Stem cell clinic will pay less than $300K in restitution
A state lawsuit filed in September 2020 against a Sandy Springs-based stem cell clinic chain sought millions of dollars in penalties, accusing the company of reaping at least $6.4 million in gross sales by roping elderly and disabled patients into paying for dubious pain cures.
As it turns out, the company will pay a fraction of that back to the people it allegedly harmed.
Georgia Attorney General Chris Carr’s office announced this week that Elite Integrated Medical, which formerly operated as Superior Healthcare Group, and its owner and manager Justin Paulk, will pay $287,631 under a settlement agreement. The state plans to distribute the money as restitution to patients who shelled out thousands of dollars per shot, believing the clinics could ease their suffering with experimental treatments that hadn’t been approved by the Food and Drug Administration.
A spokeswoman for Carr did not directly address why the state settled for such a smaller sum than it initially sought. But a motion filed in the case in June said Paulk had fallen into dire financial straits, putting him $100,000 behind on legal fees, with both his wife and mother suffering health problems. His company hasn’t operated since April 2020, according to court records.
Carr’s spokeswoman said the settlement sum will cover the losses of all former patients who lodged complaints with the Attorney General’s Consumer Protection Division and those that the division discovered through complaints to other agencies such as the Better Business Bureau, with money also set aside for future claims.
“Our office expects another related settlement to be concluded shortly that will provide additional relief to Georgia consumers,” spokeswoman Kara Richardson said in an email.
In its lawsuit filed under the Georgia Fair Business Practices Act, the state said there was no reliable scientific evidence that Elite’s stem cell injections could cure or treat any diseases, but the clinics used aggressive marketing and sales tactics to convince hundreds of patients to line up for shots. According to the state, each shot cost an average of $5,000, paid out of pocket because they weren’t covered by insurance.
“The use of unproven products or therapies can put a consumer’s health and financial well-being at risk,” Carr said in a written statement Wednesday. “This type of deceptive activity will not be tolerated, and we will continue to pursue any company that seeks to exploit our most vulnerable populations.”
Under the settlement, though, the company admitted no wrongdoing and denied the state’s allegations. Elite, through an attorney, previously told the AJC that “countless Georgians” found relief at its clinics.
“There has been no admission of liability by Defendants and our agreement to enter into the Consent Order was made solely for the purposes of avoiding the burden and expense of litigation,” Elite’s attorney, Michael Weinstein, told the AJC in an email Friday.
The company, over the years, had 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. It also touted stem cells as a treatment for neck and back pain, tennis elbow, carpal tunnel syndrome and degenerative joint disease, among other maladies.
Superior Healthcare’s practices were highlighted in a 2018 Atlanta Journal-Constitution investigation into the “wild west” of the local stem cell therapy market. Former patients told the AJC about attending lunch seminars where presenters wearing lab coats promised miracle cures for aches and pains that came with disease or aging. They said they later interacted with nurses and chiropractors instead of medical doctors, and often wound up haggling with the offices for their money back after the shots had zero effect on their pain.
Under a consent order and injunction filed in Fulton County Superior Court last week, Paulk must keep the state informed of every business he is affiliated with for the next seven years. He and Elite are permanently barred from advertising or selling any regenerative medicine treatments. Nor may they own or operate any business that markets on behalf of a healthcare business advertising regenerative medicine. However, if some regenerative stem cell treatment becomes FDA approved, the defendants can seek a modification of the court order.
The consent order also requires the defendants to pay a $600,000 civil penalty if all restitution hasn’t been paid, or other conditions of the settlement have not been met, by January 2026.
The restitution sum includes $137,631 to more than a dozen former Elite patients who have already filed complaints, and another $150,000 for those who file new claims by Aug. 1. Instructions for filing for a refund are available on the state’s website. If the full $287,631 is not claimed by former patients, the Attorney General’s office will hold the money as a civil penalty, the consent order said.