`Case 5:18-cv-01005-JGB-KK Document 190 Filed 08/30/22 Page 1 of 19 Page ID #:4641
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`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA – EASTERN DIVISION
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`UNITED STATES OF AMERICA,
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`Plaintiff,
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`v.
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`CALIFORNIA STEM CELL TREATMENT
`CENTER, INC., et al.
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`Case No.
`EDCV 18-1005 JGB (KKx)
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`FINDINGS OF FACT AND
`CONCLUSIONS OF LAW
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`Defendants.
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`Case 5:18-cv-01005-JGB-KK Document 190 Filed 08/30/22 Page 2 of 19 Page ID #:4642
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`This is a statutory injunction proceeding in which the United States, on
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`behalf of the U.S. Food and Drug Administration (“FDA”), seeks to permanently
`enjoin Defendants California Stem Cell Treatment Center, Inc., Cell Surgical
`Network Corporation, and Drs. Elliot B. Lander, M.D., and Mark Berman, M.D.,
`from performing various stem cell treatments on patients. The United States
`alleges these treatments violate the Federal Food, Drug, and Cosmetic Act
`(“FDCA”). Specifically, the United States alleges that three of Defendants’
`stromal vascular stem cell treatments violate: 21 U.S.C. § 331(k) by causing the
`adulteration of drugs; 21 U.S.C. § 331(k) by causing the misbranding of drugs; and
`21 U.S.C. § 331(c) by receiving drugs that are misbranded.
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`The case was tried to the Court on May 4, 5, 6, 7, 11, 12, and 13, 2021. Oral
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`closing arguments occurred on August 20, 2021. Because of the ongoing Covid-19
`pandemic, the United States appeared via videoconference. At the August 20,
`2021 closing arguments, the Court ordered supplemental briefing, which was
`submitted by both sides on August 27, 2021, and September 1, 2021. (“Pl’s Supp
`Br.,” Dkt. No. 179; “Defs Supp Br.,” Dkt. No. 178; “Pl’s Supp Opp.,” Dkt. No.
`181; “Defs Supp Opp.,” Dkt. No. 180.)
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`The Court, having considered all the evidence presented by the parties, the
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`written submissions from both sides, and the argument of counsel, issues the
`following Findings of Fact and Conclusions of Law.
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`I. FINDINGS OF FACT
`A. General Facts
`1. Defendant California Stem Cell Treatment Center (“CSCTC”) is a
`California professional corporation founded in 2010, with its principal place
`of business located at 72-780 Country Club Drive, Suite 301, Rancho Mirage,
`California 92270 (“CSCTC Rancho Mirage”). California Stem Cell
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`Case 5:18-cv-01005-JGB-KK Document 190 Filed 08/30/22 Page 3 of 19 Page ID #:4643
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`Treatment Center has a second location at 120 South Spalding Drive, Suite
`300, Beverly Hills, California 90212 (“CSCTC Beverly Hills.”). (“Stip.
`Facts,” Dkt. No. 113-1 ¶ 1.)
`2. Defendant Elliot B. Lander, M.D., a surgeon and board-certified urologist, is
`the co-owner and Co-Medical Director of CSCTC. He is the most
`responsible individual at CSCTC Rancho Mirage and performs his duties
`there, within the jurisdiction of this Court. He manages all firm employees
`at CSCTC Rancho Mirage. (“Pl. SOF,” Dkt. No. 169-1 ¶ 3.)
`3. Defendant Mark Berman, M.D., a board-certified cosmetic surgeon, is the
`co-owner and Co-Medical Director of CSCTC.1 He performs his duties at
`the CSCTC Beverly Hills facility, within the jurisdiction of this Court. He is
`the most responsible individual at CSCTC Beverly Hills. (Id. ¶ 4.)
`4. Defendant Cell Surgical Network Corporation (“CSN”) is a California
`corporation founded and owned by Dr. Berman and Dr. Lander that is
`registered to do business at 72-780 Country Club Drive, Suite 301, Rancho
`Mirage, California 92270, the same address as CSCTC Rancho Mirage.
`(Stip. Facts ¶ 2.)
`5. CSN operates a one-employee warehouse in Palm Desert, California, from
`which equipment and supplies are shipped to CSN affiliates. (Id. ¶ 3.)
`6. Drs. Berman and Lander are the co-owners and Co-Medical Directors of
`CSN. They are also the co-owners of Cells On Ice, Inc., which has assisted
`in the recovery of adipose tissue sent outside of the State of California. (Pl.
`SOF ¶ 6.)
`B. The “SVF Surgical Procedure”
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`1 There have been news accounts of Mr. Berman’s death in May 2022. The
`parties have not filed a judicially noticeable document verifying the accounts. The
`Court’s Findings of Fact are written in light of the lack of verification.
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`Case 5:18-cv-01005-JGB-KK Document 190 Filed 08/30/22 Page 4 of 19 Page ID #:4644
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`7. Defendants offer patients a treatment called the “SVF Surgical Procedure.”
`In this procedure, a licensed physician targets stromal vascular fraction cells
`(“SVF Cells”) for extraction and then implants those same cells that were
`removed back into the same patient during the same procedure. (“Defs.
`SOF,” Dkt. No. 168-1 ¶ 1.)
`8. SVF Cells are comprised of multiple cell types found within adipose tissue;
`these include mesenchymal stem cells (“MSC Cells”), hematopoietic cells,
`early (progenitors) and mature lineage stages of endothelia, pericyte
`progenitor cells (also called perivascular cells), red blood cells, white blood
`cells, lymphocytes, and fibroblasts among other cells. SVF Cells are the
`naturally occurring part of the adipose tissue that does not contain the
`adipocytes (fat cells). (Id. ¶ 2.)
`9. Surgeons routinely work on both tissues and cells that make up tissues.
`Surgery universally involves dissection (cutting and separation) of tissues
`through mechanical or chemical means, and has evolved to where surgeons
`can isolate cells following removal from a patient’s body. Dissected tissues
`and cells that have been isolated can be surgically relocated and re-purposed
`to other parts of a patient’s body. (Id. ¶ 4.)
`10. Surgery is intended for the treatment and prevention of disease in the human
`body. It can treat chronic and systemic conditions, and it is intended to
`affect the structure or function of the human body. There are no FDA-
`approved or disapproved surgical procedures. (Id. ¶¶ 5-8.)
`11. Accordingly, the surgical treatments at issue here have not been licensed or
`approved by the United States Food and Drug Administration. There are
`not now, nor have there ever been, any approved new drug applications for
`the surgical treatments (“NDAs”) filed with FDA pursuant to 21 U.S.C. §
`355(b) or (j). And there are not now, nor have there ever been any approved
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`Case 5:18-cv-01005-JGB-KK Document 190 Filed 08/30/22 Page 5 of 19 Page ID #:4645
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`biologics license applications (“BLAs”) filed with FDA pursuant to 42
`U.S.C. § 262 for the treatments. (Stip. Facts ¶¶ 7-9.)
`12. The SVF Surgical Procedure targets for removal mesenchymal stem cells
`and the hemopoietic or angiogenic stem cells located within the adipose
`tissue, not the adipose tissue itself. (Defs. SOF ¶ 10.)
`13. The SVF Surgical Procedure involves collecting the patient’s SVF Cells
`naturally contained in the patient’s adipose tissue and relocating those SVF
`Cells back into the same patient. The SVF Cells are already in circulation
`within the body. The SVF Surgical Procedure increases the number of
`available SVF Cells in circulation or around an injured area. (Id. ¶ 11.)
`14. The entire SVF Surgical Procedure, including the extraction, isolation, and
`reimplantation of SVF Cells occurs in California during a single, outpatient
`procedure at a surgical clinic. (Id. ¶ 12.)
`15. During the SVF Surgical Procedure, a licensed physician collects the
`patient’s SVF Cells using a technique called “mini-liposuction via
`subdermal local anesthesia,” which permits the liposuction of the SVF Cells,
`along with the adipose and connective tissue that contains the SVF Cells,
`under local anesthesia. Many cells are mechanically separated (“mechanical
`cutting”) from the adipose tissue during the liposuction procedure, as is
`common in all surgeries. Next, the removed adipose tissue is centrifuged to
`remove the anesthesia and to further mechanically dissociate the SVF Cells
`from the adipose tissue. The physician then uses surgical tools—namely,
`Liberase enzymes and a centrifuge device—to isolate the SVF Cells from
`adipocytes (fat cells). Finally, the SVF Cells are filtered through a hundred
`micron filter and viewed through a special micrograph to ensure that the
`SVF Cells are free-floating, round, and do not contain clumps of particles or
`debris. The SVF Cells are then suspended in a sterile saline solution, after
`which they are relocated back into the patient’s body. Saline is a benign
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`Case 5:18-cv-01005-JGB-KK Document 190 Filed 08/30/22 Page 6 of 19 Page ID #:4646
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`crystalloid, widely used in the practice of medicine. No new product is
`created by the use of saline as a delivery mechanism. (Id. ¶¶ 13-15, 21-22.)
`16. All of the materials used to isolate SVF Cells during the SVF Surgical
`Procedure are FDA-approved drugs or FDA-cleared devices. (Id. ¶ 17.)
`17. The SVF Cells are not altered, chemically or biologically, at any point during
`the SVF Surgical Procedure. There are no genes added to or removed from
`the SVF Cells during the SVF Surgical Procedure. The SVF Surgical
`Procedure does not change the size or genetic makeup of the SVF Cells.
`The procedure does not alter the biological characteristics of the SVF cells,
`nor does it affect their ability to proliferate. (Id. ¶¶ 23-24.)
`18. The SVF Surgical Procedure does not create any new material or introduce
`any foreign article into the body. Unlike manufactured drugs, the SVF
`Surgical Procedure does not create any cellular or tissue-based product that
`did not previously exist within the patient. (Id. ¶¶ 44.)
`19. Drs. Berman and Lander are board certified surgeons. Drs. Berman and
`Lander and their practices are regulated by the State of California Medical
`Board. Dr. Berman’s facility in Beverly Hills is accredited by the
`Accreditation Association for Ambulatory Health Care (“AAAHC”) per
`California law. The operating rooms in which Drs. Berman and Lander
`perform the SVF Surgical Procedure comply with all health and safety
`standards established by the California State Medical Board for outpatient
`procedures. (Id. ¶¶ 51-52.)
`C. The “Expanded MSC Surgical Procedure”
`20. In addition to the SVF Surgical Procedure, Drs. Berman and Lander
`perform a procedure whereby a patient’s adipose tissue is removed and sent
`to a GMP-compliant tissue bank to isolate MSC Cells. The MSC Cells are
`then replicated and stored until the same patients request that they be
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`Case 5:18-cv-01005-JGB-KK Document 190 Filed 08/30/22 Page 7 of 19 Page ID #:4647
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`returned for implantation into her body (the “Expanded MSC Surgical
`Procedure”). (Id. ¶ 61.)
`21. During the Expanded MSC Surgical Procedure, a qualified candidate
`undergoes liposuction at either Dr. Berman or Dr. Lander’s medical
`facilities. Drs. Berman and Lander do not perform the remainder of the SVF
`Surgical Procedure on the harvested adipose tissue but send the tissue to a
`GMP-compliant third party. (Id. ¶ 62.)
`22. A patient is eligible for the Expanded MSC Surgical Procedure where the
`individual has a medical condition that will require multiple treatments, but
`the individual is unable or unwilling to undergo multiple liposuctions. (Id. ¶
`63.)
`23. Drs. Berman and Lander do not adulterate, manufacture, process or store
`the patient’s adipose tissue during the Expanded MSC Surgical Procedure.
`The third party isolates the MSC Cells from the adipose tissue using a
`technique that is similar to the SVF Surgical Procedure. The third party
`then places the MSC Cells in a culture, in which the MSC Cells naturally
`begin to replicate (i.e., expand in number), thereby creating a sufficient
`number of cells under GMP conditions for multiple treatments (the
`“Expanded MSC Cells”). Replication or propagation is a natural state for
`stem cells and the Expanded MSC Cells retain all of the biological
`characteristics of the MSC Cells. The Expanded MSC Cells retain their cell
`markers, and do not differentiate while in the culture or during storage. The
`third-party tissue bank places the Expanded MSC Cells into a sterile vial
`labeled with the patient’s name, date, and description pursuant to well-
`defined patient identifier protocols. The third-party tissue bank places the
`Expanded MSC Cells into a sterile vial labeled with the patient’s name, date,
`and description pursuant to well-defined patient identifier protocols. (Id. ¶¶
`64-69.)
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`24. The Expanded MSC Cells are intended for autologous use, which refers to
`the “implantation, transplantation, infusion, or transfer of human cells or
`tissue back into the individual from whom the cells or tissue were
`recovered.” See 21 C.F.R. § 1271.3(a).
`25. Defendants can (and do) administer the Expanded MSC Cells weeks,
`months, and even years after the patient’s adipose tissue is removed. (“US
`SOF,” Dkt. No. 169-1 ¶ 22.)
`26. At the time of the inspection in 2017, Drs. Berman and Lander were sending
`the adipose tissue to American Cryostem (“ACS”) for isolation of the MSC
`Cells and storage of the same. (Defs. SOF ¶ 71.)
`27. Drs. Berman and Lander believed that ACS was a GMP facility based on
`ACS’s representations. Drs. Berman and Lander ceased utilizing ACS in
`connection with the Expanded MSC Surgical Procedure following notice
`from the FDA that ACS was not complying with GMP regulations. (Id. ¶
`72.)
`28. The third party that Drs. Berman and Lander currently use is registered
`with the FDA and has been inspected by the FDA, with no resulting
`deficiency letters. (Id. ¶ 73.)
`29. The Government did not present any evidence that Defendants are
`adulterating any material in connection with the Expanded MSC Surgical
`Procedure. (Id. ¶ 79.)
`30. Only licensed practitioners can perform the Expanded MSC Surgical
`Procedure. (Id. ¶ 80.)
`31. At all times, the vials containing the Expanded MSC Cells are labeled with
`the patient’s name, date, and description pursuant to patient identifier
`protocols. (Id. ¶ 82.)
`32. The Government did not present any evidence that Defendants label or
`mislabel any material regulated by the FDA in connection with the Expanded
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`MSC Surgical Procedure. Nor did it present any evidence regarding the
`labeling Defendants receive from any GMP facility in connection with the
`Expanded MSC Surgical Procedure, or that any such labeling is deficient.
`(Id. ¶¶ 83-84.)
`33. Drs. Berman and Lander do not charge for the Expanded MSC Cells; they
`only charge a surgical fee for the liposuction procedure. Patients paid a
`separate facility fee to the third party for the banking or storage of the
`Expanded MSC Cells. (Id. ¶¶ 85-86.)
`D. The “SVF/ACAM2000 Treatment”
`34. Drs. Berman and Lander partnered with StemImmune to study the safety of
`utilizing SVF Cells as a mechanism to deliver ACAM2000, an oncolytic
`virus, to cancer cells (“SVF/ACAM2000 Treatment”). (Id. ¶ 87.)
`35. The SVF/ACAM2000 Treatment was a limited experimental treatment
`only available to individuals with terminal cancer for whom traditional
`treatment had failed. Drs. Berman and Lander would prepare the SVF Cells
`using their standard method, then add the ACAM2000 to the SVF Cells
`ACAM2000 (“SVF/ACAM2000 Cells”), before deploying into the same
`patient’s body. (Id. ¶ 88.)
`36. The combination of SVF and ACAM2000 Cells is a manufactured product.
`(Pls. SOF ¶ 160.)
`37. ACAM2000 is an FDA-approved vaccine. (Defs. SOF ¶ 89.)
`38. The federal government maintains exclusive control over ACAM2000 as
`part of the country’s Strategic National Stockpile and it may only be
`distributed by specific government agencies. It is not publicly available, but
`researchers may request vials for studies. (Id. ¶ 91.)
`39. Drs. Berman and Lander cannot perform the SVF/ACAM2000 Treatment
`without access to ACAM2000. (Id. ¶ 92.)
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`40. The FDA confiscated vials of ACAM2000 from StemImmune’s
`laboratories at the University of California, San Diego in August 2017. Dr.
`Berman last performed the SVF/ACAM2000 Treatment before the FDA’s
`2017 confiscation. Dr. Lander last performed the SVF/ACAM2000
`Treatment in June 2016. Drs. Berman and Lander have no desire or
`intention to perform the SVF/ACAM2000 Treatment outside of proper
`FDA regulatory approval or a determination that that SVF/ACAM2000
`Cells are not a drug and do not fall under FDCA regulations. (Id. ¶ 94-97.)
`41. The ACAM2000 that Defendants used for the SVF/ACAM2000 Surgical
`Procedure was shipped in interstate commerce from the Centers for Disease
`Control (“CDC”) in Georgia. (Pls. SOF ¶ 173.)
`42. The SVF/ACAM2000 Cells were not placed in any container for
`preservation, storage, or later use. (Defs. SOF ¶ 102.)
`43. The SVF/ACAM2000 Treatment was performed at all times by Drs.
`Berman and Lander, who are licensed physicians. Drs. Berman and Lander
`performed the SVF/ACAM2000 Treatment pursuant to the IRB-approved
`study protocols, which included detailed step-by-step instructions on how to
`extract and isolate the SVF Cells, reconstitute the ACAM2000 vaccine, and
`implant the SVF/ACAM2000 Cells. (Id. ¶ 103.)
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`II. CONCLUSIONS OF LAW
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`A. General
`1. The Federal Food, Drug, and Cosmetic Act (“FDCA”) defines a drug as
`any “article,” or component thereof, that is “intended for use in the
`diagnosis, cure, mitigation, treatment, or prevention of disease” or is
`“intended to affect the structure or any function of the body of man or other
`animals.” See 21 U.S.C. § 321(g)(1)(B), (C), and (D). However, surgical
`procedures—standard in the practice of medicine—are also intended for the
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`diagnosis, cure, mitigation, treatment, or prevention of disease. When
`passing the FDCA, Congress explicitly rejected any attempt to “limit or
`interfere with the authority of a health care practitioner to prescribe or
`administer any legally marketed device to a patient for any condition or
`disease within a legitimate health care practitioner-patient relationship.” 21
`U.S.C. § 396. Indeed, Congress recognized the limitations of the FDA and
`rejected “any intent to directly regulate the practice of medicine.” Buckman
`Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 351 n.5 (2001).
`2. The line between “drug” and “procedure” is especially muddy when
`licensed medical doctors enter a patient’s body, extract that patient’s cells,
`and reintroduce those cells to that patient after some amount of cellular
`processing. The United States argues that this scenario constitutes the
`production of FDCA drugs. Defendants argue that this is mere surgery, the
`exclusive province of the medical practitioners, and not something which the
`FDCA may regulate.
`3. The Court concludes that neither Defendants’ SVF Surgical Procedure nor
`its Expanded MSC Procedure are “drugs” within the meaning of the FDCA.
`In contrast, Defendants’ SVF/ACAM2000 Treatment involves the creation
`of a drug under the FDCA.
`4. Accordingly, the SVF Procedure and Expanded MSC Procedure are not
`subject to the FDCA’s adulteration and misbranding provisions. See 21
`U.S.C. §§ 351, 352; 21 C.F.R. § 1271.20; Final Rule Concerning Human
`Cells, Tissues, and Cellular and Tissue-Based Products; Establishment
`Registration and Listing, 66 Fed. Reg. 5447, 5449 and 5456 (Jan. 19, 2001)
`(to be codified at 21 C.F.R. Part 1270).
`5. Neither the SVF Procedure nor the Expanded MSC Procedure involves
`creating “prescription drugs” within the meaning of 21 U.S.C. §
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`353(b)(1)(A), nor does it involve creating “new drugs” within the meaning
`of 21 U.S.C. § 321(p).
`6. Additionally, Defendants’ SVF Procedure—but not the Expanded MSC
`Procedure—also qualifies for the Same Surgical Procedure Exception. The
`SSP Exception exempts from FDA oversight any “establishment that
`removes HCT/Ps from an individual and implants such HCT/Ps into the
`same individual during the same surgical procedure.” 21 C.F.R. § 1271.15.
`7. “HCT/Ps” is an acronym for “[h]uman cells, tissues, or cellular or tissue-
`based products,” and HCT/Ps are defined in Section 1271.3(d) as “articles
`containing or consisting of human cells or tissues that are intended for
`implantation, transplantation, infusion, or transfer into a human recipient.”
`21 C.F.R. § 1271.3(d).
`8. “Construction which gives effect to all of the words of a statute or regulation
`is preferred over an interpretation which renders some of the statute or
`regulation ineffective.” First Charter Financial Corp. v. United States, 669
`F.2d 1342, 1350 (9th Cir. 1982) (internal citation omitted). The definition of
`HCT/Ps specifies that HCT/Ps are “articles containing or consisting of
`human cells or tissues,” in the disjunctive, indicating that articles containing
`and articles consisting of human cells or tissues may be two different things.
`21 C.F.R. § 1271.3(d) (emphasis added). The adipose tissue Defendants
`remove from patients clearly consists of human cells. And whatever is
`injected back into patients as part of Defendants’ SVF Surgical Procedure
`and Expanded MSC Surgical Procedure certainly contains such cells.
`9. Most critically, the definition of HCT/Ps states that HCT/Ps are “articles . .
`. intended for implantation, transplantation, infusion, or transfer into a
`human recipient.” 21 C.F.R. § 1271.3(d) (emphasis added). The cellular
`products Defendants create in the course of all procedures at issue here are
`clearly intended for transfer back into human recipients.
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`10. Accordingly, SVF Cells removed from patients as part of Defendants’
`procedures are HCT/Ps. The adipose tissue Defendants remove from
`patients to produce their CSCTC products is an HCT/P. 21 C.F.R. §
`1271.3(d).
`11. Because the entire SVF Surgical Procedure, including the extraction,
`isolation, and reimplantation of SVF Cells occurs during a single, outpatient
`procedure at a surgical clinic, Defendants’ SVF Surgical Procedure involves
`introducing HCT/Ps back into patients during the “same surgical
`procedure,” as they were extracted, triggering the SSP exception. 21 C.F.R.
`§ 1271.15(b). The same is not true of the Expanded MSC Procedure.
`Though the cells extracted for both the SVF Surgical Procedure and the
`Expanded MSC Procedure are HCT/Ps, only the SVF Surgical Procedure
`qualifies for the SSP Exception.
`B. The SVF Surgical Procedure
`12. For Claim One, the Government must prove: (1) that the SVF Surgical
`Procedure involves a drug, (2) that the SVF Surgical Procedure involves a
`drug that is held for sale in interstate commerce; and (3) that the methods
`used in, or the facilities or controls used for, the manufacture of the drug are
`not in conformity with current Good Manufacturing Practices (“cGMP”).
`21 U.S.C. §§ 331(k), 352(a)(2)(B).
`13. For Claim Two, the Government must prove: (1) that the SVF Surgical
`Procedure involves a drug, (2) that the SVF Surgical Procedure involves a
`drug that is held for sale in interstate commerce; and (3) that it does not
`contain adequate directions for use or the symbol “Rx.” 21 U.S.C. §§ 352(f),
`352(b)(2).
`14. The Same Surgical Procedure Exception (“SSP Exception”) is a complete
`defense to Claims One and Two, and Defendants have established that the
`SSP Exception applies to the SVF Surgical Procedure.
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`15. Additionally and alternatively, the Government failed to carry its burden
`because the SVF Surgical Procedure is not a drug.
`16. In evaluating whether the SVF Surgical Procedure satisfies the requirements
`of the SSP Exception, the appropriate focus is on the SVF Cells. The SSP
`Exception unambiguously states that the focus is on the target of the
`removal—either the cell or the tissue—rather than the largest system
`removed. This is the only permissible interpretation of the SSP Exception,
`which explicitly includes both “tissues” and/or “cells,” through its use of
`the term “HCT/Ps.” See 21 C.F.R. §§ 1271.3(d); 1271.15(b). Cells can only
`be removed from a patient along with larger systems, such as the tissues or
`organs that they comprise. Focusing on the “tissue” removed while
`ignoring the target “cells” would eliminate the word “cells” from HCT/Ps
`and violate the canons of statutory construction.
`17. The SVF Surgical Procedure is autologous because it involves collecting a
`patient’s cell population naturally occurring in the patient’s adipose tissue
`and relocating that cell population back into the same patient.
`18. The SSP Exception does not have any requirement that the HCT/Ps be
`unaltered before reinsertion into the patient. See 21 C.F.R. § 1271.15(b).
`Any reference to whether the HCT/Ps are manipulated and/or altered are
`located in a different, inapplicable, regulation 21 C.F.R. § 1271.10 (discussing
`“minimal manipulation”).
`19. Regardless, the SVF Surgical Procedure does not alter the biological
`characteristics of the SVF Cells and those cells remain “such HCT/P” that
`were removed from the patient. There is no evidence that the cells are
`anything other than autologous cells removed from, belonging to, and
`returned back to the patient.
`20. The GMP-grade Liberase enzyme used by Defendants does not affect ability
`of the SVF Cells to differentiate. When Liberase is used on SVF Cells, their
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`cell surface marker expression remains similar, and their viability does not
`significantly change.
`21. The Court finds that Dr. Berman and Dr. Lander are well qualified to opine
`and testify on the practice of medicine, development of surgical procedures,
`the SVF Surgical Procedure, and the effect of Liberase on the SVF Cells.
`The Court finds Defendants’ evidence and testimony more credible than Dr.
`Yong given her failure to analyze the appropriate enzyme. Further,
`Defendants have actually tested the product at issue (as published in a peer-
`reviewed journal), while the Government has never collected a sample or
`tested the SVF Cells or Liberase.
`22. In conclusion, the SSP Exception applies to the SVF Surgical Procedure and
`is a complete defense to Claims One and Two. Because the SSP Exception
`applies to the SVF Surgical Procedure, Defendants do not fall under FDA
`jurisdiction and are not governed by the FDCA or associated regulations;
`therefore, the Government is not entitled to injunctive relief against
`Defendants.
`23. Further, the SSP Exception is unambiguous, thus there is no need for
`deference to the FDA’s interpretation. See Kisor v. Wilkie, 139 S. Ct. 2400,
`2414 (2019) (“[T]he possibility of deference can arise only if a regulation is
`genuinely ambiguous.”); Christensen v. Harris Cnty., 529 US 576, 588
`(2000) (“The regulation in this case, however, is not ambiguous . . . . To
`defer to the agency’s position would be to permit the agency, under the guise
`of interpreting a regulation, to create de facto a new regulation.”).
`24. The SSP Exception does not require that the surgeon implant everything
`that was removed—including the removed blood and excess artery—for it to
`apply. The SSP Exception Guidance expressly recognizes that processing
`steps such as “rinsing [and] cleansing” or “sizing and shaping,” including
`“dilation,” “cutting,” “meshing,” of HCT/Ps do not take a procedure out
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`of the SSP Exception. See Food & Drug Admin., Regulatory
`Considerations.
`25. Drs. Berman and Lander may lawfully use FDA-cleared medical devices and
`FDA-approved pharmaceuticals in any manner that they determine is best to
`care for and treat their patients. Each step of the SVF Surgical Procedure
`uses FDA-cleared and/or approved medical devices and pharmaceuticals.
`See 21 U.S.C. § 396.
`C. The Expanded MSC Surgical Procedure
`26. For Claim Three, the Government must prove: (1) that the Expanded MSC
`Surgical Procedure involves a drug, (2) that the Expanded MSC Surgical
`Procedure involves a drug that is held for sale in interstate commerce; and
`(3) that the methods used in, or the facilities or controls used for, the
`manufacture of the drug are not in conformity with current Good
`Manufacturing Practices (“cGMP”). 21 U.S.C. §§ 331(k), 352(a)(2)(B).
`27. For Claim Four, the Government must prove: (1) that the Expanded MSC
`Surgical Procedure involves a drug, (2) that the Expanded MSC Surgical
`Procedure involves a drug that is held for sale in interstate commerce; and
`(3) that it does not contain adequate directions for use of the symbol “Rx.”
`21 U.S.C. §§ 352(f), 352(b)(2).
`28. For Claim Five, the Government must prove: (1) that the Expanded MSC
`Surgical Procedure involves a drug, (2) that the Expanded MSC Surgical
`Procedure involves a drug that is held for sale in interstate commerce; and
`(3) Defendants received a misbranded drug for pay or otherwise.
`29. As a threshold matter, the cells involved in the Expanded MSC Surgical
`Procedure are not drugs. They are human cells removed from patients and
`then reintroduced into those same patients. They are not fungible goods that
`can be sold, mass produced, or patented. See Ass’n for Molecular Pathology
`v. Myriad Genetics, Inc., 569 U.S. 576, 579 (2013) (holding that naturally-
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`occurring human body parts that are a “product of nature and not patent
`eligible merely because it has been isolated.”).
`30. Defendants are engaged in the practice of medicine, not the manufacture of
`pharmaceuticals.
`D. The SVF/ACAM2000 Treatment
`31. For Claim Six, the Government must prove: that (1) the SVF/ACAM2000
`Treatment involves a drug, (2) the SVF/ACAM2000 Treatment involves a
`drug that is held for sale in interstate commerce; and (3) the methods used
`in, or the facilities or controls used for, the manufacture of the drug are not
`in conformity with current Good Manufacturing Practices (“cGMP”). 21
`U.S.C. §§ 331(k), 352(a)(2)(B).
`32. For