Clinic business

Persistent lawsuit over bogus claims of defunct La Jolla stem cell clinic ends in $3.65 million

A longstanding lawsuit against StemGenex, a former La Jolla clinic that offered questionable fat-derived stem cell treatments for a host of ailments, has been settled for $3.65 million.

U.S. District Judge Anthony Battaglia approved the settlement late last month, with insurance for the bankrupt clinic and an associated osteopathic physician paying the settlement amount. The class action involved 1,063 patients.

Originally filed in August 2016, the lawsuit accused StemGenex of wrongfully overstating patient satisfaction in marketing its stem cell treatments targeting the seriously ill or disabled. The four main applicants were seeking treatment for lupus, diabetes and spinal/joint pain.

While StemGenex claimed 100% satisfaction in its marketing materials, many people who received treatment complained about its ineffectiveness.

The settlement highlights the continued pushback from patients pursuing unproven stem cell clinics, particularly in the area of ​​fat and birth, said Paul Knoepfler, stem cell researcher at the UC Davis School of Medicine, in a blog post about the case.

“With over 2,000 stem cell clinics in the United States alone, we can expect even more lawsuits involving clinics in the future,” he wrote Wednesday.

StemGenex’s high satisfaction rating was based on a survey conducted shortly after patients completed a liposuction procedure that harvested fat cells, according to the lawsuit. These cells were then processed and fed back into patients as stem cells to supposedly help treat a long list of illnesses, including Crohn’s disease, Alzheimer’s disease, rheumatoid arthritis and Parkinson’s disease.

However, patients reported that the procedure did not work, according to the lawsuit. They typically paid $14,900 per treatment.

While the class action lawsuit focused on false advertising, StemGenex ran into additional issues in 2018 with the U.S. Food and Drug Administration.

The agency issued a warning to StemGenex for illegally marketing an unapproved cellular product. Additionally, the FDA reported significant violations in the company’s lab, some of which could lead to contamination.

In 2019, StemGenex filed for Chapter 7 liquidation. Few assets remained after creditors were paid, leaving litigants to sue malpractice and other insurers.

In the settlement, $2.5 million will come from the insurer of André Lallande, the osteopathic physician associated with the clinic. The remaining $1.15 million will come from StemGenex’s insurance company. Neither Lallande nor StemGenex have admitted wrongdoing. Efforts to reach StemGenex’s lead attorney were unsuccessful.

Two San Diego law firms — Mulligan, Banham & Finley and Berger, Williams & Reynolds — sued the case for the class action patients. In an interview, lawyer Elizabeth Banham said she was happy the class was receiving at least a partial refund of their treatment costs.

“I felt they got justice,” she said. “I am pleased that justice has been served after five years of litigation.”