The Federal Trade Commission’s recent settlement with Dalal A. Akoury and AWAREmed Health & Wellness Resource Center provides a good overview of how today’s FTC approaches medical claims it believes are unsubstantiated. The case also serves as a reminder that if medical claims sound too good to be true, they probably are.
According to the complaint, filed by the Justice Department on behalf of the FTC, defendants, under Khoury’s leadership, engaged in deceptive acts or practices in violation of Sections 5 and 12 of the FTC Act and the Opioid Addiction Recovery Fraud Prevention Act (OARFPA). The complaint states that defendants deceived reasonable consumers into believing that the medical clinic’s treatments could cure cancer, chronic diseases such as Alzheimer’s and Parkinson’s, and a range of addictions, including to opioids, sex, food, and gambling.
The FTC had previously warned defendants on numerous occasions that making unsubstantiated addiction treatment claims is against the law. Khoury and AWAREmed, a set of companies Khoury controls that operate as a medical clinic, apparently ignored such warnings, causing the Justice Department to try and permanently halt defendants’ deceptive advertising and recover civil penalties. With this complaint the FTC continues its aggressive use of the Opioid Act to fill the hole in its remedial authority after AMG.
In AMG Capital Management, LLC v. FTC 593 U.S. __ 2021, the U.S. Supreme Court unanimously held that Section 13(b) of the Federal Trade Commission Act does not authorize the FTC to seek or a court to award equitable monetary relief such as restitution or disgorgement. Historically, Section 13(b) had been a popular enforcement method for the FTC, allowing it to seek and courts to award millions of dollars in consumer redress.
According to the Justice Department’s complaint, since at least early 2018 Khoury promoted her medical clinic and its questionable treatments over the internet via awaremed.com, YouTube videos, and social media. Another unlawful strategy Khoury employed, according to the complaint, was to promote her medical clinic and treatments in numerous television interviews hosted by reporters with the Fox News Myrtle Beach affiliate without disclosing that these segments constituted paid advertising, not actual news reporting. Two noteworthy points here: First, the FTC treated the segments as commercial, not editorial, speech. Second, the FTC did not treat Khoury, a physician, differently from other advertisers.
In its complaint, the Justice Department highlighted some of defendants’ unsubstantiated claims, including:
- Describing the medical clinic as the “Most Effective Medical Clinic … Anywhere” alongside the phrase “Addiction Recovery”
- Boasting that the clinic had a “98% Improvement Rate” in treating just about anything
- Claiming that the treatments were “rapid, painless, effective, and safe” and that the addiction treatment program allowed patients to “DeTox without pain, illness, sleep-loss, or anxiety” and produced results superior to those achieved in other “‘traditional’ risky, painful, lower-success 30-day programs” in a shorter amount of time and at less cost
According to the complaint, defendants lacked any reasonable basis for making these advertising claims to prospective patients. It’s important to remember, however, that people suffering from chronic illnesses and addictions—and who are often willing to pay for purported potentially life-saving solutions—are viewed by the FTC as especially vulnerable to exploitation stemming from deceptive advertising.
The proposed court order signed by the defendants to settle the lawsuit prohibits Khoury and her medical clinic from violating the FTC Act and OARFPA and from disseminating the unsubstantiated health claims set forth in the complaint. In addition to requiring Khoury and AWAREmed to pay a $100,000 civil penalty, the proposed order requires them to possess competent and reliable scientific evidence for any health-related advertising claims. It also specifically bars them from designing ads that could be reasonably misinterpreted by consumers to be objective news interviews or public information spots rather than paid advertising.
The larger lesson here is that a company making health-related claims in advertising, especially claims related to the treatment of chronic diseases and opioid addiction, must possess competent and reliable scientific evidence consisting of human clinical testing to substantiate the claims being made about its products or services. According to the proposed order, such clinical testing must be randomized, double-blind, placebo-controlled, and conducted by researchers qualified by training and experience to conduct such testing.
This type of testing is expensive, and the length of a clinical study—the aim of which is to substantiate a cure for a chronic disease or addiction—may be cost-prohibitive for many companies. The FTC’s view remains that if you don’t want to incur the cost of that level of substantiation, avoid making claims that trigger such substantiation requirements.