Home › Blog › Stem Cell Institute of America Loses FTC Case

If you have read this blog for years, you probably remember Stem Cell Institute of America. They were a chiro clinic that bombed the airwaves across the country, selling miracle cure “stem cell” treatments offered at chiropractic offices by midlevels. A new entry has been logged in that saga, with the FTC winning its case against the company and seeking 17M in damages. Yes, you read that right, that’s $17,000,000! Let’s dig in.

What Was Stem Cell Institute of America?

Stem Cell Institute of America (SCIA) was a chiropractic clinic chain owned by two chiropractors: Steven Peyroux and Brent Detelich. Dr. Brent was a convicted felon. I have blogged extensively on them because the game plan was for a chiro clinic to hire a mid-level and then spend big bucks on advertising. They would take out huge local ads and radio buys and would inject amniotic and umbilical cord products, claiming these had live and functional stem cells (they do not). Here are a slew of previous blog links:

• SCIA blog 1
• SCIA blog 2
• SCIA blog 3
• SCIA blog 4
• SCIA blog 5

If you want a deep dive into SCIA and its founders, filmmaker Doug Orchard did a great job documenting that story in his movie “From Jail Cell to Stem Cell,” available on Amazon Prime. 

Summary Judgement

The Federal Trade Commission and the State of Georgia sued SCIA and its founders for unfair and deceptive acts (federal) and for violating the Georgia Fair Business Practice Act. From the complaint:

“Plaintiffs allege that Defendants created and published false and misleading advertisements about the efficacy and approval of stem cell therapy injection treatments for a host of medical conditions (osteoarthritis, neuropathy, joint pain, and more), and embarked on a comprehensive marketing campaign to distribute those ads to the public and to other medical clinics across the county.”

On March 11th, the court granted a summary judgment on all of the government’s claims. What is that? This means the court felt that SCIA and its defendants had no chance to prevail on their defenses. It’s basically like a referee calling a game before it has begun because the teams are too mismatched.

Here is the court’s finding: Order granting summary judgment 

What Happened to Produce Such a Sweeping FTC Victory?

Trying to figure out how the FTC could easily prevail here is critical for understanding how to avoid being in the same place as SCIA and its founders. Let’s first review snippets from the decision:

“Defendants made false, misleading, and/or unsubstantiated claims that stem cell therapy (1) cures, treats, or mitigates various orthopedic conditions (including osteoarthritis, arthritis, neuropathy, plantar fasciitis, joint pain, and more) and (2) is comparable or superior to surgery, steroid injections, and painkillers in curing, treating, or mitigating those same conditions.”

So, out of the gate, SCIA used some “bad words” that are always problematic when dealing with FTC-regulated healthcare claims. This is a mistake I see many clinics make in that they use words like “cure.” I’ve even seen clinics with “cure” in their name, giving the FTC the proverbial finger. This statement above also sets up other statements below, in that if you make a claim, you had better be able to back it up with scientific evidence.

From the summary judgment order:

“In support of their reasonable basis theory, Plaintiffs rely on the testimony of their expert, Dr. Sean Morrison. Dr. Morrison is an expert in stem cell biology and regenerative medicine with considerable experience evaluating and interpreting results from the clinical testing of regenerative medicine products.

Dr. Morrison concluded that: there is no competent and reliable scientific evidence that stem cell therapy: 1) cures, treats, or mitigates orthopedic conditions, including osteoarthritis, arthritis, neuropathy, plantar fasciitis, joint pain, and pain resulting from injuries or aging; or 2) is comparable or superior to surgery, steroid injections, and painkillers in curing, treating, or mitigating orthopedic conditions including osteoarthritis, arthritis, neuropathy, plantar fasciitis, joint pain, and pain resulting from injuries or aging.

In briefing, Defendants do not challenge Dr. Morrison’s opinions, offer any contrary evidence, or rely on any clinical studies.”

What’s described here is that the FTC hired a university-based scientific expert who reviewed the medical literature regarding SCIA’s claims about “stem cell therapy” and that it was better than surgery, medications, or other types of traditional treatments for pain or arthritis. That scientific expert gave his opinion that these statements were not supported. While the SCIA defense did a very poor job of supplying credible data that supported their claims, this is what I call the “ringer” dilemma. Let me explain.

In my experience, once the FDA or FTC turns their sights toward you and your advertising, it will be very difficult to prove that any orthobiologic can pass “the ringer.” Let’s take, for example, the best and most supported orthobiologic, which is PRP for knee osteoarthritis. There are dozens of positive randomized controlled trials showing efficacy. Hence, this should easily pass the FTC’s test of substantial scientific evidence. However, because the literature has now been seeded with several RCTs used under 2X “PRP” that show no superiority over placebo, the ringer will be able to pull one or two meta-analyses that filter the literature in a way that excludes the positive evidence for PRP and only includes most of the negative evidence. That expert will then claim to the court that PRP doesn’t pass the FTC’s evidence test.

Now, you may be saying to yourself that the clinic could just hire an opposing expert who will claim the opposite. That may work, but in my experience, the courts will give tremendous weight to the expert hired by the government agency. So, while this could get you through a summary judgment test, it’s a strategy unlikely to prevail in court. Why? Because judges do not possess the scientific background to want to delve deeply into the science and understand something as nuanced as the dose problem I have discussed in this blog. 

Claiming that What You’re Doing is FDA or FTC Approved is a HUGE Problem

SCIA also made the same error I have seen countless sales reps and clinics make: they claimed that the birth tissue products they were using were “FDA-approved” and that the advertising they were using was “FTC-approved.” From the court document:

“Count II: False FDA/FTC Approval Claim
In assessing Count II, the Court considers the same elements to determine whether Defendants made false and misleading representations that the offered treatments and programs were FDA and FTC approved.”

First, the birth tissues they injected were not FDA-approved, but only 361 registered products didn’t include an indication for musculoskeletal use. In addition, the FTC never reviewed any of the SCIA marketing collateral. That statement appears to be based on the founders’ perception that their advertising could meet an FTC challenge. That was obviously an incorrect assumption.

The Founders Were Both Held Personally Liable

The founders had created a complex web of corporations owned by one or the other or both of them. Since it was shown that the founders controlled these entities (i.e., they were not controlled by a board of directors or a cadre of investors), the court didn’t buy the argument that the decisions of these companies that violated FTC rules were any different than the actions of the individual founders. Hence, Drs. Peyroux and Detelich were both held personally liable. That means they can’t just bankrupt these companies and claim that no more money is left to pay the settlement. Instead, each will have to surrender assets and pay personally.

What Can You, as a Legit Clinic Offering Interventional Orthobiologics, Do to Avoid this Type of Mess?

Nobody would want to find themselves defending this type of FTC claim. Of all of the different types of regulatory hot water, you can get into, from what attorneys in the know tell me, this is by far the worst. First, you must provide every single version of all advertising or websites you have ever produced. That alone could take weeks to comply. Then, all email and text messages about these claims. You are also likely on the hook for a 6 figure legal bill just responding to the initial claim, let alone defending yourself in court, which will likely cost a cool half a million USD.

Here are some rules to help avoid this type of issue:

1. Do not make any claims about orthobiologics with little clinical data. That means substances like BMA, A2M, umbilical cord, Wharton’s Jelly, amniotic or placental products, etc…
2. Your claims should be muted even for orthobiologics like PRP with high-level supportive data. For example, focus on explaining what the data does and doesn’t tell us about the effects of PRP.
3. Avoid red-flag words like “cure.” Few cures exist in medicine; even when they do, you need serious clinical data horsepower to prove them. NEVER use the term “Cure” to describe your clinic!
4. Use a clinical registry and make that data freely available to consumers so that they can see your real-world “all-in” results.

The upshot? SCIA created a mess for itself. They made claims they couldn’t prove and then blasted those claims all over the airwaves and the Internet. I see several clinics and clinic chains making the same mistakes. Realize that at the end of the day, if you make yourself an FTC target, regardless of how prepared you think you are to defend something like this, you will still likely get blown out of the water. So, the only way to win that type of fight is to avoid picking a fight in the first place.

Chris Centeno, MD is a specialist in regenerative medicine and the new field of Interventional Orthopedics. Centeno pioneered orthopedic stem cell procedures in 2005 and is responsible for a large amount of the published research on stem cell use for orthopedic applications. View Profile