California legal expert weighs in on court ruling in Stemgenex case

The civil lawsuit against Stemgenex here in California was substantially narrowed by a judge and some of the judge’s comments were surprising in suggesting limitations in how patients may respond to stem cell clinics or other businesses if they are unhappy enough to consider filing suit. For more on the court’s ruling see my previous post.

I asked a California legal expert, who prefers to remain anonymous, for their take on this and at the handling of patient consent in particular.

Below is their reaction.

“The fundamental problem appears to be the definition cited by the court:

‘As used in this chapter, “medical experiment” means:

(a)  The severance or penetration or damaging of tissues of a human subject or the use of a drug or device, as defined in Section 109920 or 109925, electromagnetic radiation, heat or cold, or a biological substance or organism, in or upon a human subject in the practice or research of medicine in a manner not reasonably related to maintaining or improving the health of the subject or otherwise directly benefiting the subject.

(b)  The investigational use of a drug or device as provided in Sections 111590 and 111595.

(c)  Withholding medical treatment from a human subject for any purpose other than maintenance or improvement of the health of the subject.

(Amended by Stats. 1996, Ch. 1023, Sec. 205. Effective September 29, 1996.)’

 

The “not reasonably related to maintaining or improving the health” clause provides an “out” for them (Stemgenex). As the court notes, they represent their product as “improving one’s quality of life.” My understanding is that the law / court views the representation (intent) of the claim as the trigger here. It does not matter that they do not have compelling scientific evidence of benefit because the product is “reasonably related” to quality of life improvement in the eyes of the provider.

Classic backdoor provision that enables people to skirt the spirit of the law.

 

With that said, would be concerned if they did attempt to “consent” patients for research; because…they could undermine the “consent” “research” paradigm.

 

This case underscores the need for reasonable notification of patients.”

Narrowed Stemgenex suit proceeds as court implies stem cell clinic loopholes

stemgenex

Screenshot from Stemgenex website on reported patient satisfaction rates

Can California stem cell clinics make questionable marketing claims about their experimental, non-FDA approved offerings as long as they are not demonstrably false?

Do such clinics not bear any legal requirement to provide informed consent to patients?

A new court ruling raises such striking questions.

San Diego stem cell clinic Stemgenex sells non-FDA approved experimental stem cell offerings to patients suffering from a variety of conditions and last year a lawsuit was filed against the clinic on behalf of some of their customers. The proposed class suit included a number of allegations and much of it is centered on how the clinic marketed its offerings online on its website. The screenshot above from some months back, for instance, seems to claim 100% patient satisfaction.

A judge has now issued a mixed ruling that part of the lawsuit against Stemgenex can continue, while most other parts cannot. For three different takes on the court ruling see what appears to be a Stemgenex PR here mostly claiming victory, a blog piece by Harvard Law Professor Rebecca Tushnet here, and an LA Times piece here by Michael Hiltzik.

The key take home messages from Hiltzik on the overall ruling:

“Judge Antony J. Battaglia dismissed several claims brought by three former patients at the clinic, including an allegation that Stemgenex has misled patients because it has produced no evidence that its treatments have any scientific basis. He said it’s unclear that the plaintiffs would be able to show that Stemgenex’s representations about the effectiveness of its treatments are “actually false or misleading” because they haven’t shown that the clinic’s claims have “actually been disproved.”

But he allowed the case to proceed on grounds that Stemgenex misrepresented customer satisfaction statistics on its website. The clinic claimed 100% patient satisfaction, even after the plaintiffs themselves complained that they hadn’t seen any improvement in their medical conditions.”

Therefore, as to claims of 100% patient satisfaction, the case can proceed, but most of the rest of the case at least at this point is out.

Aspects of the judge’s ruling are concerning such as this statement:

“False-advertising claims based on a lack of substantiation, rather than provable falsehood, are not recognizable under the California consumer-protection laws.”

Is it then the case based on California law that consumers here at present can be recruited by dubious advertising by stem cell clinics and the state won’t protect them unless the advertising claims can conclusively be proven false?

It may be in this particular case that the plaintiffs did not present enough evidence to make such a claim here, but more generally the court language suggests a very high hurdle for challenges to stem cell clinic marketing and even medical marketing more generally. As to stem cells, context is important. In general, how does one prove a stem cell clinic’s advertising is definitively false when concrete information is hard or impossible to come by? Most clinics never publish their data, they generally won’t share their cells with independent researchers to test, and much of what they are doing is considered confidential.

Stemgenex

Stemgenex

Was Battaglia’s court aware of FDA broad warnings about stem cell clinics and offerings across the U.S.? The FDA rightly recognizes the potential of stem cells as the basis for new treatments but is very cautionary in general about what is being marketed directly to consumers already:

“the Food and Drug Administration (FDA) is concerned that the hope that patients have for cures not yet available may leave them vulnerable to unscrupulous providers of stem cell treatments that are illegal and potentially harmful.

FDA cautions consumers to make sure that any stem cell treatment they are considering has been approved by FDA or is being studied under a clinical investigation that has been submitted to and allowed to proceed by FDA.”

That’s strong language in past years from the FDA, but since the FDA has not really subsequently backed this talk up with actual actions related to stem cell clinics marketing non-FDA approved offerings (such as the 100+ clinics here in California), how seriously do people take the language alone? I would hope a court would take it seriously, but it’s hard to say and the lack of FDA action puts more pressure on states and the civil courts in a sense to potentially oversee stem cell clinics. Are states and courts adequately prepared to do so? I also wonder if Battaglia’s court read new 2016 ISSCR guidelines that raise issues regarding stem cell clinics.

Another section of the court statement remarkably suggests that in its view of California law that patient informed consent may not be required by stem cell clinics:

“…the stem cell treatments are at least ‘reasonably related’ to maintaining or improving the health of a prospective customer and do not constitute ‘pure research’…to the extent that stem cell treatments represent a fairly newer body of research and development, the court does not find the innovative nature of the treatment to rise to the level of requiring informed consent under the Code.”

This blows my mind as a scientist, but maybe as a matter of law it is accurate? Maybe not?

What the clinics are doing is highly experimental in most cases and it seems to me that proper consent must be obtained or patients will be at much greater risk. The clinics themselves sometimes outright state that they are doing experimental research and they get their offerings listed on clinicaltrials.gov. They seem to like to think of and portray what they are doing as clinical trials. How can consent not be required in such a context? Is it because of some idiosyncrasy of California law on consent?

The court’s language suggests that California stem cell clinic patients in general may get the worst of both worlds right now as paying research subjects subject to questionable advertising for unproven experimental offerings who nonetheless mostly are without some key state protections. This ruling seems to temporarily create or at least highlight some big potential loopholes that could transcend this one fascinating case.

Another stem cell lawsuit: Stemedica sued by board member over alleged mishandling of funds

Stem cell clinic biotech Stemedica has just been sued by one of its own board members based on allegations related to money the company raised, according to CourtHouseNews. The actual suit, filed by an investment company Tiara Holdings and board member Anthony Marlon, can be read here.

CourtHouseNews writes:

“Tiara Holdings II LLC sued Stemedica Cell Technologies Inc. and its top three officers on April 6 in Clark County Court. The officers are CEO and Chairman of the Board Roger Howe, Vice Chairman and CEO Maynard Howe and President and Chief Medical Officer Nikolai Yankovich.”…Dr. Anthony M. Marlon, a medical doctor and businessman, holds 430,000 shares of Stemedica through Tiara Holdings, where he is a member. He also is a member of the board of Stemedica, he says in the complaint.”

stemedica

Note that “Yankovich” seems to be a typo as the Stemedica leader in question is Nikolai Tankovich.

The allegations in the suit are summarized by CourtHouseNews this way:

“Stemedica’s founders have operated a nearly 10-year investment scheme, wherein they have raised over $110 million dollars from various individual investors for the purported purpose of funding and establishing a stem cell company,” Tiara says in the lawsuit.

Tiara claims the Howes and Tankovich “have used these investor funds, in whole or in part, to benefit themselves and their associates through excessive compensation and lavish personal expenses and related party transactions.”

“Stemedica’s founds have concealed and perpetuated this fraud through purported operating subsidiaries, which permitted them to divert millions to benefit them without raising questions or concerns from Stemedica’s investors and shareholders,” Tiara says.”

and

“It also seeks damages and punitive damages for fraud, breach of fiduciary duty, unjust enrichment and bad faith.”

Maynard Howe reportedly told CourtHouseNews that the allegations are false.

Dr. Anthony M. Marlon Stemedica

The Stemedica website still lists Dr. Marlon as a board member (see screenshot above).

Stemedica has seen some other past controversy as in part noted in the new suit related to a KPBS investigation of the San Diego company and ties reported in that piece to the stem cell transplants received by patient Jim Gass, who later developed a spinal tumor. The origin of Gass’s tumor remains unknown to my knowledge and may have had nothing to do with Stemedica’s cells, but the stem cell community would benefit from more clarity on that situation. Stemedica also garnered major media attention further back for its role in a non-FDA-approved stroke treatment received outside the U.S. by hockey legend Gordie Howe (no relation to the company’s Howe brothers).

Another San Diego stem cell businesses, Stemgenex, is also the subject of a lawsuit, in its case related to allegations of improper marketing claims. Additional recent stem cell clinic-related lawsuits have been filed, settled, or remain active as I discuss here and here.

Big HT to Alexey Bersenev.

LA Times Reports Stemgenex Doc Gets 3-Year Probation from State Medical Board

The world of stem cell clinics is on edge right now with a number of negative patient outcomes reported and lawsuits in play such as San Diego stem cell clinic Stemgenex being a defendant in a proposed class action lawsuit focusing in part on alleged problematic marketing claims on their website (see archived posts on the lawsuit).

Pulitzer Prize-winning LA Times columnist Michael Hiltzik has a new piece on both the broader stem cell clinic jungle out there and on specific issues with Stemgenex. It’s a must read for anyone who cares about stem cells.

Stemgenex Doctors

Stemgenex  team of physicians as a few months ago

Hiltzik goes through various concerns about the practices of Stemgenex and then breaks the story that one of the key Stemgenex doctors, Dr. Scott Sessions, was placed on probation by the California State Medical Board in February. The probation was not related to Stemgenex:

“There are other red flags. One of the medical group’s physicians, plastic surgeon Scott Sessions, was placed on three years’ probation by the California Medical Board in February. He was accused of negligence related to cosmetic surgery and other procedures he performed on two patients at an unrelated facility in 2011 and 2013.

Schubert told me Wednesday that “Dr. Sessions has informed us that he is in compliance with all requirements of the probationary terms of the medical board.” But the very next day, his name, photograph and bio had disappeared from the StemGenex website. Sessions didn’t respond to a request for comment.”

Sessions photo was up on the Stemgenex website (see image above) and then suddenly it wasn’t. Hiltzik also mentions that Stemgenex has had other questionable information on its website in the past.

With California having the most stem cell clinics selling non-FDA approved interventions of any state I hope the state medical board here will wake up to the fact that it needs to give this arena more attention.

Update on patients lawsuit against stem cell clinic, Stemgenex

StemGenexThe website Law360 has an interesting update on the proposed class action lawsuit against the San Diego stem cell clinic Stemgenex.  Note that it seems you can read the full Law360 article without a subscription if you open the site in Chrome as your web browser. See more background on Stemgenex and on this case here.

Not surprisingly, the plaintiffs and defense see this case in opposite ways as reflected in quotes in the Law360 article:

“Plaintiffs make non-specific and conclusory allegations with respect to all named defendants,” StemGenex said. “The second amended complaint is so devoid of any specific facts to support its contentions that it is impossible for defendants to reasonably prepare a defense.”

Brian Findley of Mulligan Banham & Findley, a lawyer for the plaintiffs, told Law360 Wednesday that the allegations are “quite specific” and cite false statistics, made-up online reviews and StemGenex employees. If customers told the company that the treatment hadn’t done anything, they were told it could take months to see an effect, or that they should buy another treatment, he said.”

A key issue in this case is the marketing of stem cell offerings from Stemgenex and the plaintiffs allege this marketing was problematic:

“The three StemGenex customers, Selena Moorer, Stephen Ginsberg and Alexandra Gardner, all say that they paid the company $14,900 for each stem cell treatments for lupus, diabetes and other ailments after being persuaded by the number of satisfied customers on the company’s website, but that the treatments had no effect.”

The Stemgenex website still lists an apparent 100% patient satisfaction marketing claim as of today, January 23, 2017 (see screenshot below).

stemgenex

Screenshot from Stemgenex website

According to the Law360 article, Stemgenex has made various arguments to support their motion for dismissal and they overall called the lawsuit a “fishing expedition.”

If you want to follow the case, here is some info:

“The case is Moorer v. StemGenex Medical Group Inc., et al., case number 3:16-cv-02816, in the U.S. District Court for the Southern District of California.”

It seems likely that more patient suits against stem cell clinics will emerge this year. Some, but not all of the other recent cases of this kind including against US Stem Cell, Inc. and its subsidiary US Stem Cell Clinic have been settled before any judgment was issued. I’m not sure of the status of a different proposed potential class action case against The Lung Institute. If you know of other such lawsuits please contact me or post a comment.