Velvet Ropes Can’t Stop the FDA: Effort to Defeat FDA Jurisdiction Based on Club Membership Is Unceremoniously Bounced

By James C. Shehan & Andrew J. Hull –

The U.S. Court of Appeals for the Eighth Circuit recently issued an opinion in the case of Lytle v. U.S. Department of Health and Human Services, Nos. 14-3715, 15-1214 (8th Cir. Aug. 21, 2015), affirming that private membership associations (“PMAs”) cannot thwart FDA’s regulatory authority over the marketing of medical devices through distribution of devices only to PMA members.  The decision, arising from two related cases from the United States District Court for the District of South Dakota and a long regulatory history, affirmed the district court’s dismissal of pro se appellant Dr. Larry Lytle’s action for declaratory judgment challenging FDA’s authority to execute administrative warrants to inspect his laser-device businesses.

Specifically, Dr. Lytle argued that, because his companies’ laser devices were only distributed to members of his PMAs, FDA had no authority to regulate those devices.  Not surprisingly, FDA disagreed that membership in a private club excluded its jurisdiction, and the Eighth Circuit agreed with the government’s position.  Citing section 201(e) of the Federal Food, Drug, and Cosmetic Act, (defining persons subject to the Act to include associations) and another recent case finding that a cow-sharing PMA that gave raw milk to members was not immune from regulation by FDA, the court held that the activities of Dr. Lytle and his companies fell under FDA’s regulatory authority.

In addition to affirming the dismissal of the declaratory judgment in the first case, however, the court remanded the second case, in which the district court entered a preliminary injunction against Dr. Lytle to prevent him from manufacturing, processing, holding, or distributing laser devices for medical uses not approved by FDA, for further consideration of whether the injunction could have been more narrowly tailored.

Dr. Lytle, a dentist whose license was permanently revoked by South Dakota in 1998, has been marketing his lasers since 1997 and sparring with FDA over them since 2002.  Given this history and this decision inviting more inspections and a narrower injunction, this story is likely to have further chapters.  But it is not likely that other efforts to avoid FDA jurisdiction by forming PMAs will find success in the courts.