Vein Clinics of America, Inc. et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

FEDERAL TRADE COMMISSION

[File No. 912 3147]

Vein Clinics of America, 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, an Illinois-based corporation and its

officer from misrepresenting the rate of likely recurrence for any

venous disease following treatment, or misrepresenting the newness,

past availability, safety, risks or potential side-effects of any

cosmetic or plastic surgery procedure. In addition, the consent

agreement would require respondents to have scientific evidence to

substantiate any representations it makes about any cosmetic or plastic

surgery procedure it markets or sells in the future.

DATES: Comments must be received on or before April 11, 1994.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary,

room 159, 6th Street and Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Richard Kelly or Sondra Mills, FTC/H-200, Washington, DC (202) 326-3304

or 326-2673.

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)).

Agreement Containing Consent Order To Cease and Desist

In the matter of Vein Clinics of America, Inc., a corporation,

and D. Brian McDonagh, M.D., individually and as an officer of said

corporation.

The Federal Trade Commission having initiated an investigation of

certain acts and practices of Vein Clinics of America, Inc., a

corporation, and D. Brian McDonagh, M.D., individually and as an

officer of said corporation, and it now appearing that Vein Clinics of

America, Inc. and D. Brian McDonagh, M.D., hereinafter sometimes

referred to as a 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 Vein Clinics of America, Inc.,

by its duly authorized officer, and D. Brian McDonagh, M.D.,

individually and as an officer of said corporation, and their attorney,

and counsel for the Federal Trade Commission that:

1. Proposed respondent Vein Clinics of America, Inc. is a

corporation organized, existing and doing business under and by virtue

of the laws of the State of Delaware, with its office and principal

place of business located at 1101 Perimeter Drive, Suite 615, in the

City of Schaumburg, State of Illinois.

Proposed respondent D. Brian McDonagh, M.D. is the Chairman of the

Board and National Medical Director of Vein Clinics of America, Inc. He

formulates, directs and controls the policies, acts and practices of

said corporation. His address is 1535 Lake Cook Road, in the City of

Northbrook, State of Illinois.

2. Proposed respondents admit all the jurisdictional facts set

forth in the draft of complaint here attached.

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;

(c) All rights to seek judicial review or otherwise to challenge

or contest the validity of the order entered pursuant to this

agreement; and

(d) All rights under the Equal Access to Justice Act.

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 here attached.

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, (10) issue its complaint corresponding in form and

substance with the draft of complaint here attached 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, modified 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 compiled 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. ``Sclerotherapy'' means the treatment of venous disease by

injecting a solution into a vein with a needle.

2. ``Compression sclerotherapy'' means the treatment of venous

disease by injecting a solution, including but not limited to

Sotradecol (sodium tetradecyl sulfate), into a vein with a needle,

followed by compression of the injected area with bandages or wraps and

post-procedure ambulation by the patient.

3. ``Any substantially similar service'' means compression

sclerotherapy in which a solution of Sotradecol (sodium tetradecyl

sulfate) is injected into a vein.

4. ``Venous disease treatment procedure'' includes, but is not

limited to, sclerotherapy, compression sclerotherapy, laser treatments,

electrocautery, and surgery.

5. ``Competent and reliable scientific evidence'' means tests,

analyses, research, studies or other evidence based on the expertise of

professionals in the relevant area, that have been conducted and

evaluated in an objective manner by persons qualified to do so, using

procedures generally accepted in the profession to yield accurate and

reliable results.

I

It is Ordered That respondents Vein Clinics of America, Inc., a

corporation, its successors and assigns, and its officers, and D. Brian

McDonagh, M.D., individually and as an officer and medical director of

said corporation, 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 venous disease treatment procedure or any other

cosmetic or plastic surgery 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. Representing that the rate at which varicose veins recur

following surgery is approximately 65% to 85% in five years, or

otherwise misrepresenting the rate at which venous disease is likely to

recur or return following treatment by any venous disease treatment

procedure;

B. Representing that prior to the opening of Vein Clinics of

America, surgery was the only available treatment for large varicose

veins;

C. Representing that the sclerotherapy practiced at respondents'

clinics as of the date respondents sing this Order sometimes referred

to as the ``MicroCure Process,'' or any substantially similar service,

is a newly discovered and/or previously unavailable method of treating

varicose and spider veins;

D. Misrepresenting that the sclerotherapy practiced at respondents'

clinics as of the date respondents sign this Order, sometimes referred

to as the ``MicroCure Process,'' or any substantially similar service,

is exclusively available at respondents' clinics;

E. Misrepresenting the newness of, or the past or present

availability of, any cosmetic or plastic surgery procedure, including

any venous disease treatment procedure;

F. Representing that the sclerotheraphy practiced at respondents'

clinics as of the date respondents sign this Order, sometimes referred

to as the ``MicroCure Process,'' or any substantially similar service:

(1) Does not present the risk of burning, marking, or scarring

the skin; or

(2) Presents no possibility of significant risks to health;

G. Misrepresenting the safety, risks, or potential side-effects of

any cosmetic or plastic surgery procedure, including any venous disease

treatment procedure.

II

It is further ordered That respondents Vein Clinics of America,

Inc., a corporation, its successors and assigns, and its officers, and

D. Brian McDonagh, M.D., individually and as an officer and medical

director of said corporation, 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 venous disease treatment

procedure or any other cosmetic or plastic surgery procedure, in or

affecting commerce, as ``commerce'' is defined in the Federal Trade

Commission Act, do forthwith cease and desist from making any

representation, in any manner, directly or by implication, regarding:

A. The success rate or the rate at which a condition is likely

to recur or return following treatment by any cosmetic or plastic

surgery procedure, including any venous disease treatment procedure;

or

B. The rate or nature of risks to health or of adverse cosmetic

side-effects presented by any cosmetic or plastic surgery procedure,

including any venous disease treatment procedure;

unless, at the time of making such representation, respondents possess

and rely upon competent and reliable scientific evidence that

substantiates the representation.

III

It is further ordered That for five (5) years after the last date

of dissemination of any representative covered by this Order,

respondents, or the 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.

IV

It is further ordered That 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.

V

It is further ordered That respondents shall notify the Commission

at least thirty (30) days prior to any proposed change in the

corporation such a 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'.

VI

It is further ordered That, for a period of ten (10) years from the

date of entry of this Order, the individual respondent named herein

shall promptly notify the Commission of the discontinuance of his

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.

VII

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.

Analysis of Proposed Consent Order To Aid Public Comment

The Federal Trade Commission has accepted an agreement to a

proposed consent order from Vein Clinics of America, Inc., a Delaware

corporation, and D. Brian McDonagh, M.D., its Chairman of the Board and

National Medical Director (hereinafter collectively referred to as

``VCA''). VCA markets a procedure commonly known as ``compression

sclerotherapy'' for treating venous disease, including varicose veins,

spider veins and ulcers. VCA's treatment method, which it sometimes

refers to as the ``MicroCure Process'', consists of injecting solutions

of Sotradecol (sodium tetradecyl sulfate) into the veins, followed by

compression of the area with a bandage and post-procedure ambulation by

the patient. Proposed respondents currently offer their sclerotherapy

treatment services to the public at twelve clinics located in cities in

California, Georgia, Illinois, Kansas, Maryland and Virginia.

The proposed consent order has been placed on the public record for

sixty (60) days for the reception of comments by interested persons.

Comments received during this period will become part of the public

record. After sixty (60) days, the Commission will again review the

agreement and will decide whether it should withdraw from the agreement

or make final the agreement's proposed order.

The Commission's complaint charges that proposed respondents

deceptively advertised: (1) The rate at which venous disease recurs

following treatment by VCA's procedure and by other methods; (2) the

newness and availability of the treatment method administered by VCA;

and (3) the risks to health and of adverse cosmetic side-effects

presented by VCA's treatment procedure and by other methods of treating

venous disease.

Recurrence

The complaint against VCA alleges that proposed respondents falsely

represented that varicose veins recur at a rate of approximately 65 to

85 percent in five years following surgical treatment when, in fact,

the rate at which venous disease recurs five years after surgery is

substantially lower than 65 percent.

The complaint also alleges that VCA failed to posses a reasonable

basis for claims it made regarding the rate at which venous disease

recurs following treatment by VCA's method and by other treatment

methods. In brochures VCA provided to prospective customers, proposed

respondents represented that the rate at which venous disease recurs

within five years following treatment by VCA is less than 3 percent.

VCA also claimed that the rate at which venous disease recurs following

treatment by hypertonic saline injections is ``high.'' VCA's brochures

also represented that there is virtually no recurrence of venous

disease among patients who have undergone treatment by VCA after having

previously undergone surgery or other modes of treatment and that

venous disease recurs at a lower rate following treatment by VCA than

by any other treatment method. The Commission believes that these

recurrence rate claims are deceptive because at the time proposed

respondents made these claims, VCA did not posses adequate

substantiation for those claims.

The proposed consent order seeks to address the alleged recurrence

rate misrepresentations cited in the complaint in several ways. First,

the order (Part I.A) prohibits proposed respondents from representing

that the rate at which varicose veins recur following surgery is

approximately 65 to 85 percent in five years.

Second, Part I.A further prohibits proposed respondents from

otherwise misrepresenting the rate at which venous disease is likely to

recur or return following treatment by any venous disease treatment

procedure.

Third, Part II.A of the order requires proposed respondents to

posses a reasonable basis consisting of competent and reliable

scientific evidence substantiating any claim regarding the success rate

or the rate at which a condition is likely to recur or return following

treatment by any cosmetic or plastic surgery procedure, including any

venous disease treatment procedure.

Newness and Availability

The Commission's complaint further alleges that proposed

respondents falsely represented that VCA's treatment procedure,

sometimes referred to by VCA as the ``MicroCure Process,'' is a unique

mode of treatment that is exclusively available from VCA and that

differs materially from the procedures generally used by other

physicians to treat varicose and spider veins. The complaint also

alleges that proposed respondents falsely represented that VCA's

procedure is a newly discovered, previously unavailable method of

treating varicose and spider veins and that prior to the opening of

VCA, surgery was the only available treatment for large varicose veins.

In fact, according to the complaint, proposed respondents'

treatment method is not unique, is not exclusively available from VCA

and does not differ materially from the procedures used by physicians

to treat varicose and spider veins. Rather, VCA's procedure, known

within the medical community as compression sclerotherapy, can be, has

been and is regularly performed by other physicians. VCA's procedure is

neither a new nor previously unavailable method of treating varicose

and spider veins. Moreover, prior to the advent of VCA, surgery was not

the only method of treating large varicose veins.

The proposed consent order prohibits the alleged

misrepresentations. First, the consent order prohibits proposed

respondents from representing that prior to VCA, surgery was the only

available treatment for large varicose veins (Part I.B).

Second, the proposed consent prohibits VCA from representing that

its procedure is a newly discovered and/or previously unavailable

method of treating varicose and spider veins (Part I.C).

Third, the proposed consent further prohibits VCA from

misrepresenting that its procedure is exclusively available at proposed

respondents' clinics (Part I.D).

Finally, the proposed order broadly prohibits VCA from making any

misrepresentations regarding the newness of, or the past or present

availability of, any cosmetic or plastic surgery procedure, including

any venous disease treatment procedure (Part I.E).

Risks and Side-Effects

The complaint also alleges that VCA's brochures and advertisements

falsely represented that proposed respondents' sclerotherapy method

does not present the risk of burning, marking or scarring the skin. The

complaint further alleges that VCA falsely represented that the only

significant risk to health and risk of allergic reaction presented by

respondents' method is that of a mild allergic reaction in 1 in 1,000

patients.

In fact, according to the complaint, VCA's sclerotherapy can result

in burning, marking and scarring the skin. Injections of Sotradecol may

cause ulcers (open sores) to form if it extrudes onto the surface of

the skin when injected, leaving scars, and may result in potentially

permanent pigmentation. Sotradecol can also cause sever allergic

reactions, including the possibility of anaphylactic shock.

In addition, the complaint alleges that proposed respondents failed

to possess a reasonable basis for claims that VCA's sclerotherapy

presents (a) fewer significant risks to health than other non-surgical

methods of treating venous disease, and (b) presents fewer risks of

adverse cosmetic side-effects than other methods of treating venous

disease. The Commission believes these claims are deceptive because at

the time proposed respondents made these claims, they did not possess

adequate substantiation for those claims.

The proposed consent order addresses these alleged

misrepresentations in several ways. First, the proposed consent

prohibits VCA from representing that its sclerotherapy does not present

the risk of burning, marking or scarring the skin (Part I.F.1) or

presents no possibility of significant risks to health (Part I.F.2).

Second, the proposed consent broadly prohibits VCA from

misrepresenting the safety, risks, or potential side-effects of any

cosmetic or plastic surgery procedure, including any venous disease

treatment procedure (Part I.G).

Third, the proposed consent order requires VCA to possess a

reasonable basis consisting of competent and reliable scientific

evidence substantiating any claims about the rate or nature of risks to

health, or of adverse cosmetic side-effects, presented by any cosmetic

or plastic surgery procedure, including any venous disease treatment

procedure (Part II.B).

The purpose of this analysis is to facilitate public comment on the

proposed order, and it is not intended to constitute an official

interpretation of the agreement and proposed order, or to modify in any

way their terms.

Donald S. Clark,

Secretary.

[FR Doc. 94-3088 Filed 2-9-94; 8:45 am]

BILLING CODE 6750-01-M