United States v. Regenerative Sciences, LLC

• Decision Date: 23 July 2012
• Docket Number: Civil Action No. 10–1327 (RMC).
• Citation: 878 F.Supp.2d 248
• Parties: UNITED STATES of America, Plaintiff, v. REGENERATIVE SCIENCES, LLC, Christopher J. Centeno, M.D., John R. Schultz, M.D., and Michelle R. Cheever, Defendants.
• Court: U.S. District Court — District of Columbia

878 F.Supp.2d 248

UNITED STATES of America, Plaintiff,

v.REGENERATIVE SCIENCES, LLC, Christopher J. Centeno, M.D., John R. Schultz, M.D., and Michelle R. Cheever, Defendants.

Civil Action No. 10–1327 (RMC).

United States District Court, District of Columbia.

July 23, 2012.

Perham Gorji, U.S. Department of Justice, Washington, DC, for Plaintiff.

William Francis Coffield, IV, Coffield Law Group, LLP, Washington, DC, for Defendants.

MEMORANDUM OPINION

ROSEMARY M. COLLYER, District Judge.

Drs. Christopher J. Centeno and John R. Schultz developed the Regenexx™ Procedure, by which they use stem cell therapies to aid healing for their orthopedic patients. They formed Regenerative Sciences LLC (“Regenerative”) for this endeavor, at which Michelle R. Cheever is the Laboratory Director. They are all now facing an enforcement action by the Food and Drug Administration (“FDA”), which charges them with “causing articles of drug to become adulterated” and “misbranded” within the meaning of the Federal Food, Drug, and Cosmetic Act (“FFDCA”), 21 U.S.C. § 301 et seq. Compl. [Dkt. 1] ¶ 1. Defendants respond that they practice medicine wholly within the State of Colorado and under its oversight and that the Regenexx™ Procedure is not a “drug” subject to regulation by the federal government. Defs.' Opp. to Pl.'s Mot. for Summ. J. [Dkt. 26] (“Defs.' Opp”) at 1.

It is a close question but ultimately the Court concludes that the Regenexx™ Procedure is subject to FDA enforcement because it constitutes a “drug” and because a drug that has been shipped in interstate commerce is used in the solution through which the cultured stem cells are administered to patients. This acknowledged connection to interstate commerce renders the Regenexx™ Procedure subject to the FFDCA even though the doctors themselves are practicing medicine under Colorado law. Summary judgment will be granted to the United States and an injunction will be issued precluding the continued use of the Regenexx™ Procedure without compliance with the FFDCA.

I. FACTS

Drs. Centeno and Schultz practice together and jointly own the Centeno–Schultz Clinic in Broomfield, Colorado. Drs. Centeno and Schultz are also the majority shareholders of Regenerative, which owns the Regenexx™ Procedure and exclusively licenses the Clinic to use it. Ms. Sheever serves as Regenerative's Laboratory Director. Regenerative and the Clinic are related companies and operate as one business. The Regenexx™ Procedure is a non-surgical procedure for patients suffering from moderate to severe joint, muscle, tendon or bone pain due to injury or other conditions. Am. Answer Countercls. [Dkt. 16] (“Countercls.”) ¶ 3.

The Regenexx™ Procedure begins with a licensed physician taking a small bone marrow sample from the back of a patient's hip through a needle. Blood samples are also taken from a vein in the patient's arm. These samples are then sent to the Regenerative laboratory which is also in Broomfield, Colorado, just a few miles from the Clinic where the mesenchymal stem cells (MSCs) are isolated from the bone marrow and then grown to greater numbers. This process uses the natural growth factors found in the patient's blood to grow the MSCs.

After approximately 2 weeks, the expanded stem cells are sent to the Universityof Colorado affiliated Colorado Genetics Laboratory for testing....

Once the cells pass quality assurance testing, they are placed back into the patient's injured area (i.e. knee, hip, rotator cuff), typically 4–6 weeks after they were removed. The stem cells then begin to repair the patient's degenerated or injured area. The repair process usually takes between 3–6 months but many patients demonstrate marked improvement within 1–3 months.

Countercls. ¶¶ 5–10. In August 2010, when this matter began, the Regenexx™ Procedure constituted about one-third of the procedures performed by the Clinic. Defs.' Opp. at 15.

Of critical importance here is the process by which Regenerative expands the mesenchymal cells taken from a patient's bone marrow and delivers a syringe with the cells in solution to the Clinic.

1. A doctor at the Clinic obtains a tissue sample from the patient's bone marrow by inserting a needle into the hip bone and drawing a thick blood like liquid into a syringe; the sample is then sent to the laboratory.

2. The marrow sample is centrifuged to separate out fractions of the bone marrow and the middle layer (“buffy coat”) is taken off with a pipette.

3. The cells from the buffy coat are placed in a plastic flask and kept in a warm environment to incubate with the patient's own blood platelets that contain growth factors, as well as a nutrient solution. Over a few days, the mesenchymal stem cells adhere to the plastic flask while the rest of the cells do not adhere.

4. The non-adherent cells are discarded and the mesenchymal stem cells are collected using Trypsin, an enzyme, to detach the cells from the plastic flask.

5. The process is repeated to grow the cells.

6. The cells undergo a visual inspection by the Colorado Genetics Laboratory to make sure that there are no genetic mutations or other genetic problems. The treating doctor then approves the cells.

Defs.' Opp., Ex. 7 [Dkt. 26] (Centeno Decl.) ¶¶ 13–24; see also Compl. ¶ 11. “[T]he expanded cells, along with a drug product that has been shipped in interstate commerce ¹ and other additives, are placed into syringes. Regenerative Sciences [sends] the filled syringes in sterile bags to the Clinic, where they are injected into patients.” Compl. ¶ 11; see Answer ¶¶ 11 & 13 (admitting this fact).

In a letter dated July 25, 2008, the FDA notified Regenerative that the FDA believed that the cell product used in the Regenexx™ Procedure constituted a drug under the FFDCA and a biological product under the Public Health Service Act, 42 U.S.C. § 262 (“PHSA”). Further, the FDA stated that because Regenerative had not obtained the necessary approvals for the cell product, its actions in this regard were possibly unlawful. Countercls. ¶¶ 20 & 21; Pl.'s Mot. for Summ. J. [Dkt. 19] (“Pl.'s Mot.”) at 13.

FDA investigators inspected Regenerative between February 23, 2009 and April 15, 2009. Compl. ¶ 31; Countercls. ¶ 24. That inspection showed that the laboratory did not operate in conformity with current good manufacturing practice (“CGMP”).²See21 U.S.C. § 351(a)(2)(B) and 21 C.F.R. Parts 210–211; see also 21 C.F.R. Parts 600–680. When the 2009 inspection concluded, the FDA investigators issued a list of observations that identified a series of alleged CGMP violations. Compl. ¶ 31.

FDA investigators again inspected Regenerative between June 2, 2010 and June 16, 2010. Countercls. ¶¶ 26, 27. That inspection also revealed alleged CGMP violations, which the investigators catalogued in a list of observations. Compl. ¶ 32.

While the initial FDA inspection was ongoing, Regenerative filed a complaint against the FDA in United States District Court for the District of Colorado, alleging that the FDA did not have the jurisdiction to regulate autologous ³ use of stem cells. Regenerative Sciences, Inc. v. FDA, Civ. No. 1:09–cv–00411–WYD–BNB [Dkt. 1] (D.Colo. Feb. 26, 2009) (“ Regenerative I ”). On March 26, 2010, the district court granted the FDA's motion to dismiss on ripeness grounds. Regenerative I, Civ. No. 1:09–cv–00411–WYD–BNB [Dkt. 42], 2010 WL 1258010 (D.Colo. Mar. 26, 2010). Regenerative then filed a notice of appeal with the United States Court of Appeals for the Tenth Circuit on March 29, 2010.⁴Regenerative I, Civ. No. 10–1125 (10th Cir.).

On June 22, 2010, Regenerative filed a complaint in this Court challenging FDA's determination that Regenerative is a drug manufacturer. Regenerative Sciences, Inc. v. FDA, Civ. No. 1:10–cv–01055 [Dkt. 1] (D.D.C. June 22, 2010) (“ Regenerative II ”). On July 6, 2010, Regenerative filed a motion for a temporary restraining order in this Court. Regenerative II, Civ. No. 1:10–cv–01055 [Dkt. 9] (D.D.C. July 6, 2010). Pursuant to a Stipulated Order, the parties agreed to litigate the entire dispute in this Court. Defs.' Opp. at 19–20. Accordingly, Regenerative agreed to dismiss the pending actions in the District of Colorado and the Tenth Circuit, as well as withdraw its motion for a temporary restraining order in this Court. Stip. Order [Dkt. 10] at ¶ 11. Regenerative also agreed to stop using the Regenexx™ Procedure during the pendency of this litigation. Id. at ¶ 6. FDA has filed a motion for summary judgment, as well as a motion to dismiss Defendants' counterclaims.

II. LEGAL STANDARDS

A. Summary Judgment

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); accord Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Talavera v. Shah, 638 F.3d 303, 308 (D.C.Cir.2011). Moreover, summary judgment is properly granted against a party who “after adequate time for discovery and upon motion ... fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

In ruling on a motion for summary judgment, the court must draw all justifiable inferences in the nonmoving party's favor and accept the nonmoving party's evidence as true. Anderson, 477 U.S. at 255, 106 S.Ct. 2505;Talavera, 638 F.3d at 308. A nonmoving party, however, must establish more than “[t]he mere existence of a scintilla of evidence” in support of its position. Anderson, 477 U.S. at 252, 106 S.Ct. 2505. In addition, the nonmoving party may not rely solely on allegations or conclusory statements. Greene v. Dalton, 164 F.3d 671, 675 (D.C.Cir.1999). Rather, the nonmoving party must present specific facts that would enable...