UNITED STATES OF AMERICA, Plaintiff - Appellee, versus US STEM CELL CLINIC, LLC, a Florida limited liability company, US STEM CELL, INC., a Florida profit corporation, KRISTIN C. COMELLA, individually, Defendants - Appellants.
No. 19-13276
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
(June 2, 2021)
D.C. Docket No. 0:18-cv-61047-UU; [PUBLISH]
Appeal from the United States District Court for the Southern District of Florida
Before JORDAN, MARCUS, and GINSBURG,* Circuit Judges.
US Stem Cell Clinic, LLC, its parent company, and its chief scientific officer (collectively, the Clinic) offer a procedure in which they remove fat tissue from a patient, isolate the portion containing stem cells, and inject that portion back into the patient. This procedure purportedly treats all manner of chronic conditions, from pain to Parkinson‘s disease.
The United States Food and Drug Administration is skeptical of the Clinic‘s claims. It sued the Clinic, alleging the stem cell procedure violates the Federal Food, Drug, and Cosmetics Act (codified at
I. Background
Since 2001 the FDA has regulated human cells, tissues, and cellular and tissue-based products or “HCT/Ps,” which the FDA defines as “articles containing or consisting of human cells or tissues that are intended for implantation, transplantation, infusion, or transfer into a human recipient,”
1) preventing unwitting use of contaminated tissues with the potential for transmitting infectious diseases such as AIDS and hepatitis; 2) preventing improper
handling or processing that might contaminate or damage tissues; [and] 3) ensuring that clinical safety and effectiveness is demonstrated for tissues that are highly processed, are used for other than their normal function, are combined with non-tissue components, or are used for metabolic purposes.
Food & Drug Admin., Proposed Approach to Regulation of Cellular and Tissue-based Products 6 (Feb. 28, 1997), https://www.fda.gov/media/70704/download [hereinafter Proposed Approach]. Recognizing “different HCT/Ps may present different concerns,” the FDA adopted a “tiered, risk-based approach” to regulating them. Final Rule, 66 Fed. Reg. at 5450. The two provisions at issue here are aspects of this tiered approach.
The first is the “same surgical procedure” exception, which applies where an establishment “removes HCT/Ps from an individual and implants such HCT/Ps into the same individual during the same surgical procedure.”
The second provision is
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The Clinic marketed its body-fat-derived stem cell therapy for the treatment of a plethora of autoimmune, neurological, and degenerative conditions, including ALS, Parkinson‘s disease,
At the first step of the therapy, the Clinic uses a syringe to remove two ounces of the patient‘s adipose tissue (that is, body fat). The adipose tissue is made up primarily of fat cells and a network of collagen fibers, but it also contains various stromal and vascular cells. These stromal and vascular cells are known collectively as the “stromal-vascular fraction” of the adipose tissue; among them are the titular stem cells.
a) “mini-liposuction” procedure. 60 ml of adipose tissue are recovered from the patient. b) 60 ml syringe filled with aspirated adipose tissue (lipoaspirate). c) Isolated non-adipocytic cellular component of adipose tissue (SVF) after digestion of structural (non-cellular) components of 60 ml of lipoaspirate. d) SVF resuspended in approximately ml of solution (USSCC SVF Product). e) Final USSCC SVF Product in ml syringe for patient administration.
After removing adipose tissue from the patient, the Clinic uses a five-step process to isolate the stromal-vascular fraction (i.e., to turn the syringe of body fat in picture (b) into the tube of stromal and vascular cells in picture (c)). First, the adipose tissue is rinsed with a cell wash solution to remove blood cells. Second, the Clinic uses an enzyme to digest the collagen fibers. Third, the solution is centrifuged to separate the stromal-vascular fraction from the fat cells. Fourth, the Clinic uses a cell extractor and cell strainer to strip away everything except the stromal-vascular fraction. Finally, the stromal-vascular fraction is centrifuged a second time. The isolated stromal-vascular fraction is then suspended in saline solution or in platelet-rich plasma and injected back into the patient.
The FDA inspected the Clinic in 2015 and 2017. The inspectors found fault with several of the Clinic‘s practices, including its failure to keep a sterile environment and to prevent contamination; test stromal-vascular fraction samples for contamination; and label the stromal-vascular fraction solution as a drug. The Clinic responded to the FDA‘s adverse findings by asserting it was exempt from regulation.
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In 2018 the FDA sued the Clinic, alleging the stromal-vascular fraction solution is an adulterated and misbranded drug. While the lay person may not think of stem cells as a “drug,” the FDCA‘s definition of that word is expansive; any “article[] intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease” is a drug for purposes of the statute.
The Clinic did not claim to have complied with the FDA‘s good manufacturing practice or labeling requirements. Instead, opposing the FDA‘s motion for summary judgment, the Clinic argued either the same surgical procedure or the 361 HCT/P exception applied. The district court rejected those arguments and granted the FDA‘s motion. United States v. US Stem Cell Clinic, LLC, 403 F. Supp. 3d 1279, 1287-98 (S.D. Fla. 2019).
Regarding the same surgical procedure exception, the district court first held the HCT/Ps implanted into the patient must be the same HCT/Ps, in their original form, as the ones removed from the patient. Id. at 1288-89. The court based this holding on the text of the regulation, which exempts only an establishment that removes HCT/Ps from a patient and reimplants “such HCT/Ps” into the same patient. Id. The Clinic had argued the stromal-vascular fraction was an HCT/P removed from the patient and reimplanted in its original form, so the procedure was exempt. According to the FDA, however, the HCT/P removed was adipose tissue and the stromal-vascular fraction solution was obtained only after substantial processing; therefore, the Clinic was not exempt. See Food & Drug Admin., Same Surgical Procedure Exception Under 21 CFR 1271.15(b): Questions & Answers Regarding the Scope of the Exception: Guidance for Industry (Nov. 2017), https://www.fda.gov/media/89920/download [hereinafter Guidance Document] (announcing the FDA‘s view of how this exception applies in regard to adipose stem cell therapies). The district court deferred to the FDA‘s interpretation of its regulation and held the same surgical procedure exception did not apply. 403 F. Supp. 3d at 1289-94.
Next, the court held the 361 HCT/P exception inapplicable because the stromal-vascular fraction solution was not intended solely for homologous use. Id. at 1297-98. The Clinic had protested that it “intend[ed] the [stromal-vascular fraction] to perform the same basic regenerative function before and after the procedure.” Id. at 1298. Looking to the Clinic‘s marketing materials, however, the district court found the Clinic intended that the stromal-vascular fraction treat a “litany of illnesses in the recipient,” which is not the “same basic function” the stromal-vascular fraction performed before the procedure. Id.
The district court went on to hold the Clinic violated the FDCA based upon the FDA‘s undisputed contentions that the stromal-vascular fraction solution was a drug, that it was adulterated, and that it was misbranded. Id. at 1298-1300. In a separate order, the district court permanently enjoined the Clinic from offering its adipose stem cell therapy unless and until several conditions were met, including FDA approval of a new drug application or biologics license application for the stromal-vascular fraction solution.
II. Analysis
On appeal, the Clinic again argues it is exempt from regulation under the FDCA because either the same surgical procedure exception or 361 HCT/Ps exception applies.
Recall the applicable regulation provides: “You are not required to comply [with the FDA‘s rules regarding HCT/Ps] if you are an establishment that removes HCT/Ps from an individual and implants such HCT/Ps into the same individual during the same surgical procedure.”
At first glance, both readings seem plausible. There was a time when a court faced with a regulation that seemed “impenetrable on first read” might simply “wave the ambiguity flag” and defer to the agency‘s interpretation. Kisor v. Wilkie, 139 S. Ct. 2400, 2415 (2019). No longer. The Supreme Court recently clarified that judicial deference is appropriate only if a regulation is “genuinely ambiguous.” Id. Before declaring a regulation genuinely ambiguous, we must “exhaust all the traditional tools of construction,” which entails “carefully consider[ing] the text, structure, history, and purpose of [the] regulation.” Id. (internal quotation marks omitted). We will consider the parties’ textual arguments, giving the agency‘s view no special weight “except to the extent it has the ‘power to persuade.‘” Id. at 2414 (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) (“The weight of [an agency‘s interpretation] will depend upon the thoroughness evident in its consideration, the validity of its reasoning, [and] its consistency with earlier and later pronouncements“)). In this case, our tools of construction resolve the apparent ambiguity in the FDA‘s favor, so we need not decide whether to defer to the interpretation expressed in the Guidance Document.
Each side argues its interpretation is textually required. The Clinic first argues the relevant HCT/P must be the stromal-vascular fraction because adipose tissue does not fall within the definition of an HCT/P. Specifically, the Clinic says cells or tissues can be HCT/Ps only if they are “intended for implantation” into a patient. Appellants’ Br. 13 (quoting
The Clinic next draws our attention to the opinion of a district court in California that, in a similar suit against a clinic offering a similar procedure, rejected the FDA‘s interpretation under the canon against surplusage – the idea that a reading of a statute or regulation which gives each word independent meaning is generally to be preferred over a reading that makes some words superfluous. United States v. Cal. Stem Cell Treatment Ctr., Inc., No. 5:18-cv-01005, 2020 WL 1289543 (C.D. Cal. Jan 27, 2020); see also Rimini Street, Inc. v. Oracle USA, Inc., 139 S. Ct. 873, 881 (2019) (explaining the canon against surplusage and its limitations). That court reasoned that through its use of the word “HCT/Ps,”
For its part, the FDA focuses upon the word “such.” The regulation exempts only establishments that remove HCT/Ps from a patient and implant “such HCT/Ps” back into the same patient. As the district court in this case correctly explained, the word “such” in legal documents is typically used to refer back to an antecedent. See 403 F. Supp. 3d at 1288-89. Here, this means the HCT/Ps implanted must be the same as the antecedent HCT/Ps – that is, the HCT/Ps that were removed. If significant processing steps expose the HCT/Ps to foreign substances and alter their form prior to reimplantation, then the HCT/Ps cease to be the same as they were at the time of removal. This interpretation seems, at the outset, to be the more natural of the two readings.
The FDA‘s view is all the more persuasive because it is consistent with its early (as well as its recent) pronouncements, see Skidmore, 323 U.S. at 140, and consonant with the history and purpose of the regulation, Kisor, 139 S. Ct. at 2415. In 2001, when the FDA first proposed the rule that would become § 1271, it received just one comment on the same surgical procedure exception. Final Rule, 66 Fed. Reg. at 5460. Responding to that comment, the FDA noted that certain ways of processing an HCT/P could render the exception inapplicable, giving the example of cell or tissue expansion. Id. Specifically, the FDA was asked whether the exception covered “hospitals retaining [a patient‘s own] tissue ... to be used in a subsequent application on the same patient.” Id. The FDA indicated the exception would apply in that scenario “so long as the hospital does not engage in any other activity encompassed within the definition of ‘manufacture‘.... For example, if the hospital expanded the cells or tissues, it would not meet the terms of the exception.” Id. “Manufacture” encompasses “the recovery, processing, storage, labeling, packaging, or distribution of any human cell or tissue.”
After establishments such as the Clinic began offering adipose-derived stem cell therapies, the FDA issued a Guidance Document expounding on the application of the same surgical procedure exception to these therapies. The agency was of the view that when a procedure involves “intervening processing steps beyond rinsing, cleansing, sizing, or shaping,” the same surgical procedure exception usually will not apply. Guidance Document at 3. This is because while “limited handling, such as
Because the plain text of the regulation suggests that “such HCT/Ps” must be in their original form (rather than subjected to extensive processing), and because this understanding is confirmed by the agency‘s contemporaneous statements and its later, thoroughly-considered interpretation, we hold the same surgical procedure exception unambiguously does not apply to the Clinic‘s procedure. The stromal-vascular fraction solution is the product of an intensive cell isolation process involving enzymatic digestion that goes much farther than simple rinsing or sizing. By the time the stromal-vascular fraction is reinjected, it is no longer “such HCT/P” as the adipose tissue removed from the patient.
B. 361 HCT/Ps exception
The district court held that the stromal-vascular fraction solution was not a 361 HCT/P because, as a matter of law, the Clinic did not intend the stromal-vascular fraction solely for homologous use. That is, the Clinic intended the stromal-vascular fraction to perform at least some functions in its patients after the procedure that are distinct from the basic functions it performs inside the adipose tissue prior to the procedure. The Clinic claims this was error. It argues there was at least some evidence to the contrary, from which a reasonable fact-finder could arrive at the opposite conclusion, so the district court should not have granted the FDA summary judgment on this issue.
Rather than attempt to refute the Clinic‘s argument, the FDA urges us not to consider it. According to the FDA, to satisfy the homologous use criterion, the Clinic would need to intend for the stromal-vascular fraction to serve the basic functions of adipose tissue after the procedure (viz., “cushioning and support“). It says the Clinic forfeited any argument to the contrary first by failing to raise it before the district court, and again by failing to raise it on appeal. We see no forfeiture in either court.
In the district court, the FDA raised the homologous use criterion in its motion for summary judgment. It assumed, without analysis, that the relevant “basic function or functions” were those of adipose tissue. In its response, the Clinic disputed the FDA‘s assumption: “the regulation ... is silent as to which HCT/P is the appropriate comparative unit ... thus allowing for the [stromal-vascular fraction] cells to serve as the appropriate unit of comparison.” The Clinic asserted that it intends the stromal-vascular fraction to “provide a regenerative function” after the procedure, just as it does before the procedure, so the homologous use criterion is satisfied. In its reply, the FDA disagreed and argued in
On appeal, the Clinic adequately restates its position that the proper benchmark is the basic function of the stromal-vascular fraction in adipose tissue (viz., “regeneration and repair“). We agree. Unlike the same surgical procedure exception, the 361 HCT/P exception and definition of homologous use do not require that an establishment remove an HCT/P from a patient and reimplant “such HCT/P” into the same patient.2 There is no reason, therefore, the court should not compare stem cells to stem cells.
Nevertheless, we agree with the district court that the Clinic did not intend the stromal-vascular fraction solely for homologous use.3 The Clinic has consistently maintained that the stromal-vascular fraction serves a “regenerative function” inside adipose tissue. To determine the Clinic‘s “objective intent” for the stromal-vascular fraction‘s function after the procedure, we must look to the Clinic‘s marketing materials.
The Clinic marketed the stromal-vascular fraction procedure for the treatment of the plethora of conditions we described earlier. The district court was plainly correct that “providing a regenerative function in the donor is [not] the same basic function as restoring cell function, contributing to anti-inflammatory processes, and otherwise treating [a] litany of illnesses in the recipient.” 403 F. Supp. 3d at 1298 (citing Final Rule, 66 Fed. Reg. at 5458 (explaining “promotion of an HCT/P for an unproven therapeutic use, such as curing cancer,” would be a nonhomologous use)). No reasonable fact-finder could disagree.
III. Conclusion
For these reasons, neither the same surgical procedure exception nor the 361 HCT/Ps exception applies to the Clinic‘s surgical practice. The Clinic did not challenge the district court‘s judgment upon any other ground. Accordingly, we AFFIRM the judgment of the district court.
JORDAN, Circuit Judge, concurring:
I concur in full in Judge Ginsburg‘s opinion for the court, and write separately concerning footnote 3, which explains that we can address the “homologous use” issue even though the FDA chose not to brief it on appeal.
It is generally true that an appellate court can affirm on any ground supported by the record. See, e.g., Long v. Comm‘r of IRS, 772 F.3d 670, 674 (11th Cir. 2014). Nevertheless, we have held a number of times that an appellee abandons an alternative ground for affirmance on the merits
There are good reasons for this default rule of abandonment. First, our adversarial system operates on the premise that parties represented by competent counsel “know what is best for them, and are responsible for advancing the facts and argument[s] entitling them to relief.” United States v. Sineneng-Smith, 140 S.Ct. 1575, 1579 (2020) (discussing and applying the party-presentation principle). Second, if we address and decide an issue not raised by the parties, we do so without the critical assistance that focused briefing can provide, and risk depriving the losing side of the opportunity to be heard, which is the essence of due process. See Brinkerhoff-Faris Trust & Sav. Co. v. Hill, 281 U.S. 673, 681 (1930).
Having said this, I recognize that the abandonment rule (sometimes called the waiver rule) is prudential in nature. See Herrera v. Wyoming, 553 U.S. 851, 861 (2008); Day v. McDonough, 547 U.S. 198, 209 (2006). But the Supreme Court has recently told us that deviation from the party-presentation principle is reserved for “extraordinary” circumstances. See Sineneng-Smith, 140 S.Ct. at 1579. I doubt that such circumstances exist here given that the FDA is the quintessential sophisticated litigant—a specialized government agency represented by experienced counsel. But the “homologous use” issue was briefed below, and decided by the district court, see United States v. US Stem Cell Clinic, LLC, 403 F.Supp. 3d 1279, 1296-98 (S.D. Fla. 2019), so it seems that there is at least a somewhat stronger claim for us reaching the issue sua sponte on appeal.
Despite my hesitation about the propriety of sua sponte consideration of merits issues, I do not dissent or concur on different grounds. That is because we have precedent that permits the sua sponte consideration of the “homologous use” issue in the circumstances before us. See Olson v. Superior Pontiac-GMC, Inc., 776 F.2d 265, 266-67 (11th Cir. 1985) (on rehearing). Later this month we are going to hear an en banc case which provides an opportunity to set out definitive guidance as to when it is appropriate for us to consider and decide a merits issue on our own. See United States v. Campbell, 970 F.3d 1342 (11th Cir. 2020), vacated and rehearing en banc granted, 981 F.3d 1014 (11th Cir. 2020). I hope we conclude that sua sponte consideration and resolution of such an issue should be the rare exception, justified only by truly extraordinary circumstances.