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    Respectfully Submitted,

    /s/William Coffield, Esq.Bar No.: 431126

    Counsel for PlaintiffCoffield Law Group, LLP1330 Connecticut Avenue, NWSuite 220Washington, DC 20036(202) 429-4799 (o)(202) 429-3902 (f)[email protected]

    Mitchell Fuerst, Esq.Florida Bar No. 264598

    Andrew S. Ittleman, Esq.Florida Bar No. 802441Fuerst Ittleman, PL1001 Brickell Bay Drive,Suite 2002Miami, FL 33131305-350-5690 (o)305-371-8989 (f)

    Case 1:10-cv-01327-RMC Document 26 Filed 05/25/11 Page 2 of 66

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    IN THE UNITED STATES DISTRICT COURT

    FOR THE DISTRICT OF COLUMBIA

    UNITED STATES OF AMERICA, ) Civil Action No. 1:10-cv-01327-RMC

    )Plaintiff, ))

    v. ))

    REGENERATIVE SCIENCES LLC, )CHRISTOPHER J. CENTENO, M.D. )JOHN R. SCHULTZ, M.D. and )MICHELLE R. CHEEVER, )Individuals, )

    )

    Defendants. )

    MEMORANDUM OF LAW IN OPPOSITION

    TO PLAINTIFFS MOTION FOR SUMMARY JUDGMENT

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    i

    TABLE OF CONTENTS

    TABLE OF CONTENTS ................................................................................................................. i

    TABLE OF AUTHORITIES ......................................................................................................... iii

    INTRODUCTION .......................................................................................................................... 1

    STATUTORY AND REGULATORY FRAMEWORK ................................................................ 1

    I. FEDERALISM AND THE PRACTICE OF MEDICINE ............................................ 1

    II. THE COMMERCE CLAUSE ...................................................................................... 4

    III. THE FDA ...................................................................................................................... 6

    IV. THE HCT/P RULE: 21 C.F.R PART 1271 .................................................................. 6

    V. THE BELMONT REPORT ........................................................................................ 11

    STATEMENT OF FACTS ........................................................................................................... 14

    I. THE DEFENDANTS.................................................................................................. 14

    II. THE REGENEXX PROCEDURE .......................................................................... 15

    III. PROCEDURAL HISTORY........................................................................................ 16

    ARGUMENT ................................................................................................................................ 20

    I. SUMMARY JUDGMENT STANDARD .................................................................. 20

    A. Fed.R.Civ.P. 56 ............................................................................................................20

    B. Summary Judgment is Disfavored When Discovery Has Yet to Commence ..............21

    C. To the extent that the Governments Motion for Summary Judgment fails toaddress the Defendants Affirmative Defenses, the Motion should be denied. ...........21

    II. ADULTERATION ..................................................................................................... 23

    A. Defendants Affirmative Defenses XI and XII ............................................................23

    B. The Defendants Do Not Manufacture a Cultured Cell Product ...................................24

    C. To the extent that the Defendants medical procedure might be subject to FDAjurisdiction, a genuine issue of material fact exists regarding whether it meetsthe criteria for regulation solely under 21 C.F.R. Part 1271. .......................................26

    1. Burden of proof. .......................................................................................................... 26

    2. Minimal Manipulation ................................................................................................ 27

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    ii

    D. The Regenexx Procedure does not substantially affect interstate commerce. ..........32

    E. The Defendants do not adulterate anything. ................................................................35

    III. MISBRANDING ........................................................................................................ 37

    IV. PRACTICE OF MEDICINE....................................................................................... 38

    V. A PERMANENT INJUNCTION SHOULD NOT BE ISSUED IN THIS CASE...... 43

    CONCLUSION ............................................................................................................................. 46

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    iii

    TABLE OF AUTHORITIES

    Federal Cases

    A.L.A. Schechter Poultry Corp. v. United States

    295 U.S. 495 (1935) .................................................................................................................. 34

    *ABA v. FTC430 F.3d 457 (D.C. Cir. 2005) ........................................................................................ 3, 24, 39

    Abdullahi v. Pfizer

    562 F.3d 163, 182 n.13 (2d Cir. 2009) ...................................................................................... 12

    *Anderson v. Liberty Lobby477 U.S. 242 (1986) .................................................................................................................. 20

    Asgrow Seed Co. v. Winterboer

    513 U.S. 179 (1995) .................................................................................................................. 40

    Baker v. United States

    932 F.2d 813 (9th

    Cir. 1991) ................................................................................................ 32, 33

    Barnes v. District of Columbia,242 F.R.D. 113 (D.D.C. 2007) .................................................................................................. 21

    Betancur v. Florida Dep't of Health

    296 Fed. Appx. 761, 763 (11th Cir. 2008) ................................................................................... 2

    Bowen v. Georgetown Univ. Hosp.488 US 204 (1988) ...................................................................................................................... 6

    Breen v. Peters

    474 F.Supp. 2d 1 (D.D.C. 2007) ......................................................................................... 20, 21

    Bynum v. District of Columbia

    215 F.R.D. 1 (D.D.C. 2003) ...................................................................................................... 21

    Camp v. Pitts411 U.S. 138 (1973) .................................................................................................................. 31

    Center for Auto Safety v. FHA

    956 F.2d 309 (D.C. Cir. 1992) (Thomas, J.) ............................................................................. 31

    Chaney v. Heckler

    718 F.2d 1174 (D.C. Cir. 1984) ................................................................................................. 2

    Consumer Federation of America and Public Citizen v. HHS

    83 F.3d 1497 (D.C. Cir. 1996) ............................................................................................ 30, 31

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    Corson & Gruman Co. v. NLRB

    899 F.2d 47 (D.C. Cir. 1990) .................................................................................................... 23

    FDIC v. Meyer

    510 U.S. 471 (1994) .................................................................................................................. 40

    Federal Election Commission v. Rose806 F.2d 1081 (D.C. Cir. 1986) ................................................................................................ 41

    *Gonzales v. Raich

    545 U.S. 1 (2005) ........................................................................................................ 3, 5, 34, 35

    *Gonzalez v. Oregon

    546 U.S. 243, (2006) ................................................................................................. 2, 24, 39, 44

    Heckler v. Chaney

    470 U.S. 821 (1985) .................................................................................................................... 2

    Herbert v. National Academy of Sciences974 F.2d 192 (D.C. Cir. 1992) .................................................................................................. 23

    Hillsborough County v. Automated Medical Laboratories, Inc.

    471 U.S. 707 (1985) .................................................................................................................... 2

    Holcomb v. Powell

    433 F.3d 889 (D.C. Cir. 2006) ................................................................................................. 20

    James Everards Breweries v. Day

    265 U.S. 545 (1924) ................................................................................................................... 3

    Jones v. Rath Packing Co.430 U.S. 519 (1977). ................................................................................................................... 2

    Jones v. United States,529 U.S. 848 (2000) .......................................................................................................... 3, 5, 33

    Lambert v. Yellowley

    272 U.S. 581 (1926) .................................................................................................................... 3

    Linder v. United States

    268 U.S. 5 (1925) ................................................................................................................ 25, 44

    Mar-Jac Poultry Inc. v. Katz,2011 U.S. Dist. LEXIS 33582 (D.D.C. 2011) (Collyer, J.) ...................................................... 20

    Medtronic Inc. v. Lohr

    518 U.S. 470 (1996) ................................................................................................................ 1, 2

    Metropolitan Life Ins. Co. v. Massachusetts

    471 U.S. 724 (1985) .................................................................................................................... 2

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    Motor Vehicles Manufs Assoc. v. State Farm, 463 U.S. 29 (1983) ............................................. 41

    National League of Cities v. Usery426 U.S. 833 (1976) .................................................................................................................... 3

    *Natural Resources Defense Council v. EPA

    25 F.3d 1063 (D.C. Cir. 1994) .................................................................................................. 22

    New York v. United States505 U.S. 144 (1992) .................................................................................................................... 4

    Nixon v. Freeman

    670 F.2d 346 (D.C. Cir. 1982) .................................................................................................. 21

    Pennsylvania Elec. Co. v. FERC

    11 F.3d 207 (D.C. Cir. 1993) .................................................................................................... 23

    Railway Labor Exec. Assn v. Natl Mediation Bd.

    29 F.3d 655 (D.C. Cir. 1994) (en banc) .................................................................................... 39

    Ray v. Atlantic Richfield Co.

    435 U.S. 151 (1978) .................................................................................................................... 2

    RB&W Manufacturing v. Buford2004 U.S. Dist. LEXIS 22512 (N.D. Ill. 2004) ......................................................................... 22

    Rice v. Santa Fe Elevator Corp.331 U.S. 218 (1947) .................................................................................................................... 2

    Ruff v. Partners Liquidating Trust

    2001 U.S. Dist. LEXIS 11683 (N.D. Ill. 2001) ......................................................................... 22

    Rush Prudential HMO, Inc. v. Moran

    536 U.S. 355 (2002) .................................................................................................................. 40

    *Scarborough v. Harvey

    493 F.Supp. 2d 1 (D.D.C. 2007) ............................................................................................... 21

    United States v. Article of Food Consisting of 345-50 Pound Bags

    622 F.2d 768 (5th Cir. 1980) ...................................................................................................... 27

    United States v. Bass,

    404 U.S. 336 (1971) .................................................................................................................... 3United States v. Baxter Healthcare

    712 F.Supp. 1352 (D.N.J. 1989) ............................................................................................... 44

    United States v. Dianovin Pharmaceuticals

    475 F.2d 100 (1st Cir. 1973) ................................................................................................ 32, 33

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    United States v. Dotterweich320 U.S. 277 (1943). ............................................................................................................. 6, 34

    *United States v. Evers

    643 F.2d 1043 (5th

    Cir. 1981) .............................................................................................. 37, 38

    *United States v. Lopez514 U.S. 549 (1995) ................................................................................................................ 4, 5

    United States v. Morrison529 U.S. 598 (2000) ................................................................................................................ 4, 5

    United States v. Oakland Cannabis Buyers Cooperative532 U.S. 483 (2001) .................................................................................................................... 3

    United States v. Vidal-Cruz

    67 F.Supp.2d 35, (D.P.R. 1999) ................................................................................................ 34

    United States v. W.T. Grant Co.345 U.S. 629, 633 (1953) .................................................................................................... 43, 44

    United States v. Walsh331 U.S. 432 (1947) .............................................................................................................. 6, 34

    Watson v. State of Maryland,218 U.S. 173 (1910) .................................................................................................................... 2

    Whitman v. Am. Trucking Assns

    531 U.S. 457 (2001) .................................................................................................................... 3

    Constitutional Provisions

    U.S. Const., Art.1, 8 ..................................................................................................................... 4

    Federal Statutes

    18 U.S.C. 922(q)(1)(A) ................................................................................................................ 5

    21 U.S.C. 321(g)(1)(B) .............................................................................................................. 25

    21 U.S.C. 331(k) ........................................................................................................................ 32

    21 U.S.C. 333(e) .......................................................................................................................... 4

    *21 U.S.C. 353a ............................................................................................................. 24, 36, 37

    21 U.S.C. 812(c) .......................................................................................................................... 3

    42 U.S.C. 262(a) .......................................................................................................................... 6

    State Statutes

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    *C.R.S. 12-36-106(1) ................................................................................................................. 25

    Federal Regulations

    21 C.F.R. 1271.10(a)........................................................................................................ 9, 26, 28

    21 C.F.R. 601.41 ........................................................................................................................ 11

    Federal Rules

    Fed. R. Civ. P. 56 .......................................................................................................................... 21

    Fed.R.Civ.P. 56(a) ........................................................................................................................ 27

    Miscellaneous

    *Belmont Report, at p.3 fn ............................................................................................................ 14

    44 Fed. Reg. 23192 (April 18, 1979) ............................................................................................ 12

    60 Fed.Reg. 36,808 (July 18, 1995) ................................................................................................ 7

    61 Fed.Reg. 26523 .......................................................................................................................... 9

    61 Fed.Reg. 9,185 (Mar. 7, 1996) ................................................................................................... 8

    63 Fed.Reg. 26,744 (May 14, 1998) ............................................................................................... 7

    63 Fed.Reg. 26,745 (May 14, 1998) ............................................................................................. 27

    66 Fed.Reg. 5,457 ......................................................................................................................... 28

    9 Oxford English Dictionary 546 (2d ed. 1989) ........................................................................... 26

    American Medical Association,What Constitutes the Practice of Medicine?, L(5)J. Am. Med. Assoc. 368, 368-369 (Feb. 1,1908) .................................................................................................................................... 25, 40

    Application of Current Statutory Authorities to Human Somatic CellTherapy Products and Gene Therapy Products,58 Fed.Reg. 53,248 (December 13, 1993) .............................................................................. 7, 8

    Bedi, A., B.T. Feeley, and R.J. Williams,3rd,Management of articular cartilage defects of the knee.

    J Bone Joint Surg Am, 2010. 92(4) ............................................................................................. 7

    *Brief for the Petitioners, Gonzales v. Oregon, 546 U.S. 243 (2006),available at 2005 U.S. S.Ct. Briefs LEXIS 354 ............................................................ 25, 26, 40

    Cunha, B.A., C.M. Sibley, and A.M. Ristuccia,Doxycycline. Ther Drug Monit, 1982. 4(2): p. 115-35.............................................................. 32

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    Dr. Alvan Feinstein & Dr. Jeffrey Lichtenstein,Medical Ethics and the Architecture of Clinical Research (1979) ........................................... 13

    Dr. David Sabiston,The Boundaries Between Biomedical Research Involving Human Subjects

    and the Accepted or Routine Practice of Medicine

    with Particular Emphasis on Innovation in the Practice of Surgery (1979) ............................ 13

    *Dr. Robert Levine,The Boundaries Between Biomedical or Behavioral Research and the Accepted and Routine

    Practice of Medicine (July 14, 1975) ........................................................................................ 13

    Exec. Order No. 12612 (Oct. 26, 1987) ........................................................................................ 41

    Exec. Order No. 12866 (Sept. 30, 1993)....................................................................................... 41

    Exec. Order No. 12988 (Feb. 5, 1996) .......................................................................................... 41

    Exec. Order No. 13083 (May 14, 1998) ....................................................................................... 41

    Exec. Order No. 13132 (Aug. 4, 1999) ......................................................................................... 41

    Exec. Order No. 13450 (Nov. 13, 2007) ....................................................................................... 41

    Exec. Order No. 13563 (Jan. 21, 2011) ........................................................................................ 41

    Guidance on Applications for Products Comprised of LivingAutologous Cells ManipulatedEx Vivo andIntended for Structural Repair or Reconstruction. 61 Fed.Reg. 26,523 (May 31, 1996) .......... 7

    John Robertson, Esq.,Legal Implications of the Boundaries BetweenBiomedical Research Involving Human Subjects and the Accepted or Routine Practice of

    Medicine (Dec. 31, 1975) .......................................................................................................... 13

    National Research Act, Pub.L.93-348, 88 Stat. 342. .................................................................... 11

    Proposed Approach to Regulation of Cellular and Tissue Based Products,62 Fed.Reg. 9,721 (Feb. 28, 1997) .............................................................................................. 9

    *Summary for Basis of Approval,Carticel, BLA Ref. No. 96-0372, (August, 1997) ....................................................................... 7

    *The Belmont Report:

    Ethical Principles and Guidelines for the Protection of Human Subjects of Research, (1979) 12

    The Random House Dictionary of the English Language 1194 (2d ed. 1987) ............................. 26

    Webster's Third New International Dictionary 1402 (1966) ........................................................ 26

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    1

    INTRODUCTION

    The Defendants in this case treat the musculoskeletal injuries of their patients at the

    Centeno Schultz Clinic in Broomfield, Colorado using, inter alia, a procedure called the

    Regenexx Procedure. In its Motion for Summary Judgment, which it filed before the start of

    discovery, the Government argues that the Regenexx Procedure constitutes the manufacturing,

    holding for sale, and distribution of an unapproved injectable biological drug product which it

    refers to as a cultured cell product. As will be detailed in this Opposition, numerous genuine

    issues of material fact exist which must lead to the denial of the Governments motion.

    STATUTORY AND REGULATORY FRAMEWORK

    The Defendants and the Government are of very different opinions as to what the

    Regenexx Procedure is. The Defendants assert that the Procedure constitutes the practice of

    medicine as defined by the law of the State of Colorado and that the FDA lacks jurisdiction to

    regulate it. The Government asserts that the Procedure constitutes a biologic drug lacking FDA

    approval in violation of federal law. These differences are embedded in virtually every aspect of

    this lawsuit and must be understood in their appropriate Constitutional context.

    I. FEDERALISM AND THE PRACTICE OF MEDICINEThe United States Supreme Court has interpreted Federalism to require an assumption

    that the historic police powers of the States were not to be superseded by the Federal Act unless

    that was the clear and manifest purpose of Congress. Medtronic Inc. v. Lohr, 518 U.S. 470, 485

    (1996). As stated by the Court, [t]hroughout our history the several States have exercised their

    police powers to protect the health and safety of their citizens. Because these are primarily, and

    historicallymatter[s] of local concern, the States traditionally have had great latitude under

    their police powers to legislate as to the protection of the lives, limbs, health, comfort, and quiet

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    of all persons. Id., at 474; quoting Hillsborough County v. Automated Medical Laboratories,

    Inc., 471 U.S. 707, 719 (1985); Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 756

    (1985).

    It is well settled that the practice of medicine is left for the States to regulate; see e.g.

    Betancur v. Florida Dep't of Health, 296 Fed. Appx. 761, 763 (11th

    Cir. 2008), [s]tates retain

    the police power to regulate professions, such as the practice of medicine. citingWatson v. State

    of Maryland, 218 U.S. 173, 176 (1910). As stated by the Court in Chaney v. Heckler, 718 F.2d

    1174, 1180 (D.C. Cir. 1984),1 Congress exempted the practice of medicine from the Act so as

    not to limit a physicians ability to treat his patients.

    2

    Of course, Congress may still regulate the practice of medicine (or certain aspects of it) if

    it chooses to and if such regulation is consistent with its powers under the Commerce Clause. As

    stated by the Court in Gonzalez v. Oregon, 546 U.S. 243, 271 (2006), [e]ven though regulation

    of health and safety is primarily, and historically, a matter of local concern, there is no question

    that the Federal Government can set uniform national standards in these areas. (internal

    citations omitted). However, in cases where a States exercise of its police power is challenged

    under the Supremacy Clause, we start with the assumption that the historic police powers of the

    States were not to be superseded by the Federal Act unless that was the clear and manifest

    purpose of Congress.Ray v. Atlantic Richfield Co., 435 U.S. 151, 157 (1978); quoting,Rice v.

    Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947); Jones v. Rath Packing Co., 430 U.S. 519,

    525 (1977). In other words, we have wisely decided that unless Congress conveys its purpose

    1 Overruled on other grounds as stated in Heckler v. Chaney, 470 U.S. 821 (1985).

    2 The FDA has itself recognized this principle: Throughout the debate leading to enactment [of the Act], there wererepeated statements that Congress did not intend the Food and Drug Administration to interfere with medicalpractice and references to the understanding that the bill did not purport to regulate the practice of medicine asbetween the physician and the patient.Id., at n.16; quoting 37 Fed.Reg. at 16503.

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    clearly, it will not be deemed to have significantly changed the federal-state-balance. Jones v.

    United States, 529 U.S. 848, 859 (2000) (Stevens, J., concurring); quoting, United States v. Bass,

    404 U.S. 336, 349 (1971).3

    When Congress chooses to regulate the practice of medicine, it does so explicitly. For

    instance, during Prohibition, Congress enacted Section 2 of the Prohibition Act, which prevented

    physicians from prescribing intoxicating malt liquors for medicinal purposes. The Supreme

    Court upheld the statute as a lawful exercise of Congresss power under the Eighteenth

    Amendment to the Constitution; James Everards Breweries v. Day, 265 U.S. 545 (1924); see

    also, Lambert v. Yellowley, 272 U.S. 581 (1926)

    Congress has also regulated the practice of medicine through the Controlled Substances

    Act (CSA). For instance, under the CSA, Congress classified marijuana as a Schedule I drug

    because of its high potential for abuse, lack of any accepted medical use, and absence of any

    accepted safety for use in medically supervised treatment. Gonzales v. Raich, 545 U.S. 1, 14

    (2005); citing 21 U.S.C. 812(c). Thus, [b]y classifying marijuana as a Schedule I drug, as

    opposed to listing it on a lesser schedule, the manufacture, distribution, or possession of

    marijuana became a criminal offense...Id; see also, United States v. Oakland Cannabis Buyers

    Cooperative, 532 U.S. 483, 490 (2001). The Supreme Court has upheld this law as necessary for

    the regulation of interstate commerce, even though the law effectively preempted express state

    law determinations contrary to the result which has commended itself to the collective wisdom of

    Congress.Raich, 545 U.S. at 41; quoting National League of Cities v. Usery, 426 U.S. 833, 840

    (1976).

    3Congress, as articulated by Justice Scalia, does not, one might say, hide elephants in mouseholes. Whitman v.

    Am. Trucking Assns, 531 U.S. 457, 468 (2001); see also,ABA v. FTC, 430 F.3d 457, 467 (D.C. Cir. 2005).

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    Likewise, Congress has regulated physicians use of human growth hormone to treat

    patients by criminalizing whoever knowingly distributes, or possesses with intent to distribute,

    human growth hormone for any use in humans other than the treatment of a disease or other

    recognized medical condition 21 U.S.C. 333(e). Thus, even though human growth hormone

    is not a scheduled drug like marijuana, Congress has restricted physicians ability to use it on

    their patients and has thereby regulated the practice of medicine in the clearest possible way.

    II. THE COMMERCE CLAUSEAlthough Congresss authority is indisputably expansive, it is by no means total. As

    articulated by the Supreme Court, [t]he Constitution creates a Federal Government of

    enumerated powers. United States v. Lopez, 514 U.S. 549, 552-53 (1995); citing U.S. Const.,

    Art.1, 8. Deeply ingrained in our Constitutional history is the principle that the Constitution

    created a Federal Government of limited powers while reserving a generalized police power to

    the States is deeply ingrained in our constitutional history. United States v. Morrison, 529 U.S.

    598, 618, n.8 (2000); quoting New York v. United States, 505 U.S. 144, 156-157 (1992).

    The United States Supreme Court has outlined three broad categories of activity that

    Congress may regulate under its commerce power. Morrison, 529 U.S. at 608-609; quoting

    Lopez, 514 U.S. at 558. These three broad categories are (1) the use of the channels of

    interstate commerce, (2) the instrumentalities of interstate commerce, or persons or things in

    interstate commerce, even though the threat may come only from intrastate activities, and (3)

    those activities having a substantial relation to interstate commerce, i.e. those activities that

    substantially affect interstate commerce.Id. (internal citations and quotations omitted).

    Modern Supreme Court jurisprudence has set the outer limits of Congresss authority

    under the Commerce Clause, especially as it relates to the regulation of intrastate activities. In

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    Lopez, the Court considered the constitutionality of the Gun-Free School Zones Act of 1990,

    which made it a federal offense for any individual knowingly to possess a firearm at a place that

    the individual knows, or has reasonable cause to believe, is a school zone. Lopez, 514 U.S. at

    551; quoting 18 U.S.C. 922(q)(1)(A). Before the Supreme Court, the Government argued that

    the Act was a proper exercise of Congresss Commerce Clause authority; Id., at 564. Noting that

    the Constitution specifically withheld from Congress a plenary police power that would

    authorize enactment of every type of legislation, the Court rejected the Governments

    arguments; Id., at 566.4 The Court thus ruled that the Act was beyond Congresss Commerce

    Clause power.

    5

    Conversely, in ruling that the Federal Government had jurisdiction to regulate marijuana

    lawfully obtained for medical purposes under a new California-state law, the Court in Raich

    reasoned that, in enacting the CSA, Congress was particularly concerned with the need to

    prevent the diversion of drugs from legitimate to illicit channels. Raich, 545 U.S. at 16. Thus,

    even though the marijuana at issue in Raich was lawfully possessed under California law, the

    Court ruled that Congress nevertheless had the power to regulate it due to the impact that it could

    have on the interstate marijuana market.

    6

    4 To uphold the Governments contentions here, we would have to pile inference upon inference in a manner thatwould bid fair to convert congressional authority under the Commerce Clause to a general police power of the sortretained by the statesTo do so would require us to conclude that the Constitutions enumeration of powers does notpresuppose something not enumeratedand that there never will be a distinction between what is truly national andwhat is truly local. This we are unwilling to do.Id., at 567; (internal citations omitted).5See also, United States v. Morrison, 529 U.S. 598 (2000);Jones v. United States, 529 U.S. 848 (2000).

    6 See, e.g. Id. at 34 (Scalia, J., concurring) (Not only is it impossible to distinguish controlled substances

    manufactured and distributed intrastate from controlled substances manufactured and distributed interstate, but ithardly makes sense to speak in such terms. Drugs like marijuana are fungible commodities. As the Court explains,marijuana that is grown at home and possessed for personal use is never more than an instant from the interstatemarket--and this is so whether or not the possession is for medicinal use or lawful use under the laws of a particularState.)

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    III. THE FDALike all other Federal governmental agencies, the FDAs power to promulgate

    legislative regulations is limited to the authority delegated by Congress. Bowen v. Georgetown

    Univ. Hosp., 488 US 204, 208 (1988).

    The Government points to two sources of authority for the FDAs regulation of the

    Defendants medical practice, the Federal Food, Drug and Cosmetic Act (FDCA) and Public

    Health Service Act (PHSA). The FDCA rests upon the constitutional power resident in

    Congress to regulate interstate commerce. To the end that the public health and safety might be

    advanced, it seeks to keep interstate channels free from deleterious, adulterated and misbranded

    articles of the specified types. It is in that interstate setting that the various sections of the Act

    must be viewed. United States v. Walsh, 331 U.S. 432, 434 (1947); citing United States v.

    Dotterweich, 320 U.S. 277, 280 (1943). The PHSA delegates to the FDA as follows: The

    Surgeon General, with the approval of the Secretary, is authorized to make and enforce such

    regulations as in his judgment are necessary to prevent the introduction, transmission, or spread

    of communicable diseases from foreign countries into the States or possessions, or from one

    State or possession into any other State or possession.42 U.S.C. 262(a). Pursuant to that

    authority, the FDA created the chapter of regulations at issue in this case, 21 C.F.R. 1271.1, et

    seq.

    IV. THE HCT/P RULE: 21 C.F.R PART 1271In the Governments Motion for Summary Judgment, it describes that prior to 1997,

    FDA had regulated human cellular and tissue based products on a case-by-case basis,

    responding as the agency determined appropriate to the particular characteristics of and concerns

    raised by each type of product. Motion for Summary Judgment, at p.6; citing, 63 Fed.Reg.

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    26744 (May 14, 1998) (Proposed Registration Rule); Proposed Approach, at 6. Indeed, prior to

    1997, FDA had regulated human cellular and tissue based products only pursuant to informal

    guidance documents.7

    In 1995, Genzyme Tissue Repair (Genzyme) began marketing Carticel based upon

    indications from the agency that, being an autologous cell therapy, Carticel would not be

    regulated. Summary for Basis of Approval, Carticel, BLA Ref. No. 96-0372, p.1 (August,

    1997).

    8However, later that same year, CBER

    9

    On July 18, 1995, FDA announced that it would hold a public hearing on November 16-

    17, 1995, regarding Products Comprised of Living Autologous Cells Manipulated ex vivo and

    Intended for Implantation for Structural Repair or Reconstruction. 60 Fed.Reg. 36808.

    Thereafter, a hearing was held and attended by a variety of public and private officials, including

    a collection of Genzyme representatives. As described by the FDA, the Hearing had 8 panels

    notified [Genzyme] that CBER considered

    Carticel to be a somatic cell therapy product as defined in the October 14, 1993 Federal

    Register notice concerning human somatic cell and gene therapy products and advised

    [Genzyme] that marketing approval would be required. Id. Consequently, Genzyme submitted

    a request for product designation to clarify agency jurisdiction [and] the agency notified

    [Genzyme] that it could continue to market Carticel while jurisdiction was under consideration

    and policy under development.Id.

    7 See, e.g. Points to Consider in Human Somatic Cell Therapy and Gene Therapy, 56 Fed.Reg. 61022 (November

    29, 1991); Application of Current Statutory Authorities to Human Somatic Cell Therapy Products and GeneTherapy Products, 58 Fed.Reg. 53248 (December 13, 1993); Guidance on Applications for Products Comprised ofLiving Autologous Cells Manipulated Ex Vivo and Intended for Structural Repair or Reconstruction. 61 Fed.Reg.26523 (May 31, 1996).8Carticel is an autologous cell culture product wherein a surgeon takes a cartilage biopsy from a patient and sends

    the biopsy to a central Genzyme laboratory where it is cultured for several months before being shipped back to thetreating physician for surgical re-implantation. Bedi, A., B.T. Feeley, and R.J. Williams, 3rd, Management ofarticular cartilage defects of the knee. J Bone Joint Surg Am, 2010. 92(4): p. 994-1009.9 CBER is FDAs Center for Biologics Evaluation and Research.

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    with 24 speakers, and there was general consensus that the establishment, the production process

    and the products should be of the highest quality. The speakers and attendees also agreed that

    MAS cell products should benefit the patient, but there was little consensus on the appropriate

    mechanism that should be used to show this benefit. Docket No.95N-0200.10

    On March 7, 1996, the FDA announced that it would hold an FDA Commissioners

    roundtable public meeting on the regulatory approach to products comprised of living autologous

    cells manipulated ex vivo and intended for structural repair or reconstruction. 61 Fed.Reg.

    9185. The roundtable, to be held on March 15, 1996, was to be a continuation of the public

    hearing held on November 16-17, 1995, and the participants were to discuss FDAs current

    thinking on the regulatory approach of these products with respect to clinical and manufacturing

    issues, and to get input on the agencys tentative approach. Id. At that roundtable, the FDA

    publicly announced for the first time that FDAs Product Jurisdiction Officer had chosen CBER

    to be the lead center for the regulation of MAS cell products; 1995-N-0200 000814. At that

    roundtable, the FDA also publicly announced for the first time as follows:

    The record of the

    hearing was kept open until February 16, 1996.

    Burdensome, long term clinical studies should be avoidedwhenever possible and the regulation of the manufacturing processshould be based on sound scientific principles and not [be]excessive. In this spirit, I believe a new approach is warranted. Webelieve at the agency that we can accomplish this best not with thetraditional PLA-ELA requirements, but rather with a newapproach, with a biologics license application.

    10 The basic nomenclature of HCT/Ps changed on several occasions during the 1990s. At first, the FDA referred to

    these as somatic cell therapy, i.e. the prevention, treatment, cure, diagnosis, or mitigation of disease or injuries inhumans by the administration of autologous, allogeneic, or xenogeneic cells that have been manipulated or alteredex vivo. Application of Current Statutory Authorities to Human Somatic Cell Therapy Products and Gene TherapyProducts, 58 Fed.Reg. 53248. Later, the FDA referred to autologous HCT/Ps as MAS cells or MAS cell products,i.e. living autologous cells manipulated ex vivo and intended for structural repair or reconstruction. Guidance onApplications for Products Comprised of Living Autologous Cells Manipulated Ex Vivo and Intended for StructuralRepair or Reconstruction, Docket No. 95N-0200. Today, these are all referred to simply as HCT/Ps.

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    1995-N-0200 000817. Although the FDA stressed at the hearing that the regulation of this field

    ought not hinder its development, the FDAs announcement was nevertheless met with a

    subdued reactiondue in part to the fact that a number of people [being] in shock at the overall

    proposal that FDA has put forward 1995-N-0200 000853.11

    Next, FDA issued its Guidance on Applications for Products Comprised of Living

    Autologous Cells ManipulatedEx Vivo and Intended for Structural Repair or Reconstruction on

    May 31, 1996 (61 Fed.Reg. 26523) and its Proposed Approach to Regulation of Cellular and

    Tissue-Based Products (Proposed Approach) on February 28, 1997 (62 Fed.Reg. 9721). In the

    Proposed Approach, the FDA set forth a plan wherein, purportedly, tissues would be regulated

    with a tiered approach based on risk and the necessity for FDA review based on the following

    five overarching public health and regulatory concerns:

    A) How can the transmission of communicable diseases be prevented?

    B) What processing controls are necessary, e.g. to prevent contamination thatcould result in an unsafe or ineffective product, and to preserve integrity andfunction so that products will work as they are intended?

    C) How can clinical safety and effectiveness be assured?

    D) What labeling is necessary, and what kind of promotion is permissible forproper use of the product?

    E) How can the FDA best monitor and communicate with the cell and tissueindustry?

    Proposed Approach, at p.9. The terms of the proposed approach would ultimately become

    codified at 21 C.F.R. 1271.10(a) which provides, inter alia, that HCT/Ps be minimally

    manipulated in order to be regulated solely under section 361 of the PHS ACT and the

    regulations in Part 1271.

    11 The administrative record produced by the Government in this case exceeds 10,000 pages and each page has oneof five possible prefixes: DNR, GTP, REG, FDA 91N-0248, and 1995-N-0200.

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    On March 17, 1997, the FDA held a public hearing regarding its Proposed Approach; see

    PA 000139 PA 000406. During that hearing, the participants discussed the issue of minimal

    manipulation, and Mary Pendergast, Esq. on behalf of FDA, announced that it was the FDAs

    plan to keep downgrading things and pushing them into the M&M, not the upgraded M&M

    with peanuts category, the more than minimally manipulated. PA 000319. In other words,

    according to Ms. Pendergast, the FDA would downregulate tissue processing techniques over

    time as it learned more about them and could determine that such processing did not alter the

    relevant biological characteristics of the tissues being processed.

    However, the FDA has never downregulated a stem cell process, in spite of the fact that

    studies supporting the safety and efficacy of processes are widely available and have been made

    available to FDA on numerous occasions. The reason why no downregulation has ever occurred

    is uncertain at this time, but may be revealed by the following conversation between Ms. Lisa

    Raines, on behalf of Genzyme, and Mary Pendergast, Esq., on behalf of FDA on the record at

    FDA headquarters on March 17, 1997:

    [Ms. Raines]: Lisa Raines. I just wanted to comment on the issueof the possibility of the possible downregulation of more thanminimally manipulated products for which premarket approval isrequired and just suggest that that is a potentially very difficultthing to do if you want to preserve the incentives for innovation.

    If you require a company to collect the clinical data, eitherbefore or after approval, at great expense, to allow competitors intothat market without imposing on them a comparable responsibilityand obligation, just as a policy matter, creates a great incentive tobe the second guy instead of the first guy.

    If you dont have first guys, you wont have second guys.So there really is a risk. I mention it in particular in this areabecause products that FDA considers to be more than minimalmanipulated, those manipulations may not be consideredpatentable. Certainly, in the area in which my company is working,

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    we do not have any intellectual property other than some tradesecrecy with respect to our processes.

    So, if there is no patent protection, if there is no FDAexclusivity as there is under the Food, Drug and Cosmetic Act for a

    period of five years for the first indication for a new drug, if youeliminate all of that in this area, you create a significant financialdisincentive for companies to develop these therapies.

    [Ms. Pendergast]: A point well taken. That is why we need to hearback from you as to what you want. We are very curious as towhich way do you want it. Do you want to preserve yourconfidential commercial information and use that as a tool, amarketing tool, and a market entry barrier or do you want theAgency to be downclassifying as soon as it can things that (sic),once we get a handle on their impact on the cell, the tissue and the

    body.

    PA 000324-000325.

    Carticel was approved on August 22, 1997 pursuant to 21 C.F.R. 601.40-46, which

    permit the use of certain surrogate endpoints or an effect on a clinical endpoint other than

    survival or irreversible morbidity as bases for approvals of products intended for serious or life-

    threatening (sic) illnesses or conditions. 21 C.F.R. 601.41; Exhibit 1, at p.19.12

    V. THE BELMONT REPORT

    As of the date

    of Carticels approval, Genzyme had scant clinical data supporting its approval; see e.g.

    Affidavit of Dr. Michael Freeman, at p.13, 8u. Since Carticels 1997 approval, no other stem

    cell therapy has been approved by the FDA.

    In 1974, Congress enacted the National Research Act, which established the National

    Commission for the Protection of Human Subjects of Biomedical and Behavioral Research; see

    National Research Act, Pub.L.93-348, 88 Stat. 342.

    12 See, Affidavit of Dr. Michael Freeman, attached hereto as Exhibit 2, at 8u (No medical training is necessary torealize that a common knee cartilage injury is unlikely to be fatal.)

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    One of the charges to the Commission was to identify the basicethical principles that should underlie the conduct of biomedicaland behavioral research involving human subjects and to developguidelines which should be followed to assure that such research isconducted in accordance with those principles. In carrying out the

    above, the Commission was directed to consider: (i) the boundariesbetween biomedical and behavioral research and the accepted androutine practice of medicine, (ii) the role of assessment of risk-benefit criteria in the determination of the appropriateness ofresearch involving human subjects, (iii) appropriate guidelines forthe selection of human subjects for participation in such researchand (iv) the nature and definition of informed consent in variousresearch settings.

    See,http://ohsr.od.nih.gov/guidelines/belmont.html

    In 1979, the Commission carried out this charge when it issued The Belmont Report:

    Ethical Principles and Guidelines for the Protection of Human Subjects of Research, (1979)

    (the Belmont Report).13 As described by the National Institute of Health, the Belmont Report

    was the outgrowth of an intensive four-day period of discussions that were held in February

    1976 at the Smithsonian Institution's Belmont Conference Center supplemented by the monthly

    deliberations of the Commission that were held over a period of nearly four years.14

    13 A copy of the complete Belmont Report is attached hereto as Exhibit 3.

    As

    described by Commission Chairman Kenneth J. Ryan, M.D. in his letters dated September 30,

    1978 to, inter alia, President Carter, it was the recommendation of the Commission that the

    Belmont Report be adopted in its entirety as a statement of departmental policy on the conduct of

    research involving human subjects. Exhibit 3, pp. 5, 7, 9, and 11 of 40. The Belmont Report

    was published in the Federal Register at 44 Fed. Reg. 23192 (April 18, 1979), and was designed

    to provide federal employees, members of Institutional Review Boards and scientific

    14See,http://ohsr.od.nih.gov/guidelines/belmont.html; see alsoAbdullahi v. Pfizer, 562 F.3d 163, 182 n.13 (2d Cir.2009).

    Case 1:10-cv-01327-RMC Document 26 Filed 05/25/11 Page 23 of 66

    http://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.htmlhttp://ohsr.od.nih.gov/guidelines/belmont.html
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    investigators with common points of reference for the analysis of ethical issues in human

    experimentation.Id.15

    The Belmont Report is relevant to the Governments Motion for Summary Judgment for

    two interrelated reasons. First, as detailed later in this brief, the Belmont Report may assist the

    Court in evaluating as an issue of material fact whether the Regenexx Procedure constitutes the

    practice of medicine. As described in Dr. Centenos attached affidavit (Exhibit 5), Dr. Centeno

    developed the Regenexx Procedure consistent with the terms of the Belmont Report; Centeno

    Affidavit, at pp. 67-71. The Belmont Report may thus assist the Court in evaluating whether the

    Regenexx Procedure is the practice of medicine or something else entirely; see e.g., Levine, 1-

    6 (If a physician proceeds in his interaction with a patient to bring what he considers to be the

    best available technique and technology to bear on the problems of that patient with the intent of

    doing the most possible good for that patient, this may be considered the pure practice of

    medicine.)

    Similarly, the Belmont Report is relevant to the Governments request for a permanent

    injunction which is based, inter alia, on the allegation that the Defendants are somehow

    experimenting on their patients; see Governments Motion for Summary Judgment, at pp.38-

    39. Indeed, the Belmont Report provides the Court with a tutorial regarding what constitutes the

    practice of medicine, what constitutes medical research, what constitutes a combination of the

    15 Published contemporaneously with the Belmont Report was a two-volume Appendix which exceeds 600 pages

    and contains the reports of experts and specialists who assisted the Commission in fulfillingits charge. Id.Although we do not attach the entire appendix to this Brief, we do attach as Exhibit 4 the Appendixs Table ofContents, as well as a copy of the following individual reports: Dr. Robert Levine, The Boundaries BetweenBiomedical or Behavioral Research and the Accepted and Routine Practice of Medicine (July 14, 1975); Dr. AlvanFeinstein & Dr. Jeffrey Lichtenstein, Medical Ethics and the Architecture of Clinical Research (1979); JohnRobertson, Esq.,Legal Implications of the Boundaries Between Biomedical Research Involving Human Subjects andthe Accepted or Routine Practice of Medicine (Dec. 31, 1975); Dr. David Sabiston, The Boundaries BetweenBiomedical Research Involving Human Subjectsand the Accepted or Routine Practice of Medicine with Particular

    Emphasis on Innovation in the Practice of Surgery (1979).

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    two, and how the physician should govern himself in each of those circumstances; see e.g. see

    e.g. Belmont Report, at p.3 fn. (The fact that some forms of practice have elements other than

    immediate benefit to the individual receiving an intervention, however, should not confuse the

    general distinction between research and practice. Even when a procedure applied in practice

    may benefit some other person, it remains an intervention designed to enhance the wellbeing of a

    particular individual or groups of individuals; thus, it is practice and need not be reviewed as

    research.)

    STATEMENT OF FACTS

    I. THE DEFENDANTSThe Defendants in this case are Regenerative Sciences LLC (Regenerative), Dr.

    Christopher Centeno, Dr. John Schultz, and Ms. Michelle Cheever. Together, the Defendants

    treat the musculoskeletal injuries of their patients at the Centeno Schultz Clinic in Broomfield,

    Colorado using, inter alia, a procedure called the Regenexx Procedure. Counterclaims, 3.

    This history and corporate structure of Regenerative and the Centeno Schultz Clinic is

    detailed in the attached affidavits of Gus Michaels, Esq. and Dr. Centeno. As Mr. Michaels

    describes, Dr. Centeno first formed Christopher J. Centeno, M.D., P.C. d/b/a The Centeno

    Clinic in 1999. The practice was incorporated as Centeno-Schultz, Inc. in 2005 after Dr. John

    Schultz joined the practice. The professional corporations name was changed to Centeno

    Schultz, P.C. in 2007. Michaels Affidavit, at 3. Today, Drs. Centeno and Schultz jointly own

    the Centeno Schultz Clinic and are majority shareholders of Regenerative. Counterclaims 4.

    The laboratory and clinic are related companies and operate as one business. The

    laboratory exclusively services the Centeno Schultz Clinic and the Clinics patients and does so

    exclusively at the direction of Drs. Centeno and Schultz. Regenerative and the Clinic have

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    overlapping management structures. Michaels Affidavit, at 8. As Mr. Michaels describes,

    Dr. Schultz is a board member of both entities, and Dr. Centeno is the medical director for both

    entities.Id. Further, Regenerative and the Clinic have been separate, but very closely related

    Colorado entities since [Regeneratives] formation in 2005. Id. As Mr. Michaels further

    describes, the relationship between Regenerative and the Clinic is commonplace for medical

    practices in the State of Colorado. Id., at 7. The relationship between the companies is

    analogous to the common practice among physicians of forming separate entities for purposes

    such as holding valuable medical equipment, operating ambulatory surgery centers, or such other

    activities necessary or closely related to the principal medical practice Id. As Dr. Centeno

    describes, [t]hrough the years the lab has been located in various places relative to the practice

    so that the patients sample has been handed through a door to the doctor, driven down the street,

    is currently transported a short drive, and will soon be handed to the doctor in the same medical

    space. Centeno Affidavit, at 55.

    II. THE REGENEXX PROCEDUREAs Dr. Centeno describes in his affidavit, the Regenexx Procedure is one of several

    procedures that Drs. Centeno and Schultz use to treat their patients. Centeno Affidavit, at 3.

    At the time that this case began in August of 2010, the Regenexx Procedure constituted

    about one-third of the procedures performed by the clinic. Dr. Schultz and I treat our patients

    using the Regenexx Procedure only after deciding on a patient-by-patient basis that the

    Regenexx Procedure will most effectively treat the patient whom we are treating.Id.

    The steps taken to perform the Regenexx Procedure are summarized in the introductory

    paragraphs of the Defendants Counterclaims ( 5-19) and more completely outlined in Dr.

    Centenos affidavit, at 12-33, and need not be fully repeated here. Suffice it to say for

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    purposes of this document that the Procedure involves the extraction of stem cells and natural

    growth factors from the patient, the expansion of the stem cells ex vivo in culture using the

    patients own natural growth factors and FDA approved products, the reimplantation of the

    patients stem cells back into the patient, and a robust set of safety protocols designed to protect

    the patient and ensure the medical integrity of the procedure. Id. Additionally, the Procedure has

    been examined by the Colorado Board of Medicine and has been determined to be fully

    compliant with Colorado-state law; see, Michaels Affidavit at 12; Centeno Affidavit, at 6.

    III. PROCEDURAL HISTORYOn or about August 5, 2008, Regenerative received a letter dated July 25, 2008 from

    FDAs Office of Compliance and Biologics Quality concerning Regeneratives Regenexx

    Procedure. Counterclaims, at 20. In that letter, the FDA alleged that Regenerative was

    promoting the use of MSCs under conditions that caused the cells used in the Regenexx

    procedure to be drugs under section 201(g) of the Federal Food, Drug and Cosmetic Act (FDCA)

    and biological products as defined in section 351(i) of the Public Health Service Act (PHSA).Id.

    The FDA further alleged that the MSCs utilized in the RegenexxProcedure were drugs which

    were not the subject of an approved biologics license application (BLA) or investigational new

    drug application (IND) and may therefore have been unlawful. Further, on July 25, 2008, the

    very date on which the FDA purportedly sent its letter to Regenerative, but eleven days before

    Regenerative actually received it, the FDA posted its letter on its website (www.fda.gov) and

    thereby made the letter available to the public. Regenerative was given no opportunity to respond

    to the FDAs letter prior to the letter being published by the FDA on the World Wide Web.Id., at

    21.

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    On August 12, 2008, counsel for Regenerative sent the FDA a Petition for Stay of Action

    pursuant to 21 C.F.R. 10.35 requesting that all information in the petition for stay of action be

    withheld from public disclosure. Id., at 22. On August 19, 2008, the FDA responded to

    undersigned counsel stating that FDA was in receipt of the petition for stay of action filed on

    behalf of Regenerative. FDA assigned the petition a docket number and accepted the petition for

    filing but did not indicate whether it would agree to the action requested. Id. On August 25,

    2008, counsel for Regenerative sent FDA a separate legal opinion, citing cases, statutes,

    regulations and FDA policy which demonstrated that the agencys allegations in its July 25, 2008

    letter were both legally and factually flawed. Id., at 23. On October 3, 2008, the FDA formally

    denied Regeneratives Petition for Stay of Action, refused to remove the July 25, 2008 letter

    from the FDAs public website, and denied Regeneratives request that the Petition for Stay of

    Action be withheld from public disclosure.Id.

    Almost seven months later, on February 23, 2009, the FDA initiated an inspection of

    Regeneratives medical facilities. That inspection concluded on April 15, 2009, when the FDA

    issued a Form 483 to Regenerative indicating that, according to the FDA, Regenerative was

    manufacturing biological drugs in a facility that did not meet the standards of federally regulated

    biological drug manufacturers. Id., at 24. Also on April 15, 2009, the FDA warned

    Regenerative that its (Regeneratives) failure to comply with the terms of the Form 483 could

    lead to the issuance of a warning letter, seizure, injunction, criminal prosecution, and the

    disqualification of Regeneratives licensed physicians as clinical investigators.Id.

    While the inspection was ongoing, Regenerative sued the Government in the United

    States District Court for the District of Colorado. Id., at 25.16

    16 Case No. 1:09-cv-00411-WYD-BNB in the United States District Court for the District of Colorado.

    Regeneratives suit alleged, inter

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    alia, that FDAs regulatory scheme defining and regulating the autologous use of stem cells was

    ultra vires. On April 29, 2009, the Government filed its motion to dismiss on ripeness grounds,

    and the District Court entered its order dismissing Regeneratives lawsuit on March 26, 2010. Id.

    On March 29, 2010, Regenerative filed its notice of appeal with the United States Court of

    Appeals for the Tenth Circuit.17

    The FDAs efforts to regulate Regeneratives medical practice continued shortly after the

    District Court dismissed Regeneratives lawsuit. Counterclaims, at 26. On June 2, 2010, the

    FDA visited the Plaintiff for purposes of conducting an exhaustive inspection of the Plaintiffs

    medical facilities. Id. This inspection began when the Defendants issued a Notice of Inspection

    to the Plaintiff which, like the April 15, 2009 Form 483 issued by the Defendants to the

    Plaintiff identified the Plaintiff as a drug manufacturer. FDAs inspection of Regeneratives

    medical clinic lasted for roughly two weeks and cost Regenerative nearly $20,000 in personnel

    time.Id.

    The inspection concluded with an exit interview between FDA and Regenerative on or

    about June 16, 2010. Counterclaims, at 27. During the exit interview, FDA issued a Form 483

    to Regenerative which, like the April 15, 2009 Form 483 and June 2, 2010 Notice of Inspection,

    identified Regenerative as a drug manufacturer. This Form 483 also listed a number of alleged

    compliance deficiencies at Regeneratives medical facilities only applicable to drug

    manufacturers.Id.

    Likewise, during the June 16, 2010 exit interview, FDA advised Regenerative that the

    decision was made by FDA before the inspection even began that Regenerative was a drug

    manufacturer and that that decision could not be challenged. Counterclaims, at 28. Moreover,

    17 Case No. 10-1125 in the United States Court of Appeals for the Tenth Circuit.

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    FDA advised Regenerative that the failure to remedy the observations contained in the Form 483

    could lead to the issuance of a warning letter, Cease and Desist Letter, civil penalties, and/or a

    judicial injunction to compel compliance under threat of closure and criminal prosecution.Id.

    On June 22, 2010, Regenerative filed suit before this court in Case No. 10-cv-01055

    challenging FDAs finding that Regenerative was a drug manufacturer.18

    On July 15, 2010, the parties appeared before this Court on Regeneratives Motion for

    Temporary Restraining Order, and on July 28, 2010, Regenerative filed its Initial Brief before

    the Tenth Circuit challenging the decision of the District Court Judge dismissing Regeneratives

    lawsuit against the Government on ripeness grounds. While both matters were pending, the

    Government approached counsel for Regenerative and proposed the agreement which is outlined

    in the Stipulated Order which has been entered in this case; [DE 10]. In short, in exchange for

    voluntarily dismissing the ongoing actions before the District Court for the District of Colorado

    Additionally, in an

    effort to enjoin the FDA during the pendency of the ongoing appeal in the Tenth Circuit, on June

    30, 2010 Regenerative filed a motion for an injunction pursuant to Rule 62(c) of the Federal

    Rules of Civil Procedure in the District of Colorado. [Case No. 09-411; DE 53]. Finally, on July

    6, 2010, Regenerative filed a Motion for Temporary Restraining Order before this Court in Case

    No. 10-cv-01055 [DE 9], and the Government filed its Motion to Transfer Venue or in the

    Alternative to Dismiss on July 13, 2010 [DE 11] challenging, inter alia, that Regeneratives

    claims were not ripe.

    18 It should not be inferred that the Defendants responses to these FDA inspections were limited to the filing of

    lawsuits in Denver and Washington, D.C. As stated by Dr. Centeno in his affidavit, [w]e are proactive andresponsive to improve quality. Prior to the FDA first showing up to inspect the lab in 2008, we hired a nationalrecognized lab audit company, Reglera, to inspect the lab and make recommendations to improve patient safety.Over the ensuing several years we hired Reglera twice more. See appendix C for final Reglera audits. After everyFDA inspection, while we disagreed that we should treat our tissue lab as a drug production facility, we met toaddress any concerns brought up by the investigators that could improve our patients safety. See appendix D forrecords of our actions after the 2009 and 2010 inspections. Centeno Affidavit, at 32n.

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    and the Court of Appeals for the Tenth Circuit and withdrawing its Motion for a Temporary

    Restraining Order before this Court in Case No. 10-cv-01055, the Government agreed to sue the

    Defendants in this Court and thereby allow the entire dispute between the parties to be litigated

    in a single forum. [DE 10]. Additionally, the Defendants have agreed to discontinue their use of

    the Regenexx Procedure during the pendency of this litigation; Id.; see also, Motion for

    Summary Judgment, at p.17.

    ARGUMENT

    I. SUMMARY JUDGMENT STANDARDA. Fed.R.Civ.P. 56Rule 56(a) of the Federal Rules of Civil Procedure provides that [t]he court shall grant

    summary judgment if the movant shows that there is no genuine dispute as to any material fact

    and the movant is entitled to judgment as a matter of law. Facts are material if disputes over

    them might affect the outcome of a suit under governing lawHolcomb v. Powell, 433 F.3d

    889, 895 (D.C. Cir. 2006); quoting Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). Issues

    are genuine if the evidence is such that a reasonable jury could return a verdict for the

    nonmoving party. Breen v. Peters, 474 F.Supp. 2d 1, 7 (D.D.C. 2007); citing Liberty Lobby,

    477 U.S. at 248;Holcomb, 433 F.3d at 895.

    More specifically, at the summary judgment state the judges function is not himself to

    weigh the evidence and determine the truth of the matter but to determine whether there is a

    genuine issue for trial. Liberty Lobby, 477 U.S. at 249. Further, in ruling on a motion for

    summary judgment, the court must draw all justifiable inferences in the nonmoving party's favor

    and accept the nonmoving party's evidence as true. Mar-Jac Poultry Inc. v. Katz, 2011 U.S.

    Dist. LEXIS 33582, 17 (D.D.C. 2011) (Collyer, J.); citing Liberty Lobby, 477 U.S. at 255.

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    B. Summary Judgment is Disfavored When Discovery Has Yet to CommenceRule 56(c)(1)(A) provides that when moving for summary judgment, the party asserting

    that a fact cannot be genuinely disputed must support the assertion by citing to particular parts

    of materials in the record, including depositions, documents, electronically stored information,

    affidavits or declarations order, stipulationsadmissions, interrogatory answers, or other

    materials In other words, as stated by the Court in Scarborough v. Harvey, 493 F.Supp. 2d 1,

    17 (D.D.C. 2007), [s]ummary judgment is premised on the notion that parties will have had

    adequate time for discovery to establish whether a genuine issue of material fact exists. Id.,

    quoting Breen v. Peters, 474 F.Supp. 2d, 1, 7 (D.D.C. 2007).

    Accordingly, it is the general rule that decision by summary judgment is disfavored

    when additional development of facts might illuminate the issues of law requiring decision.

    Barnes v. District of Columbia, 242 F.R.D. 113, 116 (D.D.C. 2007); quoting Nixon v. Freeman,

    670 F.2d 346, 362 (D.C. Cir. 1982); see also Bynum v. District of Columbia, 215 F.R.D. 1, 4

    (D.D.C. 2003). In this case, the Government has failed to establish, much less argue, why the

    Court should depart from the general rule that summary judgment should be denied prior to the

    completion of discovery and the opportunity of the parties to develop the material facts discussed

    below which are relevant to this case.

    C. To the extent that the Governments Motion for Summary Judgment fails toaddress the Defendants Affirmative Defenses, the Motion should be denied.

    As a threshold matter, it must be noted that the Governments Motion for Summary

    Judgment only addresses the Defendants affirmative defenses dealing with the practice of

    medicine. Indeed, at p.34, n.27, the Government writes that [a]lthough we respond briefly to

    Defendants practice of medicine argument here because it appears to be their principal defense

    to this suit, we will not respond to Defendants affirmative defenses unless and until they are

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    briefed by Defendants. This position, however, is fundamentally flawed and calls for the denial

    of the Governments Motion.

    While the burden of proof of an affirmative defense must be carried by the party asserting

    it, [t]he burden or proof has nothing to do with a movants obligation to address contested

    issues in a motion for summary judgment. RB&W Manufacturing v. Buford, 2004 U.S. Dist.

    LEXIS 22512, 9-10 (N.D. Ill. 2004). In other words, regardless of who bears the ultimate

    burden on proving the defenses, if a party contends that it is entitled to judgment as a matter of

    law, it must show the court why that is so in its motion for summary judgment. Id.; citing Ruff v.

    Partners Liquidating Trust, 2001 U.S. Dist. LEXIS 11683 (N.D. Ill. 2001).

    In this case, the Government has addressed only the Defendants practice of medicine

    affirmative defenses, and chosen to place the burden of briefing the Defendants other

    affirmative defenses on the Defendants. Certain of the Defendants affirmative defenses

    including Affirmative Defenses XI and XII are based on questions of fact which will be

    developed in discovery and prosecuted by the Defendants at trial or in their own motion for

    summary judgment. In failing to even mention these affirmative defenses in its own motion for

    summary judgment, the Government has left to be determined genuine issues of material fact

    discussed below, thus preventing the Court from ruling on the Governments Motion as a matter

    of law.

    Similarly, by failing to address these affirmative defenses in its own Motion and choosing

    instead to address them in its reply brief, the Government has violated this Circuits well settled

    rule that petitioners lay all their arguments on the table in their opening briefs so that their

    opponents are not taken by surprise.Natural Resources Defense Council v. EPA, 25 F.3d 1063,

    1072, n.4 (D.C. Cir. 1994); citing Pennsylvania Elec. Co. v. FERC 11 F.3d 207, 209 (D.C. Cir.

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    1993);Herbert v. National Academy of Sciences, 974 F.2d 192, 195 (D.C. Cir. 1992); Corson &

    Gruman Co. v. NLRB, 899 F.2d 47, 50 n.4 (D.C. Cir. 1990) (We require petitionersto raise all

    of their arguments in the opening brief to prevent sandbagging ofrespondents and to provide

    opposing counsel the chance to respond.) Accordingly, the Governments Motion should be

    denied.

    II. ADULTERATIONIn its Motion for Summary Judgment, the Government argues that the Defendants

    cultured cell product is adulterated, and that the facts relevant to the adulteration issue have

    either been admitted by the Defendants or are beyond dispute. However, in reality, the

    Defendants have consistently denied that they manufacture a cultured cell product, and

    numerous other genuine issues of material fact also exist necessitating the denial of the

    Governments Motion.

    A. Defendants Affirmative Defenses XI and XIIFirst, as a threshold matter, the Government has ignored the Defendants affirmative

    defenses in its Motion choosing to instead address them in its reply. As stated above, the

    Governments choice has violated this Circuits well settled jurisprudence on this issue. More

    importantly, the Governments choice has left a critical factual issue on the table necessitating

    the denial of the Governments Motion.

    Defendants Affirmative Defense XII states that [b]ecause the FDA has previously

    approved or licensed the manufacturing of autologous, culture expanded HCT/Ps, the

    adulterating and misbranding provisions of the FDCA are not applicable to the Defendants use of

    autologous, culture expanded HCT/Ps in treating the injuries of their patients on a patient-by-

    patient basis. Because of this prior approval, Defendants Affirmative Defense XI provides that

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    this treatment of patients on a patient-by-patient basis is within the practice of medicine, does not

    constitute the manufacturing or distribution of a product and is not subject to the adulterating and

    misbranding provisions of the FDCA; see, 21 U.S.C. 353a.

    As previously discussed, the FDA approved Genzymes Carticel in 1997. Carticel

    involves the extraction of HCT/Ps from a patient by the patients physician, expanding the

    HCT/Ps at a Genzyme laboratory, returning the expanded HCT/Ps to the physician, and the use

    of the expanded HCT/Ps in the treatment of the patients injured knee. As articulated in their

    affirmative defenses, the Defendants are therefore entitled to compound Genzymes Carticel

    pursuant to 21 U.S.C. 353a, and are statutorily exempted from the FDCAs adulteration and

    misbranding provisions; see 21 U.S.C. 353a(a). Thus, even at a threshold level, the

    Governments failure to address these affirmative defenses in its motion creates aper se genuine

    issue of material fact necessitating the denial of the Governments Motion.

    B. The Defendants Do Not Manufacture a Cultured Cell ProductAs previously described, the Defendants and the Government are of very different

    opinions as to what, exactly, the Regenexx Procedure is. The Defendants assert that the

    Procedure constitutes the practice of medicine as defined by the law of the State of Colorado and

    that the FDA lacks jurisdiction to regulate it. In contrast, based on its argument that the

    procedure does not constitute the practice of medicine because it does not involve the use of an

    FDA approved drug on a patient, the Government asserts that the Procedure constitutes the

    manufacturing of a biologic drug lacking FDA approval in violation of the law.

    As described in our opposition to the Governments Motion to Dismiss, because the FDA

    lacks the jurisdiction toregulate the practice of medicine, it also lacks the jurisdiction todefine

    it; see, Gonzales v. Oregon, 546 U.S. 243 (2006); ABA v. FTC, 430 F.3d 457 (D.C. Cir. 2005).

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    Instead, because it is well settled that the practice of medicine has been left to the individual

    States to regulate, the definition of the practice of medicine has also been left to the individual

    States to create; see e.g. Linder v. United States, 268 U.S. 5, 18 (1925); see also, Gonzales v.

    Oregon (defining physician-assisted suicide as within the practice of medicine).

    In this case, Defendants Centeno and Schultz are licensed to practice medicine by the

    State of Colorado and to treat their patients in a one-on-one bases from their medical facilities

    located in Broomfield, Colorado. The State of Colorados definition of the practice of medicine

    is unquestionably broad enough to include the Regenexx Procedure, and the Defendants

    practice under the direct supervision of the Colorado Board of Medicine; see, Michaels Affidavit

    at 12; Centeno Affidavit, at 6.Therefore, the Regenexx Procedure constitutes the practice

    of medicine as regulated and defined by law in the State of Colorado; see C.R.S. 12-36-106(1).The Government also argues that the Regenexx Procedure constitutes the

    manufacturing of a drug because they promote it to treat a variety of conditions. Motion for

    Summary Judgment, at p.19. However, this argument must also fail. Whereas the FDCA defines

    drug as articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of

    disease in man, 21 U.S.C. 321(g)(1)(B), Colorados definition of the practice of medicine

    contains similar language: Suggesting, recommending, prescribing, or administering any form

    of treatment, operation, or healing for the intended palliation, relief, or cure of any physical or

    mental disease, ailment, injury, condition, or defect of any person C.R.S. 12-36-106(1)(b);

    see also, American Medical Association, What Constitutes the Practice of Medicine?, L(5) J.

    Am. Med. Assoc. 368, 368-369 (Feb. 1, 1908); Brief for the Petitioners, Gonzales v. Oregon, 546

    U.S. 243 (2006), available at 2005 U.S. S.Ct. Briefs LEXIS 354, 40-42 (using ordinary

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    meaning19

    C. To the extent that the Defendants medical procedure might be subject to FDA jurisdiction, a genuine issue of material fact exists regarding whether it meets

    the criteria for regulation solely under 21 C.F.R. Part 1271.

    to define the practice of medicine). Thus, simply because a procedure is designed to

    cure a person and is advertised as such by the treating physician, it does not mean that that

    procedure becomes a federally regulated drug. The Governments Motion for Summary

    Judgment should be denied.

    1. Burden of proof.

    Even though we are before the Court on the Governments Motion for Summary

    Judgment of its own claims prior to the commencement of discovery, the Government argues

    that the burden is on the Defendants to prove that their cultured cell product meets all of the

    criteria in 21 C.F.R. 1271.10(a). Motion for Summary Judgment, at p.20. Regardless of

    whether the Governments position is legally correct, it highlights a fundamental inconsistency

    within the Governments position in this case.

    In the FDAs Proposed Approach, regulation solely under 21 C.F.R. Part 1271 was never

    presented as an exception to a rule. Rather, the public was presented with a regulatory regime

    wherein tissues would be regulated with a tiered approach based on risk and the necessity for

    FDA review which would provide a rational, comprehensive and comprehensible framework

    under which tissue processors could develop and market their products. Proposed Approach, at

    19 The ordinary meaning of the term medical is pertaining or related to the healing art orto 'medicine,' 9Oxford English Dictionary 546 (2d ed. 1989), and the term medicine refers to that department of knowledge andpractice which is concerned with the cure, alleviation, and prevention of disease in human beings, and with therestoration and preservation of health, id. at 549; see Webster's Third New International Dictionary 1402 (1966)(the science and art dealing with the maintenance of health and the prevention, alleviation, or cure of disease); TheRandom House Dictionary of the English Language 1194 (2d ed. 1987) (the art or science of restoring or preservinghealth or due physical condition). Brief for the Petitioners, Gonzales v. Oregon, 546 U.S. 243 (2006), available at2005 U.S. S.Ct. Briefs LEXIS 354, 40-42.

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    p.7; see also 63 Fed.Reg. 26745 (a risk-based tiered approach intended to regulate human

    cellular and tissue-based products only to the extent necessary to protect public health.)

    Instead of 351 of the PHSA being set forth as the default regulatory scheme for

    HCT/Ps, the FDA simply told the public that HCT/Ps would be regulated based on the risk they

    presented. Nevertheless, the FDA has enforced these regulations with 351 of the PHSA as a

    default rule, and as such, no autologous stem cell therapies have been approved since 1997, in

    spite of the fact that the relevant technology has significantly progressed since that time.

    The parties are before the Court on the Governments Motion for Summary Judgment.

    The burden is on the Government to prove that there is no genuine dispute as to any material fact

    and the Government is entitled to judgment as a matter of law; Fed.R.Civ.P. 56(a). None of the

    cases cited by the Government in support of its burden-shifting proposition dealt with summary

    judgment proceedings or otherwise change the plain language of Rule 56. Accordingly, while the

    burden mightultimately be on the Defendants at trial to prove that the Regenexx Procedure

    qualifies for exemption solely under 21 C.F.R. Part 1271, such burden is not on the Defendants

    at this time. In opposing the Governments motion, the Defendants need only show that there

    exists a genuine issue of material fact for trial, and the Defendants readily do so below; see e.g.

    United States v. Article of Food Consisting of 345-50 Pound Bags, 622 F.2d 768 (5th

    Cir. 1980).

    2. Minimal Manipulation

    In its Motion, at pp. 20-22, the Government argues that it is beyond dispute that

    Defendants cultured cell product is more than minimally manipulated, and that therefore it

    remains subject to the FDCAs adulteration and misbranding provisions. Motion for Summary

    Judgment, at p.22. However, this statement is not accurate; the Defendants vehemently deny that

    they manufacture or more-than-minimally manipulate anything, support their denial with

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    affidavits attached to this motion, and dispute the credibility of the Governments factual

    presentation. As such, a genuine issue of material fact regarding this issue plainly exists and the

    Governments Motion for Summary Judgment must be denied.

    21 C.F.R. 1271.10(a) sets forth the FDAs standard for evaluating how stem cells and

    other HCT/Ps will be regulated. The first prong of that standard asks whether the HCT/Ps are

    minimally manipulated, and 1271.3(f)(2) states that cells and nonstructural tissue are

    minimally manipulated when their processing does not alter their relevant biological

    characteristics. The term minimal manipulation is vague, and its definition does nothing to

    clarify its meaning; see e.g. Affidavit of Dr. Centeno, at 53. In an effort to qualify that

    definition, the FDA has stated that culture expansion constitutes the more-than-minimal-

    manipulation of stem cells, but has never shared the science upon which it relied to make that

    determination; see 66 Fed.Reg. 5457. The FDA has articulated in this case that this

    determination was merely an example of what it believes to be more-than-minimal-

    manipulation, and as such, does not constitute a legislative rule; Motion to Dismiss, at p.27.

    Likewise, prior to the start of this case, the FDA never took the position that many steps

    constitutes more-than-minimal-manipulation. Actually, in the administrative record, the FDA

    took the opposite position; see PA 000267 (explaining that the intent of the regulations is to

    look at cells based on function, not so much as how much processing is done to them.)

    The Governments argument that the Regenexx Procedure constitutes the more-than-

    minimal manipulation of stem cells is laden with questions of fact. The Government relies

    entirely upon the declaration of Steven R. Bauer, Ph.D. for the proposition that the stem cells

    used in the Regenexx Procedure are more-than-minimally-manipulated, but as Dr. Bauer

    himself acknowledges, he never once examined or otherwise laid eyes on the cells in making his

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    determination; see Motion for Summary Judgment, Exhibit B, 2. Indeed, during the FDAs two

    inspections of the Defendants medical facilities, no FDA representative ever tested a s