Genetus Alexandria, Inc., et al.; Proposed Consent Agreement With Analysis To Aid Public Comment

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