The Missouri Feds Indict a physician’s assistant/clinic operator (and recently elected State Rep) for Stem Cell fraud (and other things). Should the Private Stem Cell Crowd be worried?

The Missouri Feds Indict a physician’s assistant/clinic operator (and recently elected State Rep) for Stem Cell fraud (and other things). Should the Private Stem Cell Crowd be worried?

Earlier the week, it was widely reported that the feds indicted a woman operating a couple of regenerative medicine clinics for all kinds of fraudulent and illegal conduct.

Here is an article about it. fraudindictmentarticle

If you want to go deeper, here is the indictment. derges_indictment_0

It seems like she was way off the reservation for many reasons. First and foremost, she did what I think is the riskiest thing for any health care practitioner to do, namely promote an unapproved treatment for COVID. Nothing will get you in trouble with the feds faster than that, and even if your product is natural like a bunch of herbs.

Second, she was promoting a “stem cell” treatment even though the product she was administering had no stem cells. (It was some kind of amniotic mixture made by the University of Utah for commercial distribution, and that’s another story for another day).

Worse for her, she was actually told that by the University of Utah that the product had no stem cells (or any other kind of cells for that matter). That means she knowingly falsely represented over the internet and TV the product she was administering. The feds take a dim view of that and call it “wire fraud” (because of the use of the internet and TV transmission lines).

Then there was the fact that she was writing prescriptions for controlled substances for patients she had not seen (she was DEA registered) because she was the only physician’s assistant at the clinics to be DEA registered. In addition to being charged criminally for that, I am sure that the DEA will move to revoke her registration certificate.

So what’s the lesson for the regenerative medicine community from the case?

For starters, don’t promote stem cell treatments for COVID and don’t lie about what is in your product.

Beyond that, I actually don’t think this case means much for most of the regenerative medicine community because this individual (allegedly) did so much wrong.

The folks who maybe should be worried are those of you who are marketing stem cell products with dead stem cells, and there are many reports about that happening in the community, especially amongst the non MD stem cell providers.

If you are one of these folks, you might be taking some solace in the fact that you don’t know or don’t believe the stem cells in what you are selling are dead/not viable.

Wasn’t the Missouri woman’s problem that she was told by the manufacturer that the product has no cells?

Yes, that is true, but let me introduce you to a nasty tool in the federal prosecutors’ toolbox and it’s called the deliberate ignorance jury charge. Basically, you can’t stick your head in the sand like an ostrich and claim you didn’t know. The deliberate ignorance charge supplies the element of knowledge in the absence of proof of direct knowledge in a federal felony charge which requires knowledge as an element of the offense. It is especially applicable in the health practitioner setting since there is a duty to know. For health practitioners and their defense counsel, it’s a tough one..

Still and all, the federal criminal apparatus has heretofore not been a major player in the stem cell field. The criminal boys and girls (meaning the US Attorneys Offices’ Criminal Division and the FDA’s Office of Criminal Investigations) have mostly left it to the federal civil apparatus.

Mostly I say, because you only hear about the cases which result in indictments. FDA criminal attorneys handle investigations which don’t result in indictments, and that’s not something which gets talked about much for obvious reasons, but there have been such investigations in the past, and I suspect it is still on the the criminal boys’ radar screen, as they continue to watch for egregious cases like this Missouri one.

Also, I don’t think this case will have much if any impact on the autologous crowd and especially for the utilizers of bone marrow. For those folks, it is all about the advertising claims and the recent action is more from the state AG’s offices than the feds.

Or so I see it.

Rick Jaffe, Esq.


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