprean, and Linda Oprean also
misrepresented to patients that, in most cases, the costs of their
treatment program would be covered by the patients' health insurance.
(para. 15) In fact, according to the complaint, not all the medical
tests and laboratory tests billed by Genetus were performed, many
patients were diagnosed and had services performed or ordered by Linda
Oprean, and many claims were signed by Linda Oprean without a
physician's knowledge or permission. (para. 14) For these reasons, the
costs of Genetus' treatment program were not, in most cases, covered by
patients' health insurance. (para. 16) In addition, patients were
otherwise responsible for paying for most or all of the amounts billed
by Genetus because the amounts Genetus charged bore no reasonable
relationship to the costs of certain goods and services and
substantially exceeded the amount the insurers had agreed to pay for
such items. (para. 16) The proposed order prohibits all respondents
from making the alleged misrepresentations. (Paras. I.H., I.I.)
Monetary Remedies. The proposed order also prohibits all
respondents from taking any action to collect any payments still owing
from any customers of Genetus for any of its impotence treatment
services. In addition, the proposed order requires Genetus, George
Oprean, and Linda Oprean to pay consumer redress in the amount of
$250,000, liability for which is suspended based upon the truthfulness
and accuracy of financial statements provided to the Commission by all
four respondents. If the Commission later determines that any financial
statement contained any material misrepresentations or omissions, the
entire amount of $250,000 is immediately due and payable.
The purpose of this analysis is to facilitate comment on the
proposed consent order. This analysis is not intended to constitute an
official interpretation of the agreement or proposed order, or to
modify in any way its terms.
Donald S. Clark,
Secretary.
[FR Doc. 95-23796 Filed 9-25-95; 8:45 am]
BILLING CODE 6750-01-M
