Bankrupt Stem Cell Biz To Pay $3.65M In Class Settlement

A California federal judge has given final approval to a $3.65 million class action settlement against StemGenex Medical Group Inc., a stem cell therapy provider that filed for Chapter 7 in 2019, for misleadingly marketing and selling treatments to patients suffering from “incurable diseases and a dearth of hope.”

U.S. District Judge Anthoney J. Battaglia approved the award on Friday, which includes almost $1.1 million in attorney fees and about $460,000 for out-of-pocket expenses.

At 30% of the settlement fund, the attorney fees rate exceeds the normal benchmark for similar cases, the judge noted. But he agreed with the plaintiffs that the sum is justified when taking into account the lodestar for such a case, which included five years of litigation and chasing StemGenex through bankruptcy court. That would normally put counsel’s compensation at almost $2.5 million.

Indeed, it’s been a multi-year journey for plaintiffs who filed suit in 2014 claiming StemGenex had a nationwide scheme to market and sell stem cell treatments to the “sick or disabled” and those suffering from “incurable diseases and a dearth of hope.” The treatments didn’t work the way they were advertised, and the company and its executives had “no reasonable basis” to market them that way, the class of patients alleged.

Four lead plaintiffs claimed they paid the company $14,900 per stem cell treatment for lupus, diabetes and other ailments, but the treatments had no effect.

The judge’s order approves the total settlement, which is made up of two amounts. StemGenex will pay $1.15 million through its liability provider Admiral Insurance Company. Meanwhile, Andre P. Lallande — a doctor of osteopathic medicine who, according to the lawsuit, was “wholly or partially responsible for the content of [StemGenex’s] advertising” — agreed to settle for $2.5 million.

The fund will be divided among the 1,063 identified class members, according to court records. The four class representatives will together get an additional sum of $15,500.


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