Georgia accuses stem cell clinic of false advertising

Cord blood containing stem cells, seen here, can be used in the treatment of blood cancers such as leukemias and lymphomas. However, a lawsuit filed by Georgia Attorney General Chris Carr says products used by Sandy Springs-based Elite Integrated Medical have not been approved by the FDA for marketing and distribution, nor are they covered under any investigational new drug applications that would allow for clinical use in humans. (Photo courtesy Fotolia/TNS)

State attorney seeks millions of dollars in penalties, says company’s claims aren’t backed by science

The patients who answered the ads felt desperate, living with pain, and the company promised medical miracles.

Now the state’s attorney general has accused Elite Integrated Medical, a Sandy Springs-based stem cell clinic chain, of using deceptive sales tactics to inject hundreds of vulnerable patients with an unproven drug.

In a lawsuit filed Monday under the Georgia Fair Business Practices Act, the state accused the company of roping in elderly and disabled patients, then promising to ease their ailments with experimental medicines that haven’t been approved by the FDA. Each shot costs an average of $5,000 out of pocket, the lawsuit says.

The state wants Elite to pay back millions of dollars in sales proceeds and seeks a permanent injunction barring the company from misleading the public about its products.

The clinics went by the name Superior Healthcare Group until last year, but Attorney General Chris Carr’s office alleges the healthcare it offers is anything but that.

“In reality, there is no competent and reliable scientific evidence,” the lawsuit alleges, “establishing that Defendants' regenerative medicine products cure, treat, or mitigate any diseases or health conditions and/or that their regenerative medicine products are superior or comparable to conventional medical treatments.”

Elite Integrated Medical's website features video testimonials about how stem cell therapy can help with back, knee and hip pain. One person speaking in a video, a lawsuit by the state attorney general alleges, was actually the owner of the marketing firm that maintains the website. (Special)

Credit: Special

Credit: Special

Carr’s office is suing both the company and its owner and manager, Justin Paulk, of Woodstock. Paulk’s attorney, Scott Grubman said in an email Tuesday that the lawsuit is without merit, based upon a misunderstanding of science and a misreading of the law.

“The actual evidence will demonstrate that Elite is a leader in the use of regenerative therapy to treat or mitigate pain and other symptoms caused by neuromuscular and orthopedic disorders,” the attorney said. “Countless Georgians have obtained relief from pain and increased mobility after receiving treatment at Elite’s clinics, which at one point employed nearly 20 employees in two Metro Atlanta clinics.”

The lawsuit, filed in Fulton County Superior Court, makes Georgia the latest state to take on actors in the stem cell industry, following similar actions in recent years by New York, North Dakota, Iowa and Nebraska.

Like other clinics and chiropractic offices operating in the Atlanta area, Elite touts the regenerating powers of stem cells, the building blocks of human tissue, as a treatment for neck and back pain, tennis elbow, carpal tunnel syndrome and degenerative joint disease, among other maladies. The company came up in an Atlanta Journal-Constitution investigation into the “wild west” of the local stem cell therapy market in 2018.

Stem cell technology is widely accepted for treating some blood disorders such as leukemia and for rebuilding tissues in burn victims, and it shows promise for easing joint pain and reversing the effects of multiple sclerosis, among other potential uses. But the burgeoning science has been seized upon by some making promises in the realm of science fiction, the AJC’s investigation found.

For decades, federal regulators had largely sat on the sidelines while the free market ran its course. Then in 2017, after years of inaction from the Food and Drug Administration, President Trump’s then-FDA commissioner Scott Gottlieb announced a crackdown on “unscrupulous providers who prey on the hope of patients."

Experts said at the time that the government was hoping to create a chilling effect, but the AJC nevertheless found clinics pushing the same kinds of claims that the FDA criticized. Local ads boasted stem cell treatment for hair loss, autism, Alzheimer’s and erectile dysfunction.

Elite, over the years, has promoted regenerative cellular medicine as treatment for Parkinson’s, diabetes, rheumatoid arthritis and strokes, offering “remarkable improvement when other traditional medical processes have failed or had limited efficacy,” according to the state’s complaint.

Cheryl Armstrong, of Carrollton, said she paid about $9,000 to Superior Healthcare Group for stem cell injections into her back and knees, which only left her with a burning and tingling sensation in her extremities. (Special)

Credit: Special

Credit: Special

Former patients of what was then Superior Healthcare told the AJC in 2018 about attending lunch seminars where presenters wearing lab coats made bold promises about alleviating their pains. They said they later interacted with nurses and chiropractors instead of medical doctors and, because the treatments aren’t covered by insurance, handed over thousands of dollars for injections that did little to nothing to help them.

Cheryl Armstrong told the AJC she attended a seminar at a golf course clubhouse in Carrollton in 2018, then wound up paying for injections administered at a chiropractic office to treat her back and knees. She said the shots left her with a burning, tingling sensation that started in her hands and shifted throughout her extremities for about a year.

She said she complained, but the company refunded her only about a third of the $9,000 she paid.

“You can tell the attorney general, if he can get a little piece of my retirement money back, I’d really appreciate it," Armstrong said.

The state’s complaint says that while Elite’s sales pitches often reference studies by third parties about treatments using live stem cells derived from patients' own bone marrow or fat, or live stem cells isolated from birth tissue, the products it administers are much different — derived from placental tissue or Wharton’s jelly from umbilical cords.

The complaint alleges that other misleading tactics were used, such as when a paid actor posed as a medical doctor in a website video, or when the owner of the marketing company that maintained the company’s websites appeared as a patient in a video testimonial, without disclosing his role.

The state has already settled with the marketing company, Grow Smart Marketing LLC, which agreed to pay restitution and to stop making unfounded claims on behalf of stem cell clients.

The lawsuit says an attempt to reach a resolution with Elite failed. Grubman, the attorney, said in his email that the company offered Carr’s office “a plethora of evidence, including multiple double blind, placebo-controlled scientific studies that clearly substantiate Elite’s advertising.”

From January 2017 to April 2019, Elite generated $6.4 million in gross sales by selling products to 842 people — more than half of them over the age of 59, the complaint says. The state wants the company to pay a $5,000 civil penalty for each violation of the Fair Business Practices Act, $10,000 for each violation involving an elderly or disabled person and restitution “in an amount equal to the gross sales to consumers of their regenerative medicine products.”

Loy Roper, who has degenerative disc disease, paid about $9,300 for a stem cell injection at Superior Heathcare Group in Canton. He said the injection was administered to his buttocks muscle, which had no effect. (Johnny Edwards / jredwards@ajc.com)

Loy Roper, who spoke out in the AJC’s 2018 investigation, said he wants back the $9,300 he paid to Superior Healthcare for a shot that was supposed to ease his aching back. Instead, he said, a nurse working at a Cherokee County clinic had him lean over a table and injected a needle into his buttocks muscle, having zero effect.

“It would be great to get the money back,” Roper said. “But if they could shut them down, that would be even better.”