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Patients seek stem-cell compensation

In what could be a landmark case, six patients in California are suing one of the world’s largest stem-cell companies for allegedly misleading them about the effectiveness of its stem-cell treatments.

The six patients all live in Los Angeles or Orange County and share the last name Lee. Some of them are related, according to their lawyer, the unrelated Sang I Lee. They are suing Human Biostar based in Sugar Land, Texas; Jin Han Hong, the company’s chief operating officer; and Jeong Chan Ra, a Korean citizen and chairman of the board of Seoul-based RNL Bio, the parent company of Human Biostar.

Although the US Food and Drug Administration (FDA) and Federal Bureau of Investigation have taken action against stem-cell traders and clinicians, this seems to be the first case in which patients are bringing a suit against a prominent company. Whatever way this case goes, it will probably clue aggressive lawyers in to the mismatch between what stem-cell companies are promising and what they are delivering, says Bernard Siegel, director of Genetics Policy Institute, a non-profit stem-cell lobby group based in Palm Beach, Florida.  Siegel predicts a new specialty: “cell therapy malpractice.”

The six patients claim they were sold the procedures by Hong when he was president RNL Life Science, another subsidiary of RNL Bio, based in Los Angeles. The procedure consists of taking fat from a patient, removing stem cells from the sample, processing and expanding them in RNL’s Seoul laboratory, and then sending them to one of RNL’s clinics to inject them into patients to treat a variety of diseases.

One patient says that he was given an injection in South Korea, where the treatment is not approved, and then told to keep it a secret. All other injections were at clinics either in China or Tijuana. At the Tijuana clinic, five of the six received an injection on the same day in September 2010.

The patients claim that at RNL workshops they were misled into believing that treatments, still in the experimental stage, had already been proved effective. They allege that Hong told them stem cells would cure all ailments from which they suffered, including diabetes, arthritis, high blood pressure, back pain and insomnia, and “reverse aging, restore health and virility including sex drive, and rejuvenate their body functions to that of their twenties and thirties”. They all say they have received no benefit from the treatments.

They also question whether the stem cells were transported under suitable conditions and by qualified people during their trip from South Korea to China and through Los Angeles to Mexico, and whether the doctors who performed the procedures were qualified.

Altogether there are seven legal complaints, including intentional misrepresentation of fact, negligent misrepresentation of fact, false advertising, unfair competition, negligence and breach of implied covenant of good faith and fair dealing. The seventh claim is “financial elder abuse”, a special clause in California’s Welfare and Institutions Code meant to protect the elderly from being defrauded.

The plantiffs’ lawyer says that all of the plaintiffs are elderly, although he would not give their ages.

The plaintiffs want their money back (they spent US$75,000 between them) “in addition to damages for physical ailments, disgorgement of profits, contractual attorney’s fees and punitive damages”. One of the six had already settled out of court with RNL, but the new case says that the “settlement is unfair, unduly oppressive, unreasonable and unconscionable” and based on an agreement in English that the plaintiff was “hurried into executing… without fully understanding its terms”.

The defendants’ lawyer could not be reached for comment.

The case makes a stem-cell mess in Texas even messier. The FDA has recently audited Celltex, a stem-cell company also based in Sugar Land, and found that the company failed, on 79 counts, to ensure the quality of the cells. Celltex blamed that on communication problems with “RNL Bio (dba Human Biostar)”. Meanwhile, David Eller, the chairman and chief executive of Celltex has been denying that Celltex treats patients, even when a doctor says Celltex gives him $500 every time he injects Celltex cells.

The case could bring closer scrutiny to stem-cell treatments throughout the United States. Until now, clinics advertising or selling unproven and unapproved stem cell treatments to patients had to worry only about the FDA, which monitors the clinical use of stem cells to ensure safety and efficacy — but moves slowly and bureaucratically.

The California case, which has been brought to the United States District Court of the Central District of California, could alert nimbler lawyers to the potential lawsuits from hyped-but-unproven stem-cell treatments, says Siegel. Siegel, himself a lawyer, famously used state laws in Florida to help debunk a cult’s claim to have cloned a human. “The laws are out there, you just have to look for them,” he says. “This case is blood-in-the-water, and any clinician dabbling in unproven autologous stem cells as treatments is placing his or her professional career, their licence to practice medicine and their fortune in jeopardy,” he says. All those connected with the advertising of unproven stem-cell schemes are potential defendants, he adds.

 Siegel concludes that “the hand-wringing on the part medical and scientific societies, that has done little to impede purveyors of unproven stem-cell treatments and their unconscionable deceptive advertising” is giving way to the professional trial lawyers. “They certainly know a good lawsuit when they see it.”


  1. Report this comment

    Paul Knoepfler said:

    I enjoyed this piece. For more thoughts on this case and its implications for the stem cell field as well as why I think it is a watershed moment, please read my article on my lab’s blog here

  2. Report this comment

    don margolis said:

    As Chairman of the Repair Stem Cell Institute, the world’s only stem cell patient advocacy organization, I must comment on this article.

    NATURE is well-paid by Pharma to protect its profits by constantly attacking Adult Stem Cells (ASC). Little more than intentional misinformation about stem cells has appeared on Nature’s website for the last 6-7 years. For example, the constant lie that “bone marrow stem cells can become only blood cells” was on the site in 2011, FOUR YEARS after the first published paper proving otherwise. (British Journal of Haematology 2007) And during those years, dozens of other published papers expanded on that 2007 paper. But Pharma doesn’t pay for truth, only for distortions such as “unproven,” in the face of 1500+ successful ASC clinical trials and 25,000+ humans today leading better lives thanks to ASC. Yes, ASC are unproven only in the eyes of those profiting billions from “incurable” patients, those same patients who are not allowed to read the three words “Adult Stem Cells” in a positive article about stem cells in any major USA publication.

    As most of our regular readers know, there are 500 stem cell clinics around the world. RSCI has found and approved 3% of them as “qualified,” and, as we constantly tell our members, many of the rest are “less than competent or worse.”
    Further, for some reason, Korea and Koreans lead the world in major stem cell fraud. Whether or not the following is fraudulent or merely incompetent remains to be seen. Of course, RNL never has been RSCI-Approved.

    As with all major “medical” journals, you ignore that your MD readers kill 2000 USA humans per DAY due to the ever-worsening, but FDA-Allowed, incompetence of hospitals, drug companies, medical device manufactures, and MDs misdiagnosing, prescribing wrong dosages, etc. Of course, under the ever-worsening anti-patient, pro Big Medicine laws, patients don’t have a prayer in court. But a single stem cell center is an open target and gives you a chance to earn your Pharma payment while another 2000 go to their graves unnoticed .

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      Prateek Gupta said:

      I agree to don margolis comments, many malicious campaigns against adult stem cells are being run by those who have vested interested in promoting patented and approved product fully under the control of one company. the truth is that stem cell therapy can thrive amongst medical doctors without being made into a medical product or drug
      Why do pharma companies want to develop allogenic stem cell as a product when these can become standard of practice without being labeled as drugs ( allogenic bone marrow transplant is an example of proven stem cell therapy which is not called as DRUG)
      Clinics should develop similar adult stem cell therapies like bone marrow transplant to bypass big pharma in playing a role of middle man which would increase the cost of stem cell therapies
      Dear Friends FDA never approved allogenic bone marrow transplant it was based on the consensus amongst medical community and hematologists that it was adopted as a standard of practice. FDA regulate only those who want to sell medicine off the self in form of a product with a therapeutic claim ( if a doctor uses allogenic adult stem cells as a medical procedure and do not buy it from a third party like pharma company then this does not require FDA clearance I believe)

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      Brian Cummings said:

      Don Margolis rants about Nature’s malicious campaign to discredit Adult stem cells. This coming from the Chairman of a web site which claims adult stem cells can help — and I quote:

      ALS (Lou Gehrigs’s)

      # Multiple Sclerosis

      # Alzheimers

      # Neurological Disorders

      Osteo & Rheumatoid Arthritis
      Auto-Immune Disorders
      Optic Nerve
      Cerebral Palsy
      Diabetes 1 & 2
      Renal Failure
      Heart Diseases
      Spinal Cord Injury
      Lung Diseases
      Traumatic Brain Injury

      Show us the data Mr. Margolis that adult stem cells can and are doing all the above already. No, not patient testimonials, real data from real clinical trials. One of the main points of the ”ISSCR primer to patients”: and their families on what to look out for when looking for a stem cell therapy is claims that one source of stem cells can do it all (see absurd list above versus the ISSCR’s warning #2).

      Mr Margolis, how exactly is the FDA stopping clinical trials of adult, fetal, or embryonic stem cells? Was Geron not allowed to test ES cells in the US for spinal cord injuries after obtaining FDA approval? Has StemCells, Inc not been approved by the FDA for three different clinical trials in the US (Battens disease, Pelizaeus-Merzbacher disease, and Dry age-related macular degeneration) as well as a clinical trial in Switzerland for spinal cord injury)? Didn’t the FDA approve NeuralStem to test fetal stem cells for use in ALS? Isn’t Advanced Cell Technologies testing (with FDA approval of course) ES cells for Stargardt’s macular degeneration?

      Mostly citing examples from my own field of neuroscience should illustrate the point that the FDA is not biased against approving stem cell trials regardless of the source of the stem cell. But what about approval of Adult stem cells – the magical ones that Don champions? In 2005 the FDA approved Osiris Therapeutics to test adult mesenchymal stem cells in a trial for acute myocardial infarction (phase II), graft vs host disease (phase III), type 1 diabetes (phase (II) and Crohn’s disease (phase III). Don – How did these slip through the FDA’s blockade on approving adult stem cell trials?

      If one cares to waste their time reading the propaganda on Repairstemcells dot org website, one can learn about how big Pharma owns all of us scientists (gee, if that is the case, where is that missing pay check of mine), how Don has cures for all the above listed diseases, and there is a great government/scientist conspiracy to keep miracle cures from the public. Why we would hide a cure for spinal cord injury from the public and how this gains us money rather than actually marketing and selling the treatment is never explained.

      Mr Margolis is not a scientist nor a physician, so I won’t bother citing all the counter articles in peer reviewed journals regarding bone marrow stem cells; again from the field of neuroscience, I can confirm that bone marrow stem cells do not become cells of the central nervous system. What article exactly were you citing in British Journal of Haematology 2007 that says otherwise?

      Finally, my brother has diabetes (see #11 on Don’s list), my mother has heart disease (see #13) and Crohn’s disease (why wasn’t Crohn’s on your list Mr. Margolis – if I was only tuned in to your website, my own mother would have missed this chance at a cure), and my father has heart disease and lung disease (#13 and #15). I rather keep it a secret from my own family that they can travel to a third world clinic, spend a lot of money on unproven, non-scientifically tested “treatments”, and be cured, than see them happy and healthy. So please, lets all keep quiet about these magic cures until I can secure my fair cut of big Pharma’s largesse. Thanks Don.

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    Prateek Gupta said:

    I also recognise the fact that patients are being misled by some people who provide stem cell therapy, however this does not mean that all those who provide stem cell therapy are fraud and misleading the patients.

    There are HUNDREDS of clinical trial publications in peer reviewed medical journals showing encouraging results OF adult stem cell therapy in different diseases (what else do we want as evidence to prove that stem cell therapy is not a fraud but is a science which is maturing and taking a shape of a new field of medicine called “Regenerative Medicine” )

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    Paul Frohna said:

    As an MD that worked briefly for a medical tourism stem cell company before resigning due to cases just like this, I am surprised it has taken this long for a lawsuit to be filed against stem cell companies that make unsupported claims of efficacy and safety while charging much larger sums than those mentioned in this lawsuit. I hope this strikes fear into the illegitimate companies and allows the legitimate ones to flourish. Only time will tell, but I for one am glad that there is “blood in the water” since that is the only way that theses clinics and companies will be put out of business.

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