Why NY AG suit against Manhattan stem cell clinic is such a big deal

The New York State Attorney General (AG) filed suit this week against a Manhattan stem cell clinic. It’s a landmark case.

The defendants are Image Plastic Surgery, LLC, Park Avenue Stem Cell, and Joel B. Singer, M.D. The clinic markets adipose stem cell injections for a variety of health conditions.

Park Avenue Stem had belonged to the clinic chain Cell Surgical Network, which itself is facing both a federal lawsuit seeking a permanent injunction and a patient lawsuit naming them as a co-defendant.  An interesting question is whether Park Avenue left Cell Surgical Network because of the suits against the network. How many other members of the network might have gone their own way or just stopped offering stem cells entirely, or might do so soon?

The new case seems unprecedented. While the North Dakota AG last year took some action on a stem cell clinic firm there, the NY AG case is the first time I’ve heard of a state AG filing a suit on a clinic.

See a screenshot from the Park Avenue website here. Two key phrases are mentioned or implied there at the bottom of the screenshot: minimal manipulation and homologous use. Park Avenue seems to be claiming that both apply to their practices, while in my opinion they likely do not apply to at least some of what the firm is doing, making their stem cells probably an unapproved drug product. For instance, the FDA has indicated that fat stem cells (stromal vascular fraction or SVF) are more than minimally manipulated. There are also few homologous uses of SVF.

Regarding the new NY case, according to an accompanying press release:

“Attorney General Letitia James today announced a lawsuit filed against Park Avenue Stem Cell, a New York City for-profit stem cell clinic, and its managing doctor, Dr. Joel B. Singer, M.D., for allegedly engaging in fraudulent and illegal advertising regarding its stem cell procedures.”

The New York AG filing alleges that:

“Through advertising efforts, the clinic led vulnerable patients to believe it could treat a variety of serious medical conditions using the patients’ own stem cells, including, but not limited to: urological diseases, erectile dysfunction, cardiac/pulmonary disease, neurological diseases such as Parkinson’s disease and ALS, various autoimmune diseases such as lupus, and orthopedic conditions. While stem cells hold promise for future use, there is currently no adequate scientific substantiation that stem cells can effectively treat any of these conditions.  Despite this, the Defendants charged consumers nearly $4,000 per procedure, with many consumers paying for multiple procedures.”

The suit seeks the following from the Court:

“a. Permanently enjoining Defendants from engaging in the fraudulent, deceptive, and illegal acts and practices alleged in the Complaint; b. Directing Defendants to render an accounting to the NYAG of the name and address of each former and current customer of Defendants, and the amount of money received from each such former and current customer; c. Directing Defendants to make full monetary restitution and pay damages to all injured persons or entities; d. Directing Defendants to produce an accounting of profits and to disgorge all profits resulting from the fraudulent and illegal practices alleged herein; e. Directing Defendants to pay a civil penalty to the State of New York of up to $5,000.00 for each violation of GBL Article 22-A, pursuant to GBL § 350-d; f. Awarding Plaintiff additional costs of $2,000.00 against each Defendant pursuant to CPLR § 8303(a)(6); and g. Granting such other and further relief as the Court deems just and proper.”

The dollar amounts here, should the AG prevail, could really add up. It’s hard to know how many patients this clinic injected with stem cells and so took money from, but just the refund in total could add up big time if the clinic saw hundreds of or a few thousand patients. Millions? Then there’s the potential civil penalty component; does that sought after $5,000 fine mean per customer the clinic has had?

Bottom line. Of course, one never knows how lawsuits will turn out, but again I see this one as a big deal and likely to add a further chilling effect on the unproven stem cell clinic industry. Clinics now have to worry on many fronts: the FDA, the FTC, state AGs, state medical boards, patient lawsuits and associated attorneys investigating the clinics, reporters investigating them, and more.