FCA 368, the Federal Court of Australia found that a companies Trading as Advanced Medical Institute (AMI), its Chief Executive Officer, director and shareholder, Dr Jacov Vaisman and two doctors engaged by AMI, engaged in unconscionable conduct regarding ‘treatments’ it offered for PE and ED using nasal spray and later oral strips, advertising that such treatments would result in longer lasting sex.
The following is the summary of the Court’s findings and decision (as reported by the Court).
Court Summary of Findings:
Men who were suffering from PE or ED were treated usually over the phone. They spoke first to a salesperson, then to a doctor and then to a salesperson again.
AMI designed a selling strategy which targeted the anxiety and distress of men seeking treatment for ED and PE.
Salespeople used high pressure selling techniques by telling men that their penis would shrink and they would suffer psychological impotence if they did not agree to the treatment.
AMI charged patients from about $2500 – $4500 for the programs. (It was noted in the judgment that in the 2008 financial year patients paid nearly $49 million to AMI for the treatment programs and in the 2009 financial year they paid nearly $55 million. In the 2010 financial year AMI reported a revenue of almost $40 million.)
Salespeople reassured patients that they could get a refund if the treatment did not work. But the salespeople did not say that patients had to try all treatment options including self-injection in the base of the penis in order to qualify for a refund.
Salespeople were paid on commission but were trained to conceal the fact from patients.
The nasal spray and oral strip medications were not the medications accepted in the medical profession as the first line treatment for PE and ED. The evidence from medical experts and the scientific literature demonstrated that there was no proper scientific evidence that the prescribed medications were effective to treat PE or ED.
Men were told that the treatment was for 12 to 18 months. The medical and scientific evidence before the Court however did not support the need for treatment of that period with the medications being prescribed. However, longer periods of treatment cost more and hence suited the commercial interest of AMI.
Doctors who worked for AMI were, in practice, required to prescribe the AMI medications even though there was no proper scientific basis that they were effective. The business of AMI depended on the prescribing of medications. Evidence of the consultations showed that doctors were concerned only to obtain enough information so they could prescribe the medication. They did not diagnose the cause of the problem as would be usual in a conventional consultation with a doctor. The Court also noted that such diagnosis is particularly important in cases of ED which are often associated with cardiovascular disease, diabetes, or other underlying conditions.
The doctors also failed to tell patients, adequately or at all, of the side effects of the medications. This encouraged them to agree to treatment.
The Court found that doctors failed to provide patients with proper care and act in their best interests. They failed to meet the standards of proper practice established by the medical profession. In the service of AMI, the doctors elevated the commercial interests of AMI above the medical interests of the patients. That made the conduct unconscionable.
Further, a clear picture had emerged that the business of AMI was concerned to make money from vulnerable men with PE or ED. It targeted their vulnerability to sell highly priced treatments which had no proper scientific basis. AMI required doctors to compromise their professional standards to advance the commercial interest of AMI’.
It was found that Dr Vaisman made all the critical decisions relating to the business of AMI and was responsible for the unconscionable conduct found against AMI.
The Court made a declaration that the conduct was unconscionable, and ordered compensation to be paid to some of the 14 patients treated whose cases were examined by the Court.
An order for corrective advertising and injunctions regarding further practices were also made.
The injunctions included that consultations with doctors must be conducted face to face or by video link; that the terms of any contract must be provided to patients in writing, by email, or in person before the agreement is made; that patients must be told that AMI’s doctors do not provide general medical advice but only consider whether to prescribe medication; that patients be given a 5 day cooling off period and further have the right to cancel the contract on 14 days’ notice; that patients be offered contracts of no more than 2 months duration; and that payment in advance for treatment of more than 2 months could not be accepted.
Dr Vaisman was ordered to be excluded for seven years from continuing his main role in the business of AMI which involved the unconscionable conduct.
In view of the finding of unconscionable conduct, the judgment of the Court was also to be forwarded to the medical disciplinary bodies for their attention.
A copy of the judgment, which details the Court’s findings and orders is located at http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2015/2015fca0368