[Federal Register Volume 60, Number 186 (Tuesday, September 26, 1995)]
[Notices]
[Pages 49605-49609]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-23796]



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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