In the Matter of the Complaint Against NUTRITION HEADQUARTERS, INC. 104 West Jackson Street at Carbondale, IL 62901-1408 P.S. Docket No. 12/156; 08/05/83 Cohen, James A. APPEARANCES FOR COMPLAINANT: Thomas A. Ziebarth, Esq. Steven B. Caver, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260-1112 APPEARANCE FOR RESPONDENT: Robert Ullman, Esq. Bass, Ullman & Lustigman 747 Third Avenue New York, NY 10017-2803
Respondent has appealed from an Initial Decision of an Administrative Law Judge which holds that, with regard to the sale of the product Manotex, Respondent is engaged in a scheme to obtain money or property through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.
On November 13, 1981, the Consumer Protection Division of the Law Department, United States Postal Service (Complainant), filed a Complaint alleging that Respondent was selling capsules for the symptomatic relief of Benign Prostatic Hypertrophy (BPH), marketed under the trade name "Manotex", by means of false representations in violation of 39 U.S.C. § 3005. Specifically, the Complaint alleges that Respondent falsely represents that the use of these capsules relieves the symptoms of BPH.
In a timely filed Answer Respondent denied the allegations of the Complaint but admitted that the attachment to the Complaint was a reproduction of its advertising material. As an affirmative defense, Respondent alleged that its interest in Manotex is derived from the interests of the respondents in two prior Postal Service proceedings; that Manotex is the same product as those which were the subject of the two prior proceedings; and that the advertising material annexed to the present Complaint is consistent with and conforms to the final determinations made in those proceedings and in Kurzon v. United States Postal Service, 539 F.2d 788 (1st Cir. 1976).
A hearing was held before an Administrative Law Judge at which both parties presented testimony with respect to the allegations of the Complaint. At the close of Complainant's case, Respondent made a motion to dismiss the Complaint on the grounds that Complainant failed to prove that Manotex does not afford symptomatic relief of BPH and that this proceeding is barred by prior Postal Service proceedings (Tr. 189-197). The Administrative Law Judge reserved judgment on the motion to dismiss (Tr. 196-197) and, in his Initial Decision, denied the motion. The Administrative Law Judge also found, based on a preponderance of the evidence, that Respondent represented its product as effective in relieving BPH symptoms and that this representation was materially false.
Respondent appealed the Initial Decision to the Judicial Officer. Both parties have filed written briefs. Respondent has also filed a memorandum in response to Complainant's brief.
Respondent has filed eight exceptions to the Initial Decision which have been combined where appropriate and are discussed below.
"1. Respondent excepts to the Administrative Law Judge's finding and conclusion that the instant proceeding involves 'changed circumstances' from those in POD Docket No. 1/162 wherein complainant consented to the continued advertising and sale of the formulation in Respondent's product. (I.D. pp. 3-4, 13-14).
"2. Respondent excepts to the Administrative Law Judge's finding and conclusion that the instant proceeding should not be barred by the proceedings had in P.S. Docket No. 2/199 wherein complainant failed to sustain the identical allegation that it was false to represent the formulation in Respondent's product for the relief of symptoms due to BPH. (I.D. pp. 4, 14-15)."
The parties do not dispute that the chemical composition of Respondent's product is the same as that of two other products which were previously the subject of Postal Service proceedings brought under 39 U.S.C. § 3005. In the first of these proceedings, United Pharmacal Corp., P.O.D. Docket No. 1/162, the Complainant alleged that United Pharmacal fraudulently represented its product "Urex" as relieving BPH symptoms "regardless of the cause, nature or extent of the condition" (I.D., F.O.F. 5). The parties signed an affidavit of agreement which allowed United Pharmacal to represent that Urex could be used in treating BPH after proper diagnosis by a physician. However, Urex could not be represented as effective in treating malignancy of the prostate. The parties agreed that acceptance of the agreement "shall in no manner estop, or act as a bar to, the institution of any further, additional or supplementary proceedings under 39 U.S. Code 259, 732 or other applicable statute, if, based upon changed facts and circumstances in the opinion of the General Counsel or his representative shall so warrant" (RX 14). Subsequently, a United States District Court held that Urex was not proven effective in treating BPH. United States v. Metabolic Prods. Corp., CA No. 61-570-S (D. Mass. 1962).
In the second Postal Service proceeding, Uxbridge Prods. Co., P.S. Docket No. 2/199 (P.S.D. Dec. 24, 1974), the Complainant alleged, as in this case, that Uxbridge falsely represented its product "Prostex" was effective in relieving BPH symptoms. While the Acting Judicial Officer found the advertising in that case to be misleading, he did not determine the effect of Prostex on BPH symptoms.
Respondent contends that the present action is barred by both previous proceedings. With respect to United Pharmacal Corp., Respondent states that no changed circumstance have taken place since the execution of the affidavit of agreement which would warrant bringing this action. Therefore, it argues that Complainant should be bound by the terms of the affidavit of agreement which allows the representation at issue here. In the Initial Decision in this case, the Administrative Law Judge found that the District Court decision in Metabolic Prods. Corp., the 1970 amendments to 39 U.S.C. § 3005 which eliminated fraud as a necessary element for violation of the statute, and the testimony by experts in Uxbridge Prods. Co. that the product was ineffective, all constituted "changed circumstances" justifying the present action (I.D., F.O.F. 5).
Since Respondent was not a party to the affidavit of agreement, no privity exists which would permit Respondent to enforce the terms of the agreement in its own right. In this regard, Respondent's claim to "a certain degree of privity" because it acquired its product from a supplier whose principal was responsible for the Urex, Prostallnd Prostex products (Resp. Brief at 16), is rejected. However, even if the affidavit of agreement applied to the present parties, the changed circumstances cited by the Administrative Law Judge would still warrant this proceeding. Kurzon v. United States Postal Service, 539 F.2d 788, 797-798 (1st Cir. 1976). Moreover, the Initial and Postal Service Decisions in Leucadia Pharmacals, P.S. Docket No. 11/90 (I.D. Nov. 2, 1981; P.S.D. May 27, 1982), constitute a further "changed circumstance" supporting the present action. These decisions found a product containing the same amino acid formula as that in issue in this case (with an additional ingredient, zinc) to be ineffective in the symptomatic treatment of BPH.
Respondent contends that the Uxbridge case bars this proceeding "whether on the basis of res judicata, collateral estoppel, or general principles of equitable fairness" (Resp. Brief at 12). Of these, only the principle of collateral estoppel would arguably be relevant to the present proceeding. The Administrative Law Judge found that Uxbridge did not constitute a bar because the Acting Judicial Officer in that case did not determine whether the product effectively relieved BPH symptoms (I.D. at 15). This conclusion is correct and is affirmed. See Kurzon v. United States Postal Service, supra, 539 F.2d at 793 and 794, n. 7. Since the issue was not finally determined, no collateral estoppel may lie. Connecticut Light and Power Co. v. Federal Power Comm'n, 557 F.2d 349, 353 (2d Cir. 1977). The cases cited by Respondent at page 17 of its Brief are therefore inapposite. Respondent's argument that collateral estoppel bars relitigation of issues addressed in the affidavit of agreement filed in United Pharmacal Corp. is similarly rejected since these issues were not previously litigated. Eden Valley Nursery Sales, P.S. Docket No. 7/23 (P.S.D. Feb. 15, 1980 at 12). Accordingly, Exceptions 1 and 2 are rejected.
"3. Respondent excepts to the Administrative Law Judge's findings and conclusions which rely upon the testimony of complainant's experts that their views represent a 'consensus' of medical opinion to the exclusion of all other evidence and testimony in the record. (I.D. Finding 35; Conclusions 6, 7, 9, 16).
"4. Respondent excepts to the Administrative Law Judge's findings and conclusions which disregard relevant cross-examination of complainant's witnesses. (I.D. Findings 14, 18, 20, 23, 24, 31, 33; Conclusions 6, 10).
"7. Respondent excepts to the Administrative Law Judge's treatment of Respondent's evidence as de minimus. (I.D. Findings 31-34 and Conclusions 8-16).
"8. Respondent excepts to the findings and conclusion of the Administrative Law Judge that an order, pursuant to 39 U.S.C. ?3005, should issue against Respondent (I.D. Finding 34 and Conclusion 17)."
Respondent contends that "the mere mouthing of the words by Complainant's experts that their testimony reflects the consensus of informed opinion" does not satisfy Complainant's burden of proof and that an evaluation of the entire record does not sustain the allegation that Respondent falsely represents its product (Resp. Brief at 19). The Administrative Law Judge primarily based his finding that Manotex is ineffective on Complainant's experts, whom he found to be "forthright, credible witnesses" and who testified to an informed medical and scientific consensus that the product is not effective for relieving BPH symptoms (I.D., C.O.L. 16). The Administrative Law Judge found that " a although Respondent questions the existence of this consensus, it did not present evidence of a contrary consensus" (id.).
The Administrative Law Judge's findings and conclusions are supported by the record. Complainant's first expert witness, Dr. Hrant S. Semerjian, a board certified urologist and Clinical Associate Professor of Urology at George Washington University (CX-3), testified that he "very frequently" has occasion in his practice to treat BPH (Tr. 11, 69). He was therefore qualified to testify as an expert regarding the consensus of medical opinion on the effectiveness of Manotex in alleviating BPH symptoms. His testimony in this regard was very specific. Not only did he state that his views regarding Manotex's ineffectiveness are consistent with the consensus of informed medical and urological opinion (Tr. 30), but also that "I don't think you could find any urologist in the city that wold treat this condition BPH with these medications" (Tr. 70). Neither the cross-examination of this witness nor Respondent4nt's contrary evidence detracts from the unpersuasiveness of this witness's direct testimony.
While Respondent argues that the record does not reflect the basis od Dr. Semerjian's knowledge of a consensus, Rule 705 of the Federal Rules of Evidence allows an expert to "testify in terms of opinion or inference and give his reasons therefor without prior disclosure of the underlying facts or data, unless the court requires otherwise." Of course an expert witness may "be required to disclose the underlying facts or data on cross-examination." Therefore, if Respondent had desired to extract more specific testimony from this witness as to the underlying basis of his opinion it could have done so on cross-examination. The absence of such data, however, does not require rejection of the testimony. See Nail Builder, P.S. Docket No. 7/152 (P.S.D. Jan. 30, 1981).
Complainant's second expert witness, Dr. William R. Ayers, is board certified in internal medicine, and is the Associate Dean of Undergraduate Medical Education of Georgetown University School of Medicine (CX-4). Dr. Ayers devotes twenty percent of his time to patient care (Tr. 92-93). His training and experience similarly qualify him to testify regarding the consensus of medical opinion as to Manotex's effectiveness in relieving BPH symptoms. He stated that Manotex is ineffective and that his views are consistent with the consensus of informed medical opinion (Tr. 105, 114).
As previously stated, the Administrative Law Judge found both witnesses to be forthright and nothing in the record leads to a contrary conclusion. Moreover, the testimony of these witnesses as to the consensus of informed medical opinion is supported by the testimony of Bruce Walter Halstead, M.D., an expert witness for Respondent who, although claiming success with the product's formula in treating BPH symptoms, conceded that the majority of the doctors in his area of California would not find his methods and practice acceptable (Tr. 234-235).
By establishing that a consensus of the medical community does not accept Respondent's product as an acceptable treatment for the symptoms of BPH, Complainant made a prima facie case as to the falsity of the representation alleged in the Complaint. The burden of going forward on this issue thus shifted to Respondent, who was required to show either that the consensus does not exist or that the claim of effectiveness is true despite the lack of acceptance by the medical community. Cosvetic Labs., et al., P.S. Docket Nos. 8/160 and cases consolidated therewith (P.S.D. July 22, 1982, at 14). Cf. Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248 (1981).
The record reflects that the Administrative Law Judge considered the cross-examination of Complainant's expert witnesses and other evidence presented by Respondent in concluding that Complainant had established, by a preponderance of the evidence, that the claim of effectiveness is false.
The Administrative Law Judge correctly concluded that the two studies relied on by Respondent, Feinblatt and Gant, Palliative Treatment of Benign Prostatic Hypertrophy, J. MAINE MEDICAL ASSOC. (1958), and Damrau, Benign Prostatic Hypertrophy; Amino Acid Therapy for Symptomatic Relief, J. AM. GERIATRIC SOC'Y (1962) (RX-1, RX-2), "were improperly conducted and scientifically invalid, and that it would be improper to base any conclusions on them," citing, among other things, the absence of "double blind" control groups and the failure to control for natural variations in BPH symptoms (I.D., C.O.L. 8 & 9). These same studies were found to be unpersuasive in previous Postal Service proceedings. Leucadia Pharmicals, supra, (P.S.D. p. 9-11.) No basis has been shown for giving them any greater weight in this case.
The Administrative Law Judge also considered and rejected seven Japanese studies relied on by Respondent (RX-3 - 9), which appeared in ACTA UROLOGICA JAPONICA, between 1968 and 1972. Dr. Semerjian conceded that this journal is a reputable publication (Tr. 55-63) and that the authors of the English abstract of these articles appeared to be reputable (Tr. 61-62). The Administrative Law Judge found, however, that the " l limited conclusory statements" contained in the abstracts "without the detailed basis necessary to subject them to meaningful analysis, clearly do not constitute persuasive evidence" and that "it appears from the limited evidence presented that these studies were flawed by some of the same objections noted above with respect to the Feinblatt-Gant and Damrau studies (e.g., testing period was too brief, too few patients)" (I.D., C.O.L. 10). He also found that only two of the studies were double blind and that one of these failed to indicate how effectiveness and prostate enlargement were measured, or the length of the test, while the other apparently did not consider residual urine or include cystoscopic examinations and did not indicate the length of the test. Finally, he noted that the authors of these studies were unknown to the witnesses (I.D., C.O.L. 10).
The factors cited by the Administrative Law Judge for rejecting the Japanese studies are supported by the record. Perhaps more significantly, the abstract of the largest of these studies, Aito and Iwuatsubo, The Conservative Treatment of Prostatic Hypertrophy With Paraprost, appearing in ACTA UROLOGICA JAPONICA (Jan 1979), concludes that "the conservative therapy of prostatic hypertrophy even with residual urine should be properly evaluated," thereby indicating that this area warrants further study before any final conclusions can be drawn (RX-3). Moreover, none of the abstracts reflect the dosage of amino acids administered to the subjects. Therefore, the relationship between the test amounts and the composition of Respondent's product cannot be determined. Accordingly, the Administrative Law Judge correctly concluded that the abstracts of these studies do not rebut the consensus established by Complainant's witnesses.
The Initial Decision also reflects that the Administrative Law Judge considered and rejected the testimony of Dr. Halstead. The record supports the Administrative Law Judge's findings that this witness' alleged successful results with the Manotex formula were not based on a scientifically valid study (see Tr. 221, 227), and that any improvement in BPH symptoms may have occurred because of extraneous factors (see Tr. 223, 224, 226). It is also noted that after observing Dr. Halstead's demeanor, the Administrative Law Judge did not find him to be a credible witness (I.D., C.O.L. 11-13).
The Administrative Law Judge also considered the testimony of lay witnesses presented by Respondent. He found that "There is no way of determining on the basis of the present record whether any relief that may have been experienced was due to ingestion of a Manotex formula product" (I.D., C.O.L. 14). The lay testimony was properly rejected, since self-reported experiences are subjective and may be subject to a placebo effect. In this regard, 39 C.F.R. § 952.18(f) of the Rules of Practice applicable to these proceedings states that "Lay testimonials will not be received in evidence as proof of the efficacy or quality of any product or thing sold through the mails."
Respondent argues that it is entitled to official notice of testimony regarding the effectiveness of the Manotex formula in prior proceedings, citing Uxbridge and Metabolic, supra. However, in Uxbridge, the Complainant presented testimony of two witnesses which "tended to establish that as a matter of sound and current medical theory an amino-acid combination like that in issue here could not and would not relieve the symptoms of BPH". Kurzon v. United States Postal Service, supra, 539 F.2d at 791. While, as Respondent notes, the court in Metabolic stated that "Many doctors, including some who testified for the Government, have observed in patients relief from certain symptoms of prostate disorder . . ." (RX-13), this statement may equally be cited as evidence that other doctors testifying for the Government, have observed in patients relief from certain symptoms of prostate disorder . . ." (RX-13), this statement may equally be cited as evidence that other doctors testifying for the Government in that case did not observe such relief. As the First Circuit has noted with regard to this decision: "Far from precluding further administrative review of the question of a product's effect on BPH symptoms, the Metabolic decision appears to invite it . . . The most that can be said of Metabolic is that it established that in 1962 many doctors believed that Prostex gave symptomatic relief to BPH; and even to this extent the decision is not conclusive." Kurzon v. United States Postal Service, supra, 539 F.2d at 798. Thus, even if official notice is taken of the testimony in the prior proceedings, the testimony would not alter the result reached in the Initial Decision.
Finally, the testimony cited by the Administrative Law Judge supports the specific findings of fact objected to by Respondent in Exception 4. These findings address the nature of BPH and its symptoms, the nutritional needs of individuals, and "free form" as opposed to "food bound" amino acids. Based on a careful review of the record, it is concluded that the portions of cross-examination cited in Respondent's brief as rebutting the testimony relied on by the Administrative Law Judge are unpersuasive. This cross-examination neither detracted from the conclusion that a consensus of medical opinion has not accepted the ingredients of Manotex as effective for symptomatic relief of BPH nor constituted proof that this product is otherwise effective for this purpose. In this regard, the Administrative Law Judge's failure to cite particular testimony does not indicate that the testimony was ignored. As the term implies, findings of fact are not intended as complete summaries of the record but only as brief statements of those portions of the record relied on in making ultimate determinations of fact. Immigration and Naturalization Service v. Bagamasbad, 429 U.S. 24, 25 (1976); cf., Athena Prods., Ltd., P.S. Docket No. 7/99 (P.S.D. June 26, 1981). The Administrative Law Judge correctly found, based on the preponderance of the evidence, that Manotex has neither been accepted as, nor shown to be, effective in relieving BPH symptoms. Accordingly, he correctly concluded that a remedial order should be issued under 39 U.S.C. § 3005.
"Respondent excepts to the Administrative Law Judge's findings and conclusions which determine Respondent's representations to be false on the basis of nutritional considerations expressed by the Administrative Law Judge. (I.D. Findings 24-33.)"
The findings excepted to concern protein nutrition and the nutritional adequacy of the normal diet. Respondent contends that these findings, even if accurate, are irrelevant because Manotex is not offered as a dietary food supplement. According to Respondent its product is offered for the "specific drug purpose" of relieving symptoms due to BPH and "the question of the therapeutic efficacy of a product does not turn on the fact that the ingredients in an efficacious formulation can be obtained from another source such as 'ordinary' foods" (Resp. Brief at 34-35).
The Administrative Law Judge's findings are supported by the record. Indeed, Respondent does not appear to contend that
Findings 24-30 are erroneous (see Resp. Brief at 36-38). Rather, it contends that "the so-called adequacy of the 'average' diet of the normal healthy individual is not necessarily applicable to the nutritional status of the elderly, and does not constitute support for complainant's allegation" that Manotex does not relieve BPH symptoms (Resp. Brief at 38).
Manotex, whether characterized as a "drug" or a "food supplement", is by composition a nutritional substance. Therefore, findings relating to the nutritional value of this substance and the nutritional needs of those who would be taking it are relevant to this proceeding. In this regard, Respondent's promotional materials do not indicate that Manotex is intended for or would be more successful in aiding the elderly. However, even if the nutritional needs of the elderly are considered separately, the Administrative Law Judge found that "Nutritional surveys have demonstrated that elderly people do not typically have dietary protein deficiencies" (I.D., F.O.F. 30). The portion of Dr. Ayers' testimony cited by the Administrative Law Judge (Tr. 156) supports this finding. Further, Respondent has not shown that the product's prescribed dosage - which would provide only about 2.5 grams of three amino acids each day during the first three weeks and 1.25 grams per day thereafter (I.D., F.O.F. 10, 27) - would sufficiently correct a protein deficiency so that BPH symptoms would be affected.
Findings 31-33 are based on Dr. Ayers' testimony that the body would not differentiate between amino acids in pure form and those bound in food, and that there is generally no therapeutic benefit in administering amino acids in free form. Respondent contends that this testimony was rebutted by reports shown Dr. Ayers on cross-examination and the testimony of Dr. Hartmann, a professor of psychiatry at Tufts University. Dr. Ayers was unfamiliar with the reports (Tr. 140-143), and they are not part of the record. Moreover, Respondent has not shown through these reports that the Manotex formula more effectively relieves BPH symptoms in the free form dosage prescribed than would be the case had the same dosage been bound in food. With respect to Dr. Hartmann's testimony, Respondent admits that this witness was not offered as an expert on BPH (Resp. Brief at 41). Except for an unrelated experiment involving glycine, one of the amino acids contained in Manotex, Dr. Hartmann stated that he had not experimented with the three amino acids contained in the product (Tr. 210) and has not done any work with amino acids in connection with the treatment of BPH (Tr. 209).
Accordingly, Findings of Fact 24-33 are affirmed.
"Respondent excepts to the Administrative Law Judge's failure to dismiss the complaint upon the state of the record at the close of complainant's case. (Tr. 189-197)."
As discussed supra, Complainant's two expert witnesses established a prima facie case based on a consensus of the relevant medical community that Manotex is not effective in relieving BPH symptoms. As further discussed, the reports relied on by Respondent did not rebut this prima facie case. Accordingly, the burden of going forward on the issue of effectiveness shifted to Respondent, which was required to present evidence in its own behalf. Denial of the Motion to Dismiss was therefore proper.
After consideration of the entire record and Respondent's exceptions, it is concluded that Respondent is engaged in a scheme to obtain money through the mail by means of materially false representations. Accordingly, Respondent's appeal is denied. A remedial order under 39 U.S.C. § 3005 is being issued with this decision.