Appeal of P.O.D. Docket No. 1/275 -- INTERNATIONAL BIOTICAL CORP. and ROBERT ARNDT


 In the Matter of the Complaint Against

 INTERNATIONAL BIOTICAL CORP.,

 and

 ROBERT ARNDT at
 New York, New York

 are engaged in conducting a scheme for obtaining money through
 the mails in violation of 39 U.S. Code 4005.  

 P.O.D. Docket No. 1/275; 

 APPEARANCES:
 Richard S. Farr, Esq.
 Abraham Levine, Esq.
 Office of the General Counsel
 Post Office Department for the Complainant

 Solomon H. Friend, Esq.
 Bass & Friend 342 Madison Avenue
 New York, New York for the Respondent

DEPARTMENTAL DECISION

The Respondent in this case is charged with conducting a fraudulent scheme in obtaining money through the mails by means of false and fraudulent pretenses, representations and promises in violation of 39 U.S. Code 4005. ¹/The Respondent is the manufacturer of what is designated throughout the testimony as an Infra-Massage device. This is an electric device of about 7 inches long; it has a back face-plate and is about 3-1/4 inches in diameter and vibrates; it produces conductive heat and emits infrared radiations. This device is advertised and sold for the relief of certain aches and pains related to muscular, arthritic and rheumatic pains and sells for $9.95.

I agree with the Hearing Examiner that there are three issues involved in this case: (1) are the representations set forth in the complaint in fact made by the Respondent; (2) if the alleged representations are made by the Respondent, are they false or false in some material aspect of the case; and (3) if the alleged representations are made by the Respondent and if they are materially false, were they fraudulently made which is to say were they made with an intent to deceive? ²/The Hearing Examiner has written a thorough, scholarly, and just decision with which I agree. There is not a sufficient basis for the issuance of a fraud order in this case.

To sustain issuance of a fraud order by the Postmaster, two essential requisites must appear: that the claims are unfounded and that there is an intent to deceive (Vibra Brush Corp. v. Schaffer, 152 F.Supp. 461). In reading all of the cases submitted by the Complainant there is a rule of law that stands out prominently in each one that where the claims of a Respondent are so extravagant that there is little justification for the claim, there is an intent to defraud. The cases also hold that where a product is described as being something it is not there is the intent to defraud. (Owen Laboratories v. Schroeder, 284 F.2d 445; U.S. v. 100 Cases of Tepee Apples et al, 179 F. 985).

The Complainant called several medical doctors, each with an eminent background, to testify. None of them would use the Infra-Massage device in the treatment of arthritis and related muscular diseases. The objection seemed to be that the face of the device is altogether too small to be commensurate with the claims in the advertisements of the Respondent. Neither did they believe that the device would increase blood circulation or restore a loss of energy.

Dr. William E. Reefe was the first one to testify but he had not tested the device on patients. He was not sure that the application of this device would be enough to dilate the blood vessels--neither was he sure that it wouldn't--Tr. 205--, and he admitted that increased blood circulation of any kind may have an effect upon an ache or a pain. His chief objection was that--there was not a larger area to which the device could be applied.

This was the general objection to it by the doctors who testified for the Complainant; in other words the doctors did not believe the device constituted an effective therapy or treatment as set out in the advertising by the Respondent but the doctors did agree that heat does provide a temporary relief of pains so often connected with rheumatoid arthritis. Their methods of applying the heat and the methods which they advised their patients to use in the home may preferably be induction methods (touching of the body), heat by whirlpool, heat by hydrocoloator packs (a canvas bag with a colloid-like material) which contain heat and goes as high as 120 and 130 degrees. Then there is the heat lamp and the heat pad.

It was generally agreed by the doctors and the Complainant that the vibrations of the Infra-Massage device would not penetrate at all; yet, Dr. Reefe admitted--Tr. 294--that not only the skin but the fatty tissue attached to the skin would vibrate a millimeter or two.

The doctors who testified for the Complainant in this action all agreed that the book Therapeutic Heat, 1958 by Dr. Sidney Licht to which the Respondent referred is a reputable book and its editor a reputable person.

When Dr. Fried was asked if he agreed with the following quotation from the book "It is our firm belief that a portable, light, and easily adjustable infra-red apparatus should be in every home in which there are middle-aged and elderly people" he agreed that it would be helpful.--Tr. 425. All the doctors admitted the value of heat but none of them would use the device in question--yet all agreed that there may be some temporary relief gained from using the Infra-Massage device.

Dr. frederick B. Bohensky testified for the Respondent. He, like the other doctors mentioned above has high qualifications in his field of medicine--internal medicine. He said he had treated 500-750 patients per year who would be classified in arthritic or rheumatic disease area. He gave 25 of his patients the device to use for 6 weeks or 2 months. He disagreed with the other doctors and said in his opinion that the Infra-Massage device exerts a beneficial effect for the relief of such pains and aches that were associated with conditions that were described in the hearing; that it does afford temporary and almost immediate relief. He said the small face of the device was an advantage since it could be moved.--Tr. 702. He could see no danger in the use of the device and he believed that the gentle vibration stimulates the nerve endings and the heat would increase circulation. He said further "-------- the amount of pain is individually different and the amount of relief is individually different. It is only the patient who is the judge of the amount of pain that he has and the amount of relief he got."--Tr. 737.

Even though all the doctors testifying for the Complainant said they would not use the device they did admit that heat is of value and that in most cases heat has been used as a treatment of a patient in his home, and that this device in this case may give some temporary relief and that circulation may be increased to some extent by the use of the device. Dr. Bohensky who testified for the Respondent agrees but he goes much further and believes the device is advantageous because of its size and that it does give relief. He did say that with respect to the vibratory effect of the device that vibration and massage is a debatable subject.--Tr. 748. From the foregoing, then, how can one say that the Infra-Massage device does not have some therapeutic value in the treatment of some arthritic and rheumatoid patients?

Mr. Minto's testimony relative to his business with the International Biotical Corporation, his connection with the I.B.C. Research Company, and his knowledge of the present holder of the patent of the device was shifty. Since government counsel as the Hearing Examiner noted in his decision "was seriously disadvantaged by the fact that he was unable to request the issuance of the subpoena to require the attendance of the witnesses or the production of the documents by means of which this matter might have been explored and the facts established, in the absence of proof to the contrary and being convinced as I am of the general credibility of Minto, I accept his account of these matters." I accept this estimation recorded by the Hearing Examiner. Mr. Minto's testimony on the device which he designed and tested, the reason for doing so, and its capabilities were clear and direct.

There was testimony by qualified witnesses as to the physical features and technical aspects of the device in question. The divergence was not only expressed as to the qualities of effectiveness of the device but in the methods used in testing it.

The last two physicists who testified, Mr. Ralph Stair for the Complainant and Mr. Wallace L. Minto for the Respondent, weren't far apart in their scientific opinions except on the subject of penetrability of the radiations of the Infra-Massage and the heating lamps. Mr. Minto declared that the ratiation from the Infra-Massage would penetrate more deeply than the heating lamp. Mr. Stair disagreed. Both agreed that the Infra-Massage puts out more infra-red than a heating pad.--Tr. 1089. Dr. Reynolds in testifying for the Complainant said that he occasionally recommended the use of the heating pad in the home--Tr. 372. It is interesting to note that in the advertising of the Infra-Massage device it is said that there are 2,000 gentle pulsations per minute; but the testimony shows there are actually 7,200 pulsations per minute.--Tr. 68.

The last two physicists who testified, Mr. Ralph Stair for the Complainant and Mr. Wallace L. Minto for the Respondent, weren't far apart in their scientific opinions except on the subject of penetrability of the radiations of the Infra-Massage and the heating lamps. Mr. Minto declared that the radiation from the Infra-Massage would penetrate more deeply than the heating lamp. Mr. Stair disagreed. Both agreed that the Infra-Massage puts out more infra-red than a heating pad.--Tr. 1089. Dr. Reynolds in testifying for the Complainant said that he occasionally recommended the use of the heating pad in the home--Tr. 372. It is interesting to note that in the advertising of the Infra-Massage device it is said that there are 2,000 gentle pulsations per minute; but the testimony shows there are actually 7,200 pulsations per minute.--Tr. 68.

There is disagreement among the doctors and some agreement. The same is true with the scientists who testified. All are reputable people.

The history of how the Infra-Massage device came about is important. Mr. Minto is a research scientist who is president and technical director in the I.B.C. Research Laboratories in Westwood, New Jersey, and has an interest in it. In 1957 he was contacted by a Miss Good of International Biotical Corporation. With her and other people of the company he discussed the feasibility of producing a light, portable heat and infra-red emitting device for use at home for relieving minor aches and pains.

Mr. Minto then did research on the idea. He supplied 50 references, Tr. 594-598, which he gave to the Respondent. He testified that he relied upon the pre-eminent authorities in the field of physical medicines, the physiological medicines for the physiological effect. Tr. 670. After his research he designed the Infra-Massage device keeping in mind safety, wave length of infra-red emission, and the size of the device and the size of its face. In support of some aspects of this mechanism he cited an article by Clarence Mills, published in Medical Science by the Medical Physics Handbook Association of 1960, and another article by A. Szent-Zyorgyi.

In reading the advertisements a copy of which is hereto attached it seems to me that the ordinary person receiving this material and reading it would be only impressed with the emphasis being put upon temporary relief from muscular pains connected with arthritis and relative-like diseases. There are some extravagant statements but I do not think they nullify the emphasis being put on temporary relief of pain. We Americans should be used to hyperbole in advertising. One needs merely to turn on his TV to see what the claims of some producers of products describe. My reaction to studying the transcript, the advertisements, and the briefs is "maybe it does" and "maybe it doesn't." The full representations for instance "tax deductible when purchased for medical care" even though they may be contrary to the truth--or based on ignorance of the law--the advertisements and testimonies taken as a whole do not warrant a finding that the majority of the representations are false. With some of the interpretations the Complainant made of some of the representations in the advertisements I cannot agree.

The Complainant's list of representations as set out in the first complaint and its amendments thereafter are attached to this decision. I agree with the Hearing Examiner when in his decision he said, "I find that some of the representations were made and that they are true. Some of the interpretations by the Complainant of the Respondent's statements are such that I cannot agree with them. Some of the representations made are not entirely true and the Respondent's making them is probably the result of what, for the want of a better term, may be called over-enthusiasm as to the benefits to be derived from the use of Infra-Massage. -------- In the final analysis, however, I have not found any statement made by the Respondent and charged by the Complainant as being a fraudulent misrepresentation to be so grossly false or so misrepresentative in regard to a material feature of this device as to overcome the considerations forming the basis for the previously stated ultimate finding of fact. In view of this determination, it is not necessary to be more specific as to the individual representations because they are not now material."

The main issue to be decided in this case is: Were the representations made with the intent to deceive? This type of case is different from that involving Second Class Mail in which I have held that there should be a finding on each of the material allegations in order that people who do business with the Post Office may have the proper information. The present case is a different type of case which involves three issues: (1) Are the alleged representations made; (2) Are the representations unfounded; and (3) Is there an intent to deceive. If there is no intent to deceive one does not have to decide the other issues. Vibra Brush Corp. v. Schaffer, 152 F.Supp. 461. The facts in this case can be distinguished from the cases cited by the Complainant; for instance, where circulars are inherently dishonest and deceiving the court held the product to be mislabeled such as in U.S. v. One Device, 160 F.2d 194. In the other cases the representations were contrary to the facts. U.S. v. 100 Cases, etc., 179 F. 985.

With agreement and disagreement of testimony submitted in this case and the history of how the Infra-Massage device came into being and for what purpose, I cannot hold that there was an intent to defraud.

I agree with the Hearing Examiner's decision and conclude as a matter of law the Respondent is not engaged in a scheme of the type proscribed by 39 U.S. Code 4005. American School of Magnetic Healing v. McAnnulty, 187 U.S. 94; Reilly v. Pinkus, 338 U.S. 269. The Complaint in this proceeding is hereby dismissed.

08/29/60

Bosone, Reva Reck

1/ § 4005. Fraudulent and lottery matter

(a) Upon evidence satisfactory to the Postmaster General that any person is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false or fraudulent pretenses, representations, or promises; or engaged in conducting a lottery, gift enterprise, or scheme for the distribution of money or of real or personal property by lottery, chance, or drawing of any kind; the Postmaster General may--

(1) direct postmasters at the office at which registered letters or other letters or mail arrive, addressed to such a person or to his representative, to return the registered letters or other letters or mail to the sender marked "fraudulent" or "lottery mail"; and

(2) forbid the payment by a postmaster to such a person or his representative of any money order or postal note drawn to the order of either and provide for the return to the remitters of the sums named in the money orders or postal notes.

(b) The public advertisement by a person engaged in activities covered by subsection (a) of this section, that remittances may be made by mail to a person named in the advertisement, is prima facie evidence that the latter is the agent or representative of the advertiser for the receipt of remittances on behalf of the advertiser. The Postmaster General is not precluded from ascertaining the existence of the agency in any other legal way satisfactory to him.

(c) As used in this section and section 4006 of this title the term "representative" includes an agent or representative acting as an individual or as a firm, bank, corporation, or association of any kind.

2/ The Hearing Examiner used the adjective "grossly" which I have not used because I believe if a statement is false there are no degrees. There may be importance great or small attached to the result of the false implication; but if a thing is false, it is false.