Column: Judge approves class-action case against clinic peddling unproven stem cell therapy

In another legal setback for a clinic offering unapproved and unproven stem cell treatments for a host of serious diseases, a federal judge in San Diego has granted class-action status to a lawsuit against La Jolla-based StemGenex.

The lawsuit originally was filed on behalf of StemGenex customers who say their $14,900 treatments were ineffective in treating lupus, diabetes, multiple sclerosis and other conditions. The plaintiffs say they were enticed into signing up by a claim on the StemGenex website that patients experienced 100% satisfaction.

The class certification order dated June 24 by U.S. District Judge Anthony Battaglia could expand the plaintiff group by hundreds of customers, “all of whom had the same type of treatment … and all of whom paid Defendants the same amount — $14,900 per treatment,� according to a statement by the plaintiffs’ attorneys at the San Diego firm Mulligan, Banham & Findley.

At StemGenex, as at many other firms offering purported stem cell treatments, clinicians removed fat from customers’ bodies via liposuction and then claimed to extract stem cells from the fat for reinjection into the subjects’ bodies. No scientific studies have shown that this procedure effectively treats any medical condition. It’s not approved by the Food and Drug Administration and typically not covered by health insurance.

StemGenex customers were given concierge service by the firm. Out-of-town customers were picked up at the San Diego airport and provided with a room at a hotel and transportation to the clinic site. The procedure typically lasted a few hours.

We’ve been reporting on StemGenex at length, starting in 2017. The mileposts on its past to the latest legal setback include a warning letter from the FDA in October that it was operating illegally.

The FDA said at the time that StemGenex illegally marketed its fat preparation to treat such conditions as “Alzheimer’s disease, Crohn’s disease, Type I and Type II diabetes, fibromyalgia, spinal cord injury, chronic obstructive pulmonary disease, multiple sclerosis, muscular dystrophy, Parkinson’s disease, peripheral neuropathy and rheumatoid arthritis.� Stem cell treatments for those conditions have not been approved by the FDA, in part because there are no scientific studies validating the efficacy of the treatments.

“We continue to see bad actors exploit the scientific promise of this field to mislead vulnerable patients into believing they’re being given safe, effective treatments,� then-FDA Commissioner Scott Gottlieb said in a statement issued in connection with the StemGenex warning. “Instead these stem cell producers are leveraging the field’s hype to push unapproved, unproven, illegal and potentially unsafe products. This is putting patients’ health at risk.�

The FDA warning letter cited at least 11 deviations from acceptable medical manufacturing standards, including some that could lead to contamination of preparations injected into patients. StemGenex replied that it would fix the shortcomings, but the FDA said it was unsure that all the fixes were acceptable.

It’s unclear how StemGenex will respond to Battaglia’s ruling, or even if the firm is still actively in business. Its website no longer provides a phone number or other information for customers seeking treatments. Some employees are now identified as working for Advanced Cell Medicine, which says it’s in San Diego and is recruiting customers. The relationship between the two entities is unknown.

Malte Farnaes, an attorney for StemGenex, said the firm was “disappointed� in Battaglia’s order but encouraged that the judge acknowledged the case is narrowly focused on the firm’s marketing, not the efficacy of the medical procedure. “We are confident that our clients’ rights will be vindicated at trial,� he said, observing that the judged raised questions in the order about how to calculate damages for each customer if the plaintiffs ultimately prevail.

The StemGenex lawsuit doesn’t involve whether the firm’s treatments are safe or effective. Rather, it takes aim at the firm’s publicity pitch, which included graphs on its website citing “patient satisfaction ratings� of 100%, with 90% saying their experience with the firm exceeded their expectations and 10% saying it met their expectations.

Plaintiffs say they interpreted the chart as referring to satisfaction with the outcome of the procedure — in other words, that it alleviated their conditions.

According to depositions filed in court by the plaintiffs, the ratings referred only to the patients’ “personal experience with car service, staff, hotel,� as StemGenex founder Rita Alexander testified. “It has to do with their experience in being picked up at the airport and having service at a hotel and being treated kindly … but it has nothing to do with their treatment outcome.�

In many cases, patients filled out the satisfaction questionnaire while they were still in recovery from their surgery and while StemGenex staff hovered nearby, according to court filings.

Nevertheless, StemGenex staff were telling prospective customers that its “success rate� was 90% or better — allegedly implying that more than 90% of patients experienced improvements in their health.

Even though there were no empirical grounds for that figure, StemGenex phone representatives used it on “probably every call,� one former officer of the firm testified. He said Alexander was aware of the practice and allowed it to continue. Alexander testified that she was unaware of any instructions addressing how patient representatives should respond if they were asked for the clinic’s success rate.

The patient satisfaction statistics were removed from the StemGenex website after the lawsuit was filed in 2016.

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