How donors ended up fueling an unproven and dubious $2 billion stem cell industry
Their shoulders and backs and knees were giving out. Pills and steroid injections hadn’t eased their pain. They were scared of surgery. So, one afternoon last October, two dozen men and women, many of them white-haired, some leaning on canes, shuffled into a meeting room at Robson Ranch, a luxury retirement community in Denton, Texas. Sipping iced tea and clutching brochures that promised a pain-free tomorrow, they checked off their ailments on a questionnaire.
They were there to see a presentation by Dr. David Greene, who was introduced as a “retired orthopedic surgeon.” Atlas Medical Center, a local clinic that specializes in pain treatment, hosted the event. Greene, a short, trim man with his hair slicked up, ignored the stage and microphone and stood close to his audience. After warming up the crowd with a joke about his inept golf skills, Greene launched into his sales pitch. A tiny vial no larger than the palm of his hand, he told the group, contains roughly 10 million live stem cells, harvested from the placenta, amniotic fluid, umbilical cord or amnion, the membrane that surrounds the fetus in the womb. Injected into a joint or spine, or delivered intravenously into the bloodstream, Greene told his listeners, those cells could ease whatever ailed them.
On a screen behind him, Greene displayed a densely printed slide with a “small list” of conditions his stem cell product could treat: arthritis, tendinitis, psoriasis, lupus, hair loss, facial wrinkles, scarring, erectile dysfunction, heart failure, cardiomyopathy, chronic obstructive pulmonary disease, asthma, emphysema, stroke, Alzheimer’s disease, multiple sclerosis, ALS, neuropathy, pelvic pain, diabetes, dry eye, macular degeneration, kidney failure. And that was just a sample. “I need to add a couple more slides,” Greene said with a laugh.
Greene said that amniotic stem cells derive their healing power from an ability to develop into any kind of tissue, but he failed to mention that mainstream science does not support his claims. He also did not disclose that he lost his license to practice medicine in 2009, after surgeries he botched resulted in several deaths. Instead, he offered glowing statistics: amniotic stem cells could help the heart beat better, “on average by 20%,” he said. “Over 85% of patients benefit exceptionally from the treatment.”
“Patients come back to the center saying, ‘I can walk farther, I can breathe easier, I can sleep better,’ ” he proclaimed. “It’s remarkable the outcomes we’ve been seeing for the last few years.”
In the second row, a slender woman in a striped jacket, who had hobbled into the meeting on a wooden cane, pumped her fists in the air. “Stem cells!” she cheered.
For more than half a century, the regenerative possibilities of stem cells — which the body stores to repair damaged tissue and organs and restore blood supply — have tantalized the medical community. Bone marrow transplants for cancer patients, which rely on blood stem cells, fulfill this potential. But alongside legitimate, scientifically proven treatments, an industry has sprung up in which specialized clinics offer miracle remedies from poorly understood stem cell products.
These clinics are multiplying in the United States. According to a tally by Leigh Turner, an associate professor of bioethics at the University of Minnesota, there were 12 such clinics advertising to consumers in 2009; in 2017, there were more than 700. Unproven cellular therapies are a $2 billion global business, according to a recent paper co-authored by Massimo Dominici, the lead investigator at the cellular therapy lab at the University of Modena and Reggio Emilia, in Italy.
This burgeoning business is largely unregulated. Technically, manufacturers are required to submit stem cell therapies for review as a drug, and to provide evidence of their safety and efficacy, but the U.S. Food and Drug Administration hasn’t enforced the rule consistently. The former FDA commissioner Dr. Scott Gottlieb acknowledged in an interview that the agency’s laissez-faire attitude has made it easier for stem cell clinics to proliferate. “This is an example where the FDA, for a long period of time, took enforcement discretion, then the field grew,” he said. “Then it becomes hard to step in and actually apply the regulation.”
Many clinics offer stem cells taken from a patient’s own bone marrow or fat. But they’re being challenged by a newer technology: amniotic stem cells.
Greene’s company, R3 Stem Cell, was established in 2013. It distributes amniotic stem cells to about 30 clinics nationwide, which have administered them to 10,000 patients, according to an R3 brochure. It also handles marketing for the clinics. In an interview, Greene acknowledged that the benefits of amniotic stem cells that he touted at the Robson Ranch seminar are based on “a lot of success stories,” rather than on clinical trials. “I don’t claim anything,” he added. “I don’t claim that this is a treatment. I don’t claim that it cures anything. I don’t claim that it’s a permanent fix. All I discuss is maybe, potentially, people can get some improvements from stem cell care.”
One appeal of amniotic stem cell treatments is convenience. They don’t require patients to undergo liposuction or bone marrow extraction; instead, manufacturers harvest the cells from tissues donated by women who have recently given birth, and the cells are then frozen and shipped to clinics. There’s no special training needed to administer amniotic treatments, either — a nurse practitioner on staff can give injections — so chiropractors, beauticians and sports medicine doctors can enter the field with relative ease. A procedure such as an injection into a joint might take about 10 minutes and cost between $5,000 and $10,000. For systemic diseases such as lupus, some clinics also administer the cells intravenously, which can cost more than $10,000 per session.
Because amniotic stem cell treatments don’t undergo the clinical trials required for FDA approval, there’s little data or research on them. Their efficacy is highly questionable and, in one case where bacteria contaminated the supply, the lack of accountability in the industry has led to serious infections for a dozen patients. An investigation by ProPublica and The New Yorker found disgraced doctors who were recast as salespeople, manufacturers that cloaked themselves in pseudoscience and had few scientists on staff, and clinics that offer to treat conditions like multiple sclerosis or kidney disease without specialized training. Unscientific methods, deceptive marketing, price gouging and disregard for patients’ well-being were rampant across the amniotic stem cell therapy industry.
The supply chain for amniotic therapy starts and finishes with people who are at vulnerable times in their lives: the cells come from new mothers and go to chronically ill patients. Women who undergo cesarean sections are often asked to donate their birth tissue shortly before the procedure. By law, they can’t be compensated for it. Mothers who donated their tissue told ProPublica and The New Yorker that they assumed, or were assured, that it would be used for a worthy cause — and that otherwise it would be disposed of as medical waste. But they couldn’t recall the details of the donation process, owing to the haze of childbirth.
“Someone walked in with a form while I was in labor and asked if I wanted to donate” the umbilical cord, said Julie Menge, who gave birth in Pittsburgh in 2015. “I said, ‘Sure!’ And I have no idea what happened to it.”
Tissue banks do collect birth tissue for important medical reasons. For instance, blood stem cells from umbilical cords can be used in the treatment of some blood disorders, such as leukemia. Placentas can be turned into wound dressings, including surgical grafts and bandages for people who have had ocular surgery. Other donations, though, find their way to commercial amniotic stem cell manufacturers, which sell them at a steep markup.
The patients are taking an expensive gamble. A 66-year-old insurance auditing specialist, who asked not to be named for privacy reasons, suffered constant pain from arthritis in both knees but wanted to avoid replacement surgery. After attending a seminar in Irving, Texas, hosted — like the one at Robson Ranch — by Atlas Medical Center, she booked an appointment at Atlas in November 2017.
There, the staff told her that the supplier was offering a discount that would lower her cost to $7,300 for injections in both knees. “They were just acting so shocked, one of them said, ‘I’ve never seen a discount this high before,’” she recalled. “I was so gullible.”
She received an injection in each knee and returned every two months for a checkup. “They had me fill out this form every time to record my pain level, and it was close to 10 every time,” she said. The staff assured her that she would improve within six months, but her knees did not get better.
Alexandra Schnee, a chiropractor from Atlas who introduced Greene at the Robson Ranch event, defended the treatment. “As with any procedure, there will be patients who have success and others that don’t,” she said in an email. “We have many more patients who have experienced improvement with this therapy.”
The patient canceled her last appointment. “After six months, I was pretty ticked off,” she said.
When most people hear the words “stem cell,” the first thing that often comes to mind is embryos. Embryonic stem cells are truly wondrous: They can evolve into all types of cells in the body. But their power is fleeting. By the time a fetus is fully formed, its stem cells are stratified: blood-forming stem cells can make both white and red blood cells, for example, but they won’t naturally turn into skin. Skin stem cells can regenerate the various layers of skin, but they won’t give rise to a new brain cell. Only in a lab, with genetic modifications, can scientists get differentiated stem cells to regain embryonic capabilities.
Amniotic stem cell products are made solely from tissues related to childbirth, not from embryonic cells. The scientific consensus is that they may be able to turn into a limited range of tissue types — namely bone, fat and cartilage — but they can’t turn into liver, heart or brain cells, for example. Even if such a transformation were possible, scientists don’t know how it could happen or what would trigger it. Until this regenerative capacity is proved, some researchers say, these birth-tissue cells shouldn’t be called stem cells at all.
Yet providers of amniotic stem cell treatments often attribute to their products all the powers of embryonic stem cells, minus the ethical issues associated with deriving cells from early-stage embryos. In his talk at Robson Ranch, Greene blurred the distinction between embryonic and amniotic stem cells, saying, “I think of a stem cell as a blank slate, a master cell that has not made the decision of what it wants to specialize in.” The cells he markets “can turn into anything we clinically need them to become,” he said.
That assertion is “simply not true,” said Jeanne Loring, the director of the Center for Regenerative Medicine at the Scripps Research Institute and chief scientific officer at Aspen Neuroscience. “If a stem cell from one organ is put into another, like a placenta or umbilical cord cell into a knee, it will die. It can’t become something else.”
Greene acknowledged that most patients don’t understand the difference between embryonic and other types of stem cells, and that the language he uses in his seminars is largely guided by market research. “When you look at what people are typing on the web, ‘stem cell’ is the No. 1 key phrase,” he told me. “That is the key word that the public in America understands.”
Greene later cited a 2017 paper from a Chilean study as evidence that amniotic stem cells could help patients with heart failure. In the trial, 15 patients received umbilical cord-derived cells and saw improvement in the amount of blood pumped with each heartbeat. Dr. Steven Nissen, chairman of the department of cardiovascular medicine at the Cleveland Clinic, reviewed the study at ProPublica and The New Yorker’s request and noted that the trial was “tiny” and “is so preliminary (and frankly limited in quality) that no conclusions are possible.” He added that the Chilean findings had not been reproduced, while other studies had been negative. “This is NOT a justification for commercial administration of stem cells,” he said.
At the Robson Ranch seminar, Schnee, the Atlas chiropractor, played a news clip about a two-part study at Stanford and the University of Pittsburgh in which stem cells were used to treat stroke patients. It showed a woman who had lost much of her limb function raising her arm above her head with a look of awe. But the cells used in the Stanford trial — which the clip referred to as “modified adult stem cells” — weren’t taken from amniotic tissue. Instead, the study used bone marrow cells that had been cultivated in a lab, genetically modified to be more potent and then delivered with a needle into a precisely selected spot in the brain.
Dr. Gary Steinberg, the chair of neurosurgery at Stanford University, ran the trials and has been developing stem cell therapies for stroke patients for two decades. When he was told how the clip about his study was used, he said that there is no evidence to show that products made from amniotic cells are beneficial. “I have no control over how these clips get used, unfortunately,” Steinberg said. “I’m not happy about it.” He added, “I’m an advocate for thoughtful, controlled trials, and they will never know, unless we do controlled trials, if it works.”
Steinberg isn’t the only academic whose work has been distorted to promote Greene’s products. A video on YouTube by R3 Stem Cell includes clips of David Schaffer, the director of the Stem Cell Center at the University of California, Berkeley, talking about regenerative medicine. Schaffer told ProPublica and The New Yorker that he has never heard of R3 and does not work with amniotic tissue. “That footage was not included with my consent,” he said. “I would be suspicious of the business.”
Greene’s main supplier is the Utah Cord Bank, in Sandy, Utah, which was established in 2005 as a private facility where customers paid to store umbilical cord blood and other birth tissue taken from their babies to be used, among other reasons, if the child or a sibling had a blood disorder. For years, the bank’s website boasted of “bottom line prices,” advertising the “lowest yearly storage fee in the nation.”
Around 2016, the bank began making two amniotic stem cell products, called StemShot and StemVive. (StemShot was later renamed Stemii.) Although the bank continued to store birth tissue, amniotic stem cells soon became its biggest moneymaker.
The Utah Cord Bank was co-founded by a man named Eliott Spencer, who holds a doctorate in biochemistry from Brigham Young University. When the bank started producing StemShot and StemVive, Spencer was the only scientist on the company’s management team and the only person who knew the recipe for making the products, according to two former employees who spoke on condition of anonymity. Spencer said in an email that the bank now has “more than one scientist and many technicians, as well as multiple people who know how to safely procure, process and package our products.”
Spencer said that he and his wife, Carlee, “currently work side by side as co-founders and presidents of the company.” According to her LinkedIn page, Carlee has a degree in design graphics. A former volunteer youth religion teacher, she originally joined Spencer’s company as a lab support worker and, the next year, rose to executive vice-president and director of procurement. The bank’s chief executive officer, Leigh Kimball, says on his LinkedIn page that the company makes “100% organic stem cells” and is “on track to double in size in 2019 to $20M.” He has a bachelor’s degree in journalism.
Friends and former employees described Spencer as a computer whiz who mined bitcoin in his spare time. They also portrayed him as a libertarian who dislikes government regulation and can be thrifty to a fault. Last November, he pleaded guilty to a misdemeanor charge of criminal mischief after trying to exit an airport parking lot without paying an $18 parking fee. According to a court filing, he caused $3,755 worth of damage to the parking-lot gate, which he agreed to pay for. He said in his email that he doesn’t believe he was responsible for the damage and that the incident “is in no way indicative of major flaws in my character.”
Industry insiders and the two former employees said that one placenta should yield between two and four hundred vials of amniotic stem cells. The Utah Cord Bank would harvest as many as 800, the ex-employees said. Also according to the former employees, it costs less than $50 to make a single vial, which is then sold to a clinic or a distributor for about $1,000.
Spencer also used expired chemicals and reagents in his lab, according to two former employees. In January 2018, the FDA sent an inspector to the Utah Cord Bank to audit it for compliance with regulations on laboratory operations, according to the FDAzilla database, which tracks inspections. After the inspector notified the company that she would arrive on a Monday, workers spent the previous weekend getting rid of expired materials, two former employees said. Spencer didn’t respond to a request to comment on this incident. The bank passed the audit.
Spencer said that the Utah Cord Bank has a perfect safety record and has never been cited for deficiencies by the FDA. “With tens of thousands of treatments shipped worldwide, and with no serious adverse events reported, UCB has helped a lot of people overcome their health challenges,” he said. “Sadly, this cannot be said for so many others in this space.”
On its website, the Utah Cord Bank touts its products as containing “young multipotent cells” that can turn into many kinds of tissue. It and other manufacturers typically ship amniotic stem cells cryogenically preserved to a doctor’s office, where they’re thawed before they are injected into a patient. But despite the effort to preserve the cells, research suggests that many of them do not survive. Dead cells, once injected, have no effect; the body breaks them down.
“For most of these products, there’s not many healthy cells left,” said Daniel Kuebler, the dean of the School of Natural and Applied Sciences at Franciscan University of Steubenville, Ohio. Kuebler has tested amniotic products for manufacturers including the Utah Cord Bank, but he declined to comment on any specific product, saying that his contracts bound him to confidentiality. Even if there are some cells that are still alive post-thaw, “I have a hard time getting them to grow,” Kuebler said. “Just because they’re alive doesn’t mean they’re not in the process of dying.”
Dr. Lisa Fortier, a researcher at Cornell University and a consultant for a company that sells birth-tissue products, tested nine of them from four manufacturers — Utah Cord Bank was not one of them — and also found no live cells. It is “very unlikely” that the amniotic membrane “works as a stem cell product,” she said. Fortier and Kuebler said that there may be other proteins in the products that could somehow wake up the immune system or restore tissue, which might account for the benefits reported by some patients, but there’s not enough data to know for sure.
Greene supplied ProPublica and The New Yorker with two lab analyses of Utah Cord Bank products. Both showed that up to 42% of the cells in the tested vials were alive. One analysis, done by Kuebler, counted roughly 600,000 live cells in the vial. That’s far less than the 10 million live stem cells that Greene cited at the seminar. The testing also didn’t indicate whether the living cells were stem cells or another type of tissue. “There’s a good chance most of these cells are not stem cells,” Paul Knoepfler, professor of cell biology and human anatomy at the University of California, Davis, said, after reviewing the reports sent by Greene. “The majority could be fibroblasts” — connective tissue cells — “or other unhelpful cells.”
In its advertising, the cord bank features employee testimonials about the excellence of its products. Eliott Spencer said that “nearly all” of the bank’s employees “have used our products to treat shoulder pain, knee pain and more” and have “experienced the benefits.” The two former Utah Cord Bank employees described “shoot-up parties” where the staff were given vials of the product for personal use. According to one former employee, Spencer’s brother “would come in and do IV pushes on people.” The other former employee said that he became concerned about Spencer’s secretive production methods and worried that the amniotic cells weren’t being properly tested for disease. He said he’d take his dose to the bathroom and trash it.
On an overcast day in November 2017, a 90-year-old man named Norman Graf, one of 27 million Americans who suffer from arthritis, attended a seminar at the Holiday Inn in Bismarck, North Dakota, hosted by West2North Medical Solutions. West2North is not part of Greene’s network, but it is also supplied by Utah Cord Bank. Dean Jones, a chiropractor who co-owns West2North, assured the audience at the seminar that amniotic stem cells alleviate arthritic pain. Graf later told his daughter, Libby Graf, that he had planned to go home and think about a stem cell injection, but the clinic’s staff convinced him to have it done immediately.
“He was telling me he went and got an injection for $5,400 and I was, like, What?” Libby recounted. Her father’s cognitive abilities have diminished with age, and “it’s obvious that he doesn’t have enough wherewithal to make this decision,” she said.
Jones said in an email that, while confidentiality prevents him from commenting on specific patients, the clinic “does not ‘convince’ anyone to do a procedure immediately. We fully explain the different options and benefits, and allow the patient to decide.” All patients sign consent forms and are told there’s no guarantee that the therapy will help them, Jones said.
Graf told his daughter that his condition hadn’t improved. Yet he was planning to go back, because the clinic had promised him a discount — to $3,600 — for a second shot. Libby persuaded him not to go. Graf’s other daughter, Jodi Jacobson, complained to the North Dakota attorney general, as did other patients, prompting a state investigation. In May, West2North agreed to repay $19,733 to Graf and three other patients, and to be “permanently enjoined from engaging in any stem cell injections” that don’t comply with FDA rules, but denied any violation of state law.
Spencer said that Utah Cord Bank was contacted by the North Dakota attorney general about one physician but wasn’t a target of the investigation. “We have been burdened and troubled by claims made by some physicians that use our products,” he said.
West2North couldn’t stay away from the lucrative stem cell market. As of February 2019, the clinic’s website said, “Bone marrow stem cells coming soon.” Jones said that the state attorney general has been informed of this plan and hasn’t objected.
North Dakota is still reviewing the matter, according to assistant attorney general Parrell Grossman. “We have approved nothing,” he said.
Jones faced tougher regulation from the state of North Dakota than he did from the FDA. Nearly 15 years ago, the FDA established rules on the use of human tissue. If the tissue was “minimally manipulated” and used in the same way it originally functioned in the body, it didn’t need FDA approval as a drug. However, if the cells were modified in a lab or were given a new purpose — such as using placenta cells to treat a brain disease — they would be considered a drug and would have to undergo FDA review.
The problem is that the agency left it up to manufacturers to decide which group their products belonged to. Seeking FDA approval entails running multiple human trials, which can cost hundreds of millions of dollars. There was no incentive for the stem cell manufacturers to put their treatments through this process, so they took the position that their products didn’t count as drugs.
The FDA rarely disagreed with their stance. From 2010 to 2017, the agency sent warning letters to only seven of the hundreds of companies that made or marketed stem cell treatments, according to a tally of letters in the FDA database. The agency said it could not confirm the exact number because it “does not maintain lists of actions by product.”
In the early 2010s, the agency decided it should issue stricter guidelines on the use of human tissue. But it wasn’t until November 2017 that the guidelines were updated, clarifying that many tissue products, including amniotic stem cells, must be characterized as drugs. The FDA gave the clinics another three years — until 2020 — to comply. (In the meantime, the agency continues to send warning letters to more companies.)
Gottlieb, the former FDA commissioner, said he is disappointed that, during this interim period, few firms have submitted their products to the FDA for approval as drugs. “There are literally hundreds of clinics, and some of them are engaging in very risky actions,” he said. “They’re crossing the line.”
Gottlieb acknowledged that the agency doesn’t have the resources to go after them all at once. He said that the FDA will prioritize the clinics that offer the riskiest procedures, such as injections into the eye and spinal cord. On March 5, a few weeks after our interview, Gottlieb announced his resignation. It’s not clear yet if his successor will maintain his commitment to cracking down on the stem cell industry.
Greene, who is 50, travels the country to deliver seminars, drawing in patients with his friendly patter. His website, R3stemcell.com, connects patients to clinics, referred to as “Centers of Excellence,” that have signed contracts with him.
Greene enlists doctors at those clinics to offer amniotic stem cell treatments. The clinics pay Greene at least $495 to join his network, another $495 per month and $75 for each prospective patient that comes to them through his website, according to a brochure.
Greene regularly holds training sessions in Las Vegas for potential providers. On another R3 website, eight “top providers and industry thought leaders” are listed as trainers. They included a “Functional Oriental Medicine Expert” who doesn’t have a medical degree, a “biologics expert” who is the president of a surgical supplies consulting company and has no scientific training, and a pain doctor who was once disciplined by the Texas Medical Board for inadequate care of two patients who received spinal cord stimulators.
Among the most recent doctors to join Greene’s network is Dr. Prabhat Soni, who runs a private practice out of a townhouse in Brooklyn, New York. In the clinic’s waiting area, banners advertise the “O-shot” and “P-shot” for erectile dysfunction, promising to “rejuvenate your sex life and your marriage.” Another banner, which carries Greene’s logo, advertises “cosmetic stem cell therapies: effective regenerative procedures for facelift, hair restoration and scar improvement!”
Soni told me that he has been offering procedures using fat stem cells for about a decade. He joined Greene’s network, at the end of 2018, because amniotic treatments were a better value proposition, he said. “For fat cells, you have to numb the patient, do the liposuction to take fat, and then process the fat. It can take three hours. For amniotic cells, you just take the vial between your hands and warm it up, then you can go. It takes 10 minutes.” Either way, Soni charges $5,000 for one injection and $10,000 for intravenous treatment.
He told me that he sees patients for stem-cell treatments about once a day and that stem cells can work for any ailment known to mankind. “They do everything,” Soni said, “because stem cells are our friend.” When asked why they hadn’t replaced all other medicines, Soni blamed a conspiracy by the pharmaceutical industry, saying, “because then the pharmaceutical companies will die.”
Soni put me in touch with Joseph Longo, a 72-year-old who developed arthritis in his knees after decades of working as a ballroom dancer and instructor. Last December, Longo paid Soni $12,000 for two injections, one in each knee. When he woke up the next morning, he said, he felt “a little different. Not so stiff, not so much pain.” When we met, two months later, Longo was limping slightly but said that his left knee continued to feel somewhat better.
Soni told Longo that three more injections were required for him to feel a significant difference, but, by early May, Longo had decided not to seek further treatment, saying that his left knee hadn’t improved any more. “I don’t think the regenerative properties were happening,” Longo said.
Earlier this year, Soni’s Web site displayed the names and faces of a team of clinicians, including a cardiologist, a cosmetologist, a neurologist, and a urologist. None of them were listed on New York State’s license look-up page, and their photos were traced back to stock photo websites.
When initially asked about these specialists, Soni said, “They are all seeing patients for me” and changed the subject. After ProPublica and The New Yorker expressed doubts about the clinicians’ existence to Soni, the names and photos vanished from the website.
In a biography on his website, Soni said that he is an assistant clinical professor at NewYork-Presbyterian/Weill Cornell Medical Center. When asked if he was still affiliated with the hospital, Soni said he was in the pulmonary division, asserting inaccurately, “I’m the chief of department.”
The hospital said that Soni’s assistant professorship ended in December 2017, and he no longer has a position there. After ProPublica questioned him, Soni updated his website to reflect that he no longer works at the hospital. Greene said he dropped the doctor from the R3 network.
Soni expressed confidence that his stem cell practice is poised to grow. “Someday I will be on TV,” he said. “So many people will come.”
For some patients, stem cell treatments have been disastrous. Last July, Dorothy O’Connell, an 89-year-old grandmother living in Brazoria, Texas, went to see Sammy Tao, a chiropractor offering stem cell therapy. She had read about him in a newspaper piece by Gin Crawford, a local columnist who, when not sharing recipes for strawberry sheet cakes or tips for opening pickle jars, regularly extolled amniotic stem cell treatments and recommended Tao’s clinic as a local option for her readers.
Tao assured O’Connell that stem cells could help her arthritic shoulders and back, said O’Connell’s daughter Elaine Dilley, who took her to the appointment. “He told her that her life would change, that she could go back to being herself again,” Dilley recalled. That prospect seemed worth the $12,250 price.
On Aug. 9, a nurse practitioner at the clinic injected stem cells in both of O’Connell’s shoulders, according to her daughter and court documents. The following month, O’Connell returned for injections in her spine. Three days later, she called the clinic complaining of severe back pain and muscle spasms. Dr. Omar Vidal, a pain management physician who worked with Tao, prescribed a muscle relaxant and Tylenol.
Tao had said that O’Connell might feel under the weather for a few days. But she kept getting worse. “I was scared I was hurting her when I moved her, because, every time you would touch her, she would scream, she was in so much pain,” Dilley said.
Finally, Dilley called an ambulance. The local hospital had her mother flown to Baylor St. Luke’s Medical Center in Houston, because blood tests showed that she had sepsis. O’Connell’s kidneys were failing and her body was shutting down.
Amniotic stem cells are unlikely to cause major complications if they’re clean, but the ones injected into O’Connell were contaminated with bacteria, according to the U.S. Centers for Disease Control and Prevention. The product Tao’s team used was made from umbilical cord blood and came from a privately held distributor in California, called Liveyon. At least 11 other patients across Texas, Florida and Arizona were also infected with various strains of bacteria, including E. coli and E. cloacae, and hospitalized after being treated with contaminated cells from Liveyon. Under pressure from the FDA, Liveyon recalled the product.
Liveyon’s ads feature a dignified looking doctor with graying hair and piercing blue eyes telling patients about the benefits of stem cells. He shows one woman a glowing blue vial, and a narrator declares that the stem cells will provide “a new standard of living, free of pain and limitation.”
The doctor is Dr. Alan Gaveck, the company’s director of education. Gaveck used to work as a podiatrist, in Arizona, but, in 2007, the state’s medical board put him on probation after he bungled a foot surgery and the patient had to have a toe amputated. “I felt horrible at the time and still do to this day that the patient suffered such a loss,” Gaveck said. He acknowledged that he is not trained in stem cell biology. His “relevant experience,” he said, “has been learned through eight years of being immersed in the industry and daily reading of journal articles related to regenerative medicine.”
Liveyon’s founder and chief executive officer, John Kosolcharoen, pleaded guilty in 2016 to paying illegal kickbacks as part of a scheme to steer prescriptions for military members covered by TRICARE, the U.S. military’s health care program, to specific pharmacies. He is awaiting sentencing.
Kosolcharoen readily acknowledged the felony conviction, saying that he got tripped up by a change in the law. He blamed the contaminated stem cells on his supplier, a San Diego-based manufacturer called Genetech. Once the FDA contacted Liveyon, it immediately cut ties with Genetech, he said. Genetech’s president, Edwin Pinos, could not be reached. His company’s San Diego office has been closed.
O’Connell spent two weeks at St. Luke’s and five more in a rehabilitation center. “My mother used to be able to wash her car, mow the yard, cook,” Dilley said. “Now she can barely get down the steps.” O’Connell has a lawsuit against Liveyon, Genetech, Vidal and Tao pending in a Texas district court. Tao and Vidal denied all allegations in court filings and said that they weren’t responsible for O’Connell’s injuries. Tao’s lawyer declined to comment and Vidal didn’t respond to a request for comment.
Crawford, the local newspaper columnist, said she was upset to hear of O’Connell’s infection. “I’ve been sick about this whole thing,” she said. “My whole intent was to help people, not harm people.” In a March column, Crawford told her readers that she no longer recommends Tao’s clinic.
Now Liveyon is making its own product, from umbilical cords that it buys from a public cord bank, Kosolcharoen said. The bank, which he declined to identify, sells donated cords that don’t meet FDA standards. He called the new treatment “clinical trial grade” and said that Liveyon plans to start trials to prove its safety and benefits. But, even before conducting trials, Liveyon is already marketing the product, which it calls Pure, with the tagline “The Pure Feeling of Healing.”
In his talk at Robson Ranch, Greene assured his listeners that the FDA supports regenerative medicine. “They’ve realized that there are clinical uses now,” he said. He also warned against what he called “endgame surgery,” telling his audience, “You can’t go back from a spinal fusion or knee replacement.”
Greene knows firsthand how dangerous surgery can be. After earning his bachelor’s and medical degrees, at the University of Virginia, Greene began working as an orthopedic surgeon, in Arizona, in 2004. By 2007, he was earning more than $400,000 a year, but the outcomes of his surgeries were dire. From 2005 to 2007, he botched at least a dozen of them, the Arizona Medical Board later found.
In April 2005, a 35-year-old U.S. Air Force master sergeant, James DeJong, came to Greene complaining of back pain, according to court filings. DeJong left Greene’s operating room as a paraplegic. “I wouldn’t buy a bottle of water from him if I was lost in the Sahara Desert,” DeJong said in a recent email.
In January 2006, Greene operated on 78-year-old Lola Ollerton for what was supposed to be a routine surgery. Her five daughters sat in the waiting room with their father, joking and “talking about history, about when our parents started dating,” until they were called into a conference room, said one of Ollerton’s daughters, Peggy Archuleta. Greene then told them that “there was a complication,” another daughter, Susan Fuller, recounted. “He then said that she had died. My eldest sister, Pam, said — and I will never forget this — ‘You mean to tell me that our mother’s death was a complication?’” Besides her husband and daughters, Ollerton left behind 28 grandchildren and 46 great-grandchildren.
Four more of Greene’s patients died in that two-year period. Others suffered from infections, meningitis, excessive bleeding and permanent injuries such as a dropped foot. Alarmed by the “sheer volume of cases” and Greene’s “continued insistence that he made no mistakes in the care of his patients,” the Arizona Medical Board revoked his license in 2009.
Inundated with 14 malpractice lawsuits, Greene filed for bankruptcy that year. His insurance settled most of the cases. The Ollerton family received a six-figure settlement, the filings show.
Greene said he had “great outcomes” as a surgeon and the same rate of complications as other doctors who haven’t been sanctioned. He also said that he settled the lawsuits because he couldn’t afford to fight them in court. “I had a disagreement with the medical board that went on, and I ran out of money.” Greene said that several board certified doctors testified on his behalf, and these incidents are not relevant to his work today.
He defended his continuing use of the honorific “Dr.,” likening himself to a television personality. “Well, what about Dr. Phil?” he asked. The loss of his license, he said, “doesn’t take away the fact that I did a fellowship and a six, seven year residency. … But I just hate that we’re even talking about this because I’ve been through it, all these malpractice things, but, you know, my life is very, very different now.” He asserted that none of the stem cell patients in his network have suffered major complications from their treatments.
After the lawsuits, Greene returned to school and got an MBA at Arizona State University. Then he launched his second act, in stem cells. He was barred from practicing medicine, but he could still profit from it.
Schnee, the chiropractor who introduced Greene at Robson Ranch, said that she was unaware of Greene’s disciplinary record when he spoke there. After learning of it from ProPublica and The New Yorker, Atlas cancelled all seminars with him, she said.
Archuleta, whose mother died in Greene’s operating room, was quiet on the phone as she heard about his new business. “I hope he is remorseful and he’s taking decent care of people in some other line of work,” she said. “But if he’s not changed, if he still disregards the truth and is harming people, then he needs to be stopped. Someone needs to stop him again.”
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