The Advanced Medical Institute aggressively promoted and supplied medical services and unproven medications for men suffering from sexual dysfunction, and falsely led men to believe they might suffer heart attacks or strokes if they did not buy the treatments, Australia’s federal court has found.
NRM Corporation Pty Ltd, NRM Trading Pty Ltd and the NRM director, Jacov Vaisman, had appealed to the court against a previous finding that their Advanced Medical Institute [AMI] business had targeted vulnerable consumers through advertising and sales techniques.
In dismissing the appeal and ordering NRM to pay the Australian Competition and Consumer Commission (ACCC) full court costs, the full court found NRM and AMI had engaged in “unconscionable conduct”, which was described as “clearly unfair or unreasonable, or serious misconduct”.
In most of the 168 individual patient cases put forward by the ACCC, medications with no proven efficacy and sold only by the NRM and AMI were offered, and AMI doctors failed to diagnose any underlying cause for their patients’ sexual dysfunctions or refer them on to specialists, the court heard.
AMI and NRM salespeople were trained to use high-pressure techniques to sell the treatment programs.
“They were instructed in methods which were likely to frighten men into agreeing to the treatments offered by AMI and NRM,” Justice Anthony North said.
“The salespeople were trained to tell men that if they did not agree to treatment, they would suffer adverse medical consequences, including shrinkage of the penis and psychological impotence. There was no scientific basis established before the court for these claims.
“The salespeople were instructed to say that the treatment for erectile dysfunction would reduce the chance of heart attack or stroke. They were also instructed to inform patients that their partners may suffer from depression if they did not take the treatments. The threat of dire medical and social consequences placed pressure on men to accept the treatments.”
Such conduct was immoral, North said.
NRM and AMI doctors had previously been barred from prescribing medications and consulting patients over the telephone, and had been ordered that all services were to be provided by a qualified medical doctor in person or through a video conference.
North found NRM guilty of contempt for failing to comply with the order, and a hearing on the penalty will be held at a future date.
The ACCC chairman, Rod Sims, said NRM had exploited peoples’ vulnerability for commercial gain.
“This case provides a clear message that businesses must not take advantage of consumers who are vulnerable or disadvantaged,” Simms said.
“Consumer issues in the health and medical sector are a priority for the ACCC. We will not hesitate to take appropriate enforcement action where businesses in this sector are exploiting the vulnerability of consumers.”
The full court also dismissed Vaisman’s appeal against orders restraining him for seven years from having a role in connection with training, supervising or counselling or terminating employees, agents or contractors of NRM.
The Slater & Gordon national practice group leader for medical law, Bill Madden, said the case could affect how similar businesses operated in future, particularly doctors who provided prescriptions for medications over the phone. He described the rejection of the appeal as a win for consumers.
Madden said the potential for affected patients to seek compensation from the company would depend on whether they could prove the damage had been done by taking the treatments.
“Cases seeking compensation need to focus on damage done, and it may well be although they may have been provided with treatments that were not effective, those treatments didn’t harm them or cause them damage,” he said.