2016 lawsuit alleging bogus claims by now-defunct La Jolla stem cell clinic is settled for $3.65 million

Scales of justice

A long-running lawsuit against StemGenex, a defunct La Jolla clinic that offered 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 doctor paying the settlement amount. The class-action lawsuit covered 1,063 patients.

The suit, initially filed in August 2016, accused StemGenex of wrongfully exaggerating patient satisfaction in the marketing of its stem cell treatments for seriously ill or disabled people. The four lead plaintiffs sought treatment for lupus, diabetes and spine and joint pain.

While StemGenex claimed 100 percent satisfaction in its marketing materials, many people who received treatment complained that it was ineffective.

StemGenex’s high satisfaction rate was based on a survey taken shortly after patients completed a liposuction procedure that harvested fat cells, according to the lawsuit. Those cells were then processed and injected back into patients as stem cells intended to help with a long list of conditions, including Crohn’s disease, Alzheimer’s, rheumatoid arthritis and Parkinson’s.

However, patients reported the procedure didn’t work, according to the lawsuit. They typically paid $14,900 per treatment.

Though the suit focused on allegations of bogus advertising, StemGenex ran into additional trouble in 2018 with the U.S. Food and Drug Administration.

The agency issued a warning to StemGenex, saying it was illegally marketing an unapproved cellular-based product. The FDA also flagged significant violations in the company’s lab, including some that it said could lead to contamination.

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

In the settlement, $2.5 million will come from the insurer for Andre Lallande, the osteopathic doctor associated with the clinic. The remaining $1.15 million will come from StemGenex’s insurance company.

Neither Lallande nor StemGenex admitted wrongdoing. Efforts to reach the lead lawyer for StemGenex were unsuccessful.

Two San Diego law firms — Mulligan, Banham & Finley and Berger, Williams & Reynolds — pursued the case for the class action. Attorney Elizabeth Banham said she was glad the patients will receive at least partial reimbursement for their treatment expenses.

“I am pleased that justice has been obtained after five years of litigation,” she said. ◆