The Sordid Tale of the “World’s Most Advanced” Regen Med Procedures
I’m a pretty outspoken critic of “stem cell” clinics that make claims they can’t prove or go well beyond what’s medically reasonable. Most of the time, I call out a chiropractic or naturopath-run clinic, but sometimes clinics run by physicians make what are, in my opinion, crazy claims. A few years back, I called out a clinic called Cellaxys for claiming they were the world’s most advanced. That led to them filing suit against me, a judgment in my favor against Cellaxys, and then a wild goose chase to get our attorney’s fees paid. Let’s dive in.
Getting Ahead of Reality
I want to use this drama today as a word of wisdom for colleagues using marketing firms to advertise their regenerative medicine practice. Not necessarily because I know that’s what Cellaxys did, but more because this is where I see clinics get into trouble with their websites. Why?
When you hire a third party to do your practice marketing, it’s their job to maximize eyeballs and get those people to click and schedule an appointment. The problem is that, as physicians, there is a distinct limit to what we can say, which is often controlled by our state medical boards and other factors. For example, you would never want to claim that your clinic is the best in the world unless you could easily prove that claim, as nobody wants a board issue they can’t resolve. However, those kinds of claims get people to click and buy.
In addition, these types of hyped-up claims harm the field. Why? Legit physicians look at these websites and roll their eyes. Their world is full of muted claims, and any website advertising something that sounds like magic must be selling snake oil. This reduces the widespread use of regen med in these physician communities.
“World’s Most Advanced Stem Cell and PRP Procedures Treating Orthopedic and Spine Injuries, Arthritis and Degenerative Conditions”
Cellaxys is a medical practice that, in 2021, was made up of family physician Matthew Otten, D.O., anesthesiologist Pouya Mohajer, M.D., and Pejman Bady, D.O. The group made the above claim on their website, which I called out on this blog. While there may be a handful of clinics on the face of the earth that could make a credible argument that they might qualify for that title based on their extensive published research or being the first to perform X or Y procedure, I had never heard of Cellaxys, or it’s physicians before seeing their website. Hence, my blog on the topic was a cautionary tale of getting too far over your skis on claims.
A short while after the blog was published, we received word from the legal counsel for Cellaxys that the clinic wanted the blog to come down and that they considered it libelous. We responded via our counsel that if anything was inaccurate in the blog, we would be happy to change it, but they needed to point out what was inaccurate and why. That led to the clinic’s attorney filing suit against us for defamation and business interference before we ever got their response.
Because I’m not shy about calling out clinics or companies that are, in my opinion, stretching the truth, I have learned quite a bit about US defamation law. Hence, I’m happy to share what I know.
In the US, if you write something about someone that is demonstrably untrue that you know is untrue and that results in harm, then that’s called libel. If that person is a private figure, the libel bar is lower. If that person has inserted themselves into the public debate by, for example, putting up a website to make claims to the public, that bar is higher. Either way, if all you do is render your opinion, there is no libel, as 1st Amendment free speech protections overrule any harm-related concerns.
Based on what I wrote, I knew that Cellaxys had no case, mainly because they could point to nothing in the blog that was untrue or went beyond my opinion. It also became apparent to me that the business attorney they hired had no advanced training in First Amendment law. The attorney we hired is one of the most authoritative experts on US First Amendment law in the world (Mitch Langberg). It was literally an elderly featherweight against Mohamed Ali in his prime. It was all over 10 seconds into the first round at the first punch, with our attorney getting the case thrown out.
The Wild Goose Chase for Our Legal Fees
Given that the judge determined that the Cellaxys lawsuit had no merit and zero chance of success, we were eventually awarded our legal fees. This is where it got really interesting, as hiring one of the 1st Amendment superstar attorneys isn’t cheap (but was worth every penny). First, Cellaxys filed an appeal. Then, the Cellaxys attorney pulled out of that case and got sanctioned by the Nevada Supreme Court for failing to meet deadlines in the appeal. That began a year-long hunt for our money with no response from Cellaxys.
When Cellaxys didn’t pay up and its principles refused to respond to court procedures to disclose assets, we tried to find local and major national banks where Cellaxys banked, as we had the legal right to file a petition with the court to sweep their business account for our legal fees. We found no local or national banks that held a Cellaxys bank account. Then, we decided to try to go back to court and pursue the individual doctors who owned the company. After we served the individuals, their attorneys started to talk. We got multiple lowball settlement offers, basically offering a declining amount of settlement money as our attorney fees climbed. In trying to get at the individual’s bank accounts, we eventually learned that the clinic had transferred its clinic name to a different corp. In that process, our attorney also found bankruptcy proceedings for a medical marijuana company that some of the physicians had owned, which concerned us because, in our opinion, this was another example of the clinic owners running away from their debts. Finally, we got a better settlement offer for less than half of our attorney’s fees. We only agreed to this because it didn’t prevent me from writing about this drama.
Did Cellaxys Handle this Correctly?
This is where I’ll let you be the judge. Cellaxys refused to tell us what was untrue about the blog. In my opinion, they hired a business attorney who was way over his pay grade when going against one of the world’s most educated 1st Amendment attorneys. They also had no credible legal argument, which is called a SLAPP suit. Cellaxys then went out of its way to hide and dodge paying our awarded attorney’s fees. In the end, we spent more than $120,000. In my opinion, they only agreed to make this right once it became clear to the individual doctors that they would be forced to pay us the total increasing amount of attorney’s fees at some point. So what does this obvious shirking of their legal responsibility say about the clinic and its owners? I’ll leave that one to you.
Is There Much More to this Story?
In trying to find these guys, our attorney found out that two of these doctors have an interesting history as “entrepreneurs” in the medical marijuana industry. That sordid tale is detailed here, but suffice it to say that the company they began (Nuveda) filed for bankruptcy.
According to legal documents filed in the case, it was alleged that Dr. Bady falsely submitted documentation to the state to eliminate a big investor in the company, with those shares being redistributed to Drs. Bady and Mohajer. This was widely covered on poker news sites as the investor, in true Vegas style, was a superstar poker player. Nuveda also had multiple complaints lodged against it for mishandling cannabis products, unpaid insurance premiums, and failure to pay taxes. Nuveda partnered with another company called CWNevada, which operated dispensaries. This is from a news story on the company:
“Those weren’t the only issues. NuVeda sued CWNevada in 2019, as part of the fallout over a 2019 decision by the Nevada Cannabis Compliance Board that fined CWNevada, and by extension NuVeda, $1.25 million for numerous violations, including off-the-book cannabis sales, selling untested cannabis, and destroying evidence. Six of the business’s 14 dispensary licenses for CWNevada’s “Canopi”-branded outlets were revoked, while the other eight were placed into receivership and ordered to be sold. CWNevada itself filed for bankruptcy protection in 2019.
The entire episode of legal events surrounding NuVeda and CWNevada, which jointly operated as CWNV, illustrated that the cannabis industry in Las Vegas was less of a goldmine than many investors had hoped. When Las Vegas approved dozens of dispensaries and their parent companies in 2014, the rush was on, while several notable individuals, including Ivey and fellow pro Antonio Esfandiari, joined investor efforts hoping for quick profits.”
Are the Medical Marijuana and Regen Med Spaces Similar?
I’ve covered dozens of clinics that have come and gone on this blog. What the regen med space and medical marijuana space have in common, in my opinion, is that they both have attracted players who are in it for the “gold rush” effect and are not drawn to it because they have developed verifiable expertise or because they are physicians who are trying new things to help patients. As a result, both spaces have seen lots of flash-in-the-pan players who burn bright and then quickly collapse.
How Much Did All of this Cost Cellaxys?
Here, I’m guessing a bit, but if you add up the attorney’s fees for filing a lawsuit, filing motions in response to ours, going to the initial court appearance, filing an appeal, employee time dealing with all of this, and then paying almost half of our attorney’s fees, Cellaxys likely spent well over 100K. If you add in physician time and aggravation during this process and lost revenue, that likely adds in tens of thousands more. Hence, this could have easily been a 150K mistake by filing a suit that, according to the court, had zero chance of winning.
The upshot? The good news is that we know our legal rights, so if you want to file a frivolous lawsuit, you’re barking up the wrong tree. The bad news? Anybody in America can sue anyone else for anything, and even if you hire the Mohommed Ali of lawyers and get a knockout in the first 10 seconds of the first round, you may have to chase down your legal fees!