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United States Court of Appeals,
Fifth Circuit.
No. 93-2071.
TRUSTEES OF THE NORTHWEST LAUNDRY AND DRY CLEANERS HEALTH &
WELFARE TRUST FUND, Plaintiff-Appellee,
v.
Stanislaw R. BURZYNSKI, Defendant-Appellant.
July 28, 1994.
Appeal from the United States District Court for the Southern
District of Texas.
Before WISDOM, BARKSDALE, and EMILIO M. GARZA, Circuit Judges.
WISDOM, Circuit Judge:
Today we write the latest chapter in a medical iconoclast's
long history of litigation over an unorthodox cancer treatment.
The
district
court
granted
summary
judgment
for
the
plaintiff/appellee, the Northwest Laundry and Dry Cleaners Health
& Welfare Trust Fund, an ERISA health insurance fund, after finding
that the defendant/appellant, Dr. Stanislaw R. Burzynski, had
defrauded the plaintiff and violated the terms of the health plan.
We agree that the defendant may not trick the plaintiff into paying
for an unlawful, unapproved drug. We AFFIRM.
I.
A. The Prior Litigation and Injunction
Dr. Stanislaw R. Burzynski is a Houston physician who
developed
an
unorthodox
treatment
for
cancer
called
1

"antineoplastons".1 The antineoplastons treatment has never been
approved by the Food and Drug Administration ("FDA") or the Texas
Department of Health. Dr. Burzynski's antineoplastons treatment
has been the subject of frequent litigation.2
In 1983, the United States sued Dr. Burzynski's research
organization, the Burzynski Research Institute, alleging several
violations of the Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et
seq. On May 24, 1984, Judge Gabrielle K. McDonald of the United
States District Court for the Southern District of Texas partially
granted the request of the United States for a permanent
injunction. Judge McDonald's order prohibited Burzynski from
distributing his antineoplastons treatment in interstate commerce,
but did not forbid intrastate distribution of the drug.3
1"Simply stated, antineoplastons are a special class of
peptides, found in the blood, that combat neoplastons--abnormal
cells or cancer cells." Gary Null, Gary Null's Complete Guide to
Healing Your Body Naturally 95 (1988), attached to Def.'s
Supplemental Mem. Supp. Mot. Dismiss or Change Venue, 3 Rec. 125.
2In this Court alone, see In re Burzynski, 989 F.2d 733 (5th
Cir.1993), modifying on rehearing Burzynski v. Aetna Life Ins.
Co., 967 F.2d 1063 (5th Cir.1992); United States v. Burzynski
Cancer Research Inst., 819 F.2d 1301 (5th Cir.), reh'g denied,
829 F.2d 1124 (5th Cir.1987), cert. denied, 484 U.S. 1065, 108
S.Ct. 1026, 98 L.Ed.2d 990 (1988).
3Judge McDonald's Final Judgment of Permanent Injunction was
subject to the following proviso:
Nothing contained herein shall be construed as
restraining, enjoining or in any way prohibiting the
Defendant's manufacture, processing, packing, holding,
promotion, labeling, sale or distribution of the
antineoplaston A10 or of any similar article however
designated (provided articles are not falsely labeled
or marked) when that manufacture, processing, packing,
holding, promotion, labeling, sale or distribution is
2

B. The Antineoplastons Treatment of Huey Roberts
Huey Roberts, a resident of Oregon, developed cancer of the
esophagus in 1986. Radiation treatments and chemotherapy did not
reverse the progress of the disease. In 1988, Dr. Burzynski began
administering a series of antineoplastons treatments to Roberts.
After an initial series of treatments in Dr. Burzynski's Houston
office, Roberts continued taking antineoplastons at his home in
Oregon from a supply furnished by Dr. Burzynski. The
antineoplastons treatments in Texas violated part of the Texas
Food, Drug, and Cosmetic Act barring the use of any
non-FDA-approved drug in Texas.4 The treatments in Oregon violated
the permanent injunction Judge McDonald imposed on Dr. Burzynski in
1984. These treatments apparently proved ineffectual, and Huey
Roberts discontinued antineoplastons therapy on July 4, 1989.
Huey Roberts was a beneficiary under the health plan of
undertaken strictly and wholly intrastate.
4See Tex.Health & Safety Code Ann. § 431.114. This statute
provides, in pertinent part, that
(a) A person shall not sell, deliver, offer for sale,
hold for sale or give away any new drug unless:
(1) an application with respect thereto has been
approved and the approval has not been withdrawn
under Section 505 of the federal Act; and
(2) a copy of the letter of approval or
approvability issued by the Federal Food and Drug
Administration is on file with the commissioner if
the product is manufactured in this state.
The district court found that antineoplastons was a "new
drug" within the meaning of § 431.114, and Dr. Burzynski
does not contest the finding on appeal.
3

plaintiff/appellee Northwest Laundry and Dry Cleaners Health &
Welfare Trust Fund ("the Fund"). Dr. Burzynski submitted claim
forms to the Fund and received over $90,000 in reimbursements for
the treatments he administered to Roberts.
When the Fund learned that it had reimbursed Dr. Burzynski for
illegal treatments, it brought this lawsuit in Oregon state court
to try to get its money back. The Fund charged Dr. Burzynski with
fraud and with violations of ERISA5 and RICO.6 Dr. Burzynski,
invoking diversity jurisdiction, removed the case to the United
States District Court for the District of Oregon, and on his motion
for a change of venue, the case was transferred to the United
States District Court for the Southern District of Texas.
On cross-motions for summary judgment, the district court
entered summary judgment for Dr. Burzynski on the Fund's RICO
claims and for the Fund on its fraud and ERISA claims. Dr.
Burzynski appealed.
II.
A. The Fund's ERISA Claim
The ERISA plan under which Roberts was covered provided that:
When medically necessary treatment is provided by a legally
qualified physician for an illness or injury, and that
physician is practicing within the scope of his license,
payment will be made for expenses incurred for Hospital, Home
5Employee Retirement Income Security Act, 29 U.S.C. §§ 1001-
1461.
6Racketeer Influenced and Corrupt Organizations Act, 18
U.S.C. §§ 1961-1968.
4

and Office visits as shown in the Schedule of Benefits.7
To be "medically necessary" under the Plan, a treatment must meet
two requirements, measured under Oregon law. First, the treatment
must be "appropriate and consistent with the diagnosis (in accord
with accepted standards of community practice)". Second,
"medically necessary" treatments "could not be omitted without
adversely affecting the covered person's condition or the quality
of medical care".8
Dr. Burzynski correctly points out that these requisites do
not, by their express terms, hold all non-FDA-approved treatments
medically "unnecessary". An Oregon court, however, construed
nearly identical language in an insurance contract to bar coverage
of an experimental cancer treatment. In Jacob v. Blue Cross & Blue
Shield of Oregon,9 the insurance contract defined "medically
necessary" as treatment that
[i]s appropriate and consistent with the diagnosis and which
in accordance with accepted medical standards in the State of
Oregon could not have been omitted without adversely affecting
the patient's condition or the quality of medical care
7A Group Health Program For Members Covered By The Northwest
Laundry & Dry Cleaners Trust, Class 8, at 19, 2 Rec. 504.
8Id. at 25, 2 Rec. 501. Although this definition appears in
a different section of the plan from the first quoted passage, we
must read the plan, like any other contract, as a whole, giving
effect to every provision thereof. See Grider v. Transamerica
Occidental Life Ins. Co., 979 F.2d 209 (5th Cir.1992) (table),
manuscript opinion at 6-7 (citing Ross v. Western Fidelity Ins.
Co., 872 F.2d 665, 668 (5th Cir.), opinion clarified on reh'g,
881 F.2d 142 (5th Cir.1989); D.E.W., Inc. v. Laborers' Int'l
Union, 957 F.2d 196, 200 (5th Cir.1989)).
992 Or.App. 259, 758 P.2d 382 (1988).
5

rendered[.]10
Under that definition, the court held that the contract did not
cover the insured's "Gerson therapy" or "immuno-augmentive
therapy", two unorthodox cancer treatments. The court noted that
the treatments had "not been approved by the appropriate government
agencies" and were "not in accordance with accepted medical
standards".11 Accordingly, it concluded that the cancer treatments
were not covered under the contract and upheld the trial court's
summary judgment for the insurer.
We find the Jacob court's reasoning persuasive and its
conclusion sound. Dr. Burzynski's antineoplastons treatment had
not been approved by the FDA, nor by the Texas Department of
Health, and was not in accordance with accepted medical standards.12
Accordingly, the treatments were not "medically necessary" as the
Plan defines that term. We uphold the district court's summary
judgment for the Fund on the Fund's ERISA claim.
B. The Fund's Fraud Claim
The district court held that Dr. Burzynski defrauded the Fund
by, inter alia, materially misrepresenting the legality of his
10Id., 92 Or.App. at 261-62, 758 P.2d at 383. There also
was a second contract involved in the Jacob case that contained a
nearly identical definition of "medically necessary". See id.
11Id., 92 Or.App. at 262, 758 P.2d at 383.
12See Burzynski v. Aetna Life Ins. Co., 967 F.2d 1063, 1064
(5th Cir.1992), modified on reh'g, In re Burzynski, 989 F.2d 733
(5th Cir.1993), noting the opposition of various professional
groups to antineoplastons therapy. See also 2 Rec. 398, 400
(Pl.'s Mot.Summ.J. & Rep.Def.'s Mot.Summ.J., Ex. R), noting
opposition of FDA and American Cancer Society.
6

antineoplastons treatment. After Judge McDonald's 1984 injunction,
Dr. Burzynski was on notice that interstate use of antineoplastons
violated federal law. The portion of the Texas Health & Safety
Code barring use or sale of non-FDA-approved drugs in Texas13 put
Dr. Burzynski on notice that intrastate distribution of
antineoplastons was also illegal. Accordingly, Dr. Burzynski was
on notice that both the intrastate and interstate applications of
antineoplastons in Huey Roberts's case were illegal. It is this
illegality that the Fund charges Dr. Burzynski fraudulently
withheld from it. Dr. Burzynski admitted that he never disclosed
to the Fund that his antineoplastons A and B treatments were not
approved by the FDA. The question, then, is whether the district
court correctly ruled that this omission constituted fraud.
We begin with some basic principles. Texas law defines fraud
as the "misrepresentation of a material fact with intention to
induce action or inaction, reliance on the misrepresentation by a
person who, as a result of such reliance, suffers injury".14 A
defendant's failure to disclose a material fact is fraudulent only
if the defendant has a duty to disclose that fact.15 A duty to
speak can arise by operation of law or by agreement of the parties.
In the absence of an agreement, there must be some special
13See Tex.Health & Safety Code Ann. § 431.114.
1441 Tex.Jur.3d Fraud and Deceit § 7 (1985) (footnotes
omitted); see also Roberts v. United N.M. Bank, 14 F.3d 1076,
1078 (5th Cir.1994).
15See, e.g., Spoljaric v. Percival Tours, Inc., 708 S.W.2d
432, 435 (Tex.1986); Bernstein v. Portland Sav. & Loan Ass'n,
850 S.W.2d 694, 701 (Tex.App.--Corpus Christi 1991, writ denied).
7

relationship between the parties, such as a fiduciary or
confidential relationship, before a duty to disclose arises.16 The
nondisclosing party must have had knowledge of the facts it
withheld.17 Even without a special relationship, there is always
a duty to correct one's own prior false or misleading statement.18
A speaker who makes a partial disclosure assumes a duty to tell the
whole truth even when the speaker was under no duty to make the
partial disclosure.19
1. Knowledge
Several of Dr. Burzynski's arguments challenge the district
court's finding that he knew his antineoplastons treatment was
illegal. He asserts that (1) Judge McDonald's injunction
authorized the use of antineoplastons in Texas; (2) intrastate
16Stephanz v. Laird, 846 S.W.2d 895, 904 (Tex.App.--Houston
[1st Dist.] 1991, writ denied). The relationship giving rise to
a duty to disclose may be either fiduciary or confidential in
character; it does not require a strict fiduciary relationship
in all cases. See, e.g., Lang v. Lee, 777 S.W.2d 158, 164
(Tex.App.--Dallas 1989, no writ) (relationship of "trust or
confidence"); Southwestern Indem. Co. v. Cimarron Ins. Co., 334
S.W.2d 831, 833 (Tex.Civ.App.--Waco 1960) (same), rev'd on other
grounds, 161 Tex. 516, 344 S.W.2d 442 (1961).
17HTM Restaurants, Inc. v. Goldman, Sachs & Co., 797 S.W.2d
326, 329 (Tex.App.--Houston [14th Dist.] 1990, writ denied).
18See, e.g., Ralston Purina Co. v. McKendrick, 850 S.W.2d
629, 635 (Tex.App.--San Antonio 1993, writ denied); Tempo Tamers,
Inc. v. Crow-Houston Four, Ltd., 715 S.W.2d 658, 669
(Tex.App.--Dallas 1986, writ ref'd n.r.e.).
19Boggan v. Data Sys. Network Corp., 969 F.2d 149, 154 & n.
6 (5th Cir.1992); Southeastern Fin. Corp. v. United Merchants &
Mfrs., Inc., 701 F.2d 565, 566-67 (5th Cir.1983); International
Sec. Life Ins. Co. v. Finck, 475 S.W.2d 363, 370
(Tex.Civ.App.--Amarillo 1971), aff'd in part, rev'd in part on
other grounds, 496 S.W.2d 544 (Tex.1973).
8

distribution of antineoplastons is authorized by the Texas Medical
Practice Act; (3) he cannot be held to have known that
antineoplastons were illegal because no Texas court has ever so
decreed; and (4) the district court applied the wrong standard of
scienter to the Fund's fraud claim. Because Dr. Burzynski's latter
two challenges verge on the frivolous, we will discuss only the
first two.
Dr. Burzynski acknowledges that Judge McDonald's 1984
injunction barred him from interstate distribution of the drug. He
argues, however, that Judge McDonald authorized him to distribute
antineoplastons in Texas. As did the district court, we find this
argument unpersuasive. Judge McDonald limited the injunction to
barring interstate distribution. Although the injunction did not
forbid intrastate distribution, neither did it excuse Dr. Burzynski
from compliance with state laws governing intrastate distribution
of antineoplastons. The injunction simply is silent on the
legality of intrastate distribution.
Dr. Burzynski next asserts that, even if § 431.114 of the
Texas Health & Safety Code bars intrastate distribution of
antineoplastons, that bar is superseded by § 5.09 of the Texas
Medical Practices Act ("TMPA"),20 which provides:
A physician licensed to practice medicine under this Act may
supply patients with any drugs, remedies, or clinical supplies
as are necessary to meet the patient's immediate needs. This
subsection does not permit the physician to operate a retail
pharmacy without first complying with the Texas Pharmacy
Act....
20Tex.Rev.Civ.Stat.Ann. art. 4495b.
9

Dr. Burzynski argues--and a state administrative law judge
recently agreed21--that the reference to "any drug" in the quoted
text includes illegal drugs prohibited by the Texas Health & Safety
Code. On our de novo review of state law, we follow the district
court in rejecting this interpretation of the TMPA. Read as a
whole, TMPA § 5.09 plainly is intended to authorize physicians to
dispense drugs when urgent necessity precludes resort to a
pharmacy. It does not clearly authorize anyone to dispense illegal
drugs. We must read TMPA § 5.09 in harmony with Health & Safety
Code § 431.114.22 Reading the statutes together, we cannot conclude
that TMPA § 5.09 authorizes Dr. Burzynski to do anything forbidden
by Health & Safety Code § 431.114.
2. Duty to Disclose
Two things are clear. The antineoplastons treatments
administered to Huey Roberts in Texas and in Oregon were illegal,
and Dr. Burzynski knew or should have known it. To uphold the
district court's judgment on the Fund's claim of fraud, we must
additionally decide that Dr. Burzynski had a duty to disclose to
the Fund the illegality of the antineoplastons treatments. For
three reasons, we conclude that he did.
First, Dr. Burzynski had a confidential relationship with the
Fund. A confidential relationship includes "every form of relation
21See In re Burzynski, no. 503-92-529 (Texas State Office of
Administrative Hearings, Mar. 10, 1994). The state ALJ's ruling
was issued after this case was orally argued in this Court.
22See Tex.Gov't Code Ann. § 311.026; Louisiana Pub. Serv.
Comm'n v. FCC, 476 U.S. 355, 370, 106 S.Ct. 1890, 1899, 90
L.Ed.2d 369 (1986).
10

between parties wherein confidence is reposed by one in another,
and he relies and acts upon the representations of the other and is
guilty of no derelictions on his own part".23 It is an equitable
concept that includes informal relationships outside the customary
examples of partnerships, attorney/client relations, or familial
relations.24 The Fund customarily relied, and was equitably
entitled to rely, on Dr. Burzynski's representations as to the
legality of his treatment.25 Obviously, Dr. Burzynski had superior
knowledge concerning the legality of his treatment, and knew that
the Fund would have acted differently had it been aware that
antineoplastons therapy was illegal. In such circumstances, Dr.
Burzynski's duty to disclose is clear.26 Dr. Burzynski's failure
23Peckham v. Johnson, 98 S.W.2d 408, 416 (Tex.Civ.App.--Fort
Worth 1936), aff'd, 132 Tex. 148, 120 S.W.2d 786 (1938) (quoted
in Boggan, 969 F.2d at 154 n. 5). See also Thompson v. Vinson &
Elkins, 859 S.W.2d 617, 624 (Tex.App.--Houston [1st Dist.] 1993,
writ denied); Thames v. Johnson, 614 S.W.2d 612, 614
(Tex.Civ.App.--Texarkana 1981, no writ).
24In re Monnig's Dep't Stores, Inc., 929 F.2d 197, 201 (5th
Cir.1991); Hruska v. First State Bank, 727 S.W.2d 732, 736
(Tex.App.--Houston [1st Dist.] 1987) (confidential relationships
include "moral, social, or personal relationships"), aff'd in
part, rev'd in part on other grounds, 747 S.W.2d 783 (Tex.1988).
25We do not address whether the Fund would have been
entitled to rely on representations by Dr. Burzynski other than
those implicating the legality of antineoplastons treatment.
26See, e.g., Susanoil, Inc. v. Continental Oil Co., 519
S.W.2d 230, 236 (Tex.Civ.App.--San Antonio 1975, writ ref'd
n.r.e.); Chandler v. Butler, 284 S.W.2d 388, 398
(Tex.Civ.App.--Texarkana 1955, no writ); cf. Moore & Moore
Drilling Co. v. White, 345 S.W.2d 550, 555-56
(Tex.Civ.App.--Dallas 1961, writ ref'd n.r.e.); accord Mann v.
Adams Realty Co., 556 F.2d 288, 297 (5th Cir.1977) (applying
Alabama law); American Nat'l Ins. Co. v. Murray, 383 F.2d 81,
86-87 (5th Cir.1967) (applying Mississippi law).
11

to disclose the illegality of antineoplastons treatment breached
his confidential relationship with the Fund and gave rise to a
claim of fraud in the Fund's favor.
Second, Dr. Burzynski's partial disclosures to the Fund
imposed a duty on him to make such additional disclosures as would
remove the false or misleading character of his partial
disclosures.27 The claims forms Dr. Burzynski submitted to the Fund
represented that "chemotherapy" was being administered to Huey
Roberts. Considering that many perfectly legal forms of
chemotherapy are employed in fighting cancer, the omission of the
fact that this was not ordinary chemotherapy, but an unapproved
drug that could not be lawfully administered in Texas or Oregon,
was misleading.28
Finally, at the risk of laboring the obvious, Dr. Burzynski is
a practicing physician, a trained professional licensed by the
State of Texas. The practice of medicine in Texas is a privilege,
not a right.29 Among the prices the State exacts for the exercise
of that privilege is that physicians hold themselves to a standard
of ethical conduct befitting their position. For example,
27See supra notes 18-19 and accompanying text.
28Dr. Burzynski's brief argues that the abbreviation "ANPA"
on the claims forms submitted to the Fund should be understood as
a direct disclosure that he had been administering
antineoplastons to Huey Roberts. The full description of service
Dr. Burzynski entered in the claim forms reads: "High Dose ANPA
chemotherapy IV drip". Try as we might, we are unable to read
those words to make a sufficient disclosure that Dr. Burzynski
sought reimbursement for the knowing illegal use of an unapproved
drug, not ordinary "chemotherapy".
29Tex.Rev.Civ.Stat.Ann. art. 4495b § 1.02(1).
12

physicians may find themselves subject to disciplinary action for
unprofessional or dishonorable conduct that is likely to
deceive or defraud the public or injure the public....
includ[ing] but not limited to the following acts:
(A) committing any act that is in violation of the laws
of the State of Texas if the act is connected with the
physician's practice of medicine.30
This is a salutary policy. We would damage it if we held that
Dr. Burzynski was free to defraud a health insurer by obtaining
reimbursement for illegally administered treatment. In conjunction
with the other factors just mentioned, Dr. Burzynski's ethical
responsibility as a physician supports the conclusion that he had
a duty to disclose the illegality of the antineoplastons treatment.
Because we conclude that Dr. Burzynski failed to disclose the
illegality of his antineoplastons treatment to the Fund when he had
a duty to do so, we uphold the district court's judgment on the
Fund's claim of fraud. We need not address the other grounds
offered by the plaintiff for affirming the district court, such as
Dr. Burzynski's alleged misrepresentations as to the location of
the treatment.
III.
We close by echoing the concluding thoughts of the late Judge
Alvin Rubin in one of the previous lawsuits involving Dr.
Burzynski.31 Cancer victims, such as Huey Roberts, often are
30Id. § 3.08(4).
31See United States v. Burzynski Cancer Research Inst., 819
F.2d 1301, 1315 (5th Cir.), reh'g denied, 829 F.2d 1124 (5th
Cir.1987), cert. denied, 484 U.S. 1065, 108 S.Ct. 1026, 98
L.Ed.2d 990 (1988).
13

understandably eager to pursue any course of treatment, whatever
its cost or efficacy, that offers the faintest hope of preserving
life. Their plight commands sympathy, but also attracts
opportunists. The State of Texas and the Federal Food and Drug
Administration have stepped in to protect cancer patients from
those who would prey on their vulnerability. While we do not
impute evil motives to Dr. Burzynski, neither can we conclude that
he is beyond the laws written to protect his patients. When he
oversteps their bounds, the resulting costs are his to bear.
The district court's judgment is AFFIRMED.

14