MO lawmaker accused of selling fake stem cells in fraud

State Rep. Patricia Derges, who operates a small chain of medical clinics in southwest Missouri, went on local TV in the first few frightening weeks of the pandemic with a bold claim: a certain kind of stem cells could potentially treat COVID-19.

Less than a year later, Derges — sworn in last month as a Republican representative from Nixa— is under federal indictment, accused of an expansive fraud scheme in which she repeatedly touted the properties of stem cells but in reality administered to patients amniotic fluid that didn’t have the cells.

Federal prosecutors allege that over a year and a half, Derges marketed her clinics, Ozark Valley Medical, as a leader in regenerative medicine using stem cells and specifically mesenchymal stem cells, which are found in bone marrow, umbilical cord tissue and amniotic fluid.

But the amniotic fluid that Derges, an assistant physician, used in her practice not only didn’t contain mesenchymal stem cells — it didn’t have stem cells at all, prosecutors say. In all, the indictment alleges Derges’ patients paid $191,815 for fluid with no stem cells.

Prosecutors say the April 2020 TV appearance by Derges triggered an investigation that led to a 20-count grand jury indictment unsealed on Monday.

“We place our hope and our trust in health care providers and government officials,” Timothy Langan, Special Agent in Charge of FBI Kansas City, said in a statement. “The defendant’s actions are not only a betrayal of that trust, but her actions erode the very core of our confidence in a system we rely on. Derges vowed to do no harm as a health care professional and was elected to serve the people, not deceive them. She used her position for personal gain and damaged the public’s trust.”

Fighting ‘Goliath?’

The allegations are a stunning blow to a celebrated medical practitioner in southwest Missouri. Derges, 63, was named “Humanitarian of the Year” in 2018 by the Community Foundation of the Ozarks and Southwest Missouri non-profit CEO of the year in 2019.

She is CEO of Boards Ready, a Springfield-based business that helps medical students prepare for the U.S. Medical Licensing Exams. The business’ website advertises a $4,500 12-week semester, a textbook authored by Derges and housing for students. It purports to attract medical students from other countries to Springfield and even offers instructions on obtaining a visa to attend.

140 Tricia Derges (R).JPG
Rep. Patricia Derges. Tim Bommel Missouri House

Derges ran unopposed in the general election after winning a four-way Republican primary with 30 percent of the vote. A resident of the area for decades, she campaigned on lowering drug costs, increasing the availability of doctors in her region and helping small businesses.

She presented herself as a champion for medical care among rural and underserved populations in southwest Missouri, touting her founding of Lift Up Springfield, an organization that provides free medical and dental care to the homeless.

With her predecessor, Rep. Lynn Morris, she pushed for Missouri to pass a first-in-the-nation law in 2014 that allowed those who have completed medical school and passed some medical licensing exams — but who have not completed a residency — to become licensed “assistant physicians” who can treat patients. She testified in 2017 in favor of expanded eligibility.

She was licensed as an assistant physician herself that same year. According to prosecutors, Derges graduated from Caribbean Medical University of Curacao in May 2014 but wasn’t accepted into a medical residency.

In a Facebook post apparently in reference to the indictment, she wrote that “despite this ‘Goliath’ I will keep helping those in need and standing for the rights of all of us.”

“Lies and twisted words mean nothing. Truth and righteousness mean everything,” Derges wrote. “I can stand before God and know that He will smile at me. Goliath can’t take that away as much as he tries. Righteous people are also always able to discern the truth – I trust in this. God stood with David, I have the faith that He will stand with me against the Goliath that I face today – his sole purpose is to destroy.”

Reached on Tuesday, Derges’ attorney Stacie Calhoun Bilyeu blasted media coverage of the indictment and said Derges had received “all sorts of threats.” Bilyeu said she is “limited as to what we can say” about the allegations but stressed her client had pleaded not guilty to all charges.

“Dr. Derges, despite what it looked like yesterday, has not been found guilty or convicted of anything,” she said.

A spokesman for House Republican leaders didn’t immediately respond to a request for comment.

Insufficient data

Derges gave the non-stem cell amniotic fluid to patients with tissue damage, kidney disease, chronic obstructive pulmonary disease (COPD), Lyme disease, erectile dysfunction, and urinary incontinence, among other conditions, prosecutors allege.

According to the indictment, the University of Utah sold its amniotic fluid allograft for approximately $244 per milliliter and $438 for two milliliters. Derges then charged patients $950 to $1,450 per milliliter.

As the pandemic took hold last spring, Derges began touting stem cells as a potential weapon against the deadly virus. “This amazing treatment stands to provide a potential cure for COVID-19 patients that is safe and natural,” Derges wrote in an April Facebook post.

COVID-19 treatment guidelines from the National Institutes of Health recommend against using mesenchymal stem cells, except in clinical trials. The agency warns there’s insufficient data to assess their usefulness.

Treatments that use stem cells are questioned by medical researchers and bioethics experts, who say clinics often peddle unproven, sometimes dangerous treatments for conditions such as mild arthritis, erectile dysfunction, multiple sclerosis and Parkinson’s disease.

The indictment also charges Derges with 10 counts of distributing Oxycodone and Adderall online without a valid prescription. Derges wrote electronic prescriptions for the medications without in-person evaluations, th
e indictment alleges.

“Because none of the assistant physicians whom Derges employed at Ozark Valley Medical Clinic could prescribe Schedule II controlled substances, the indictment says, it was the standard practice of the assistant physicians to see a patient and later communicate to Derges the controlled substances they wanted her to prescribe to their patients,” a Department of Justice news release says.

The investigation into Derges had been ongoing for months, according to the indictment, which charges her with making false statements to investigators in May 2020. Derges hinted at trouble in a series of Facebook posts in late January, asking supporters for prayers amid “the unfair persecution that I have gone through all last year and now on into this year.”

On Saturday, two days before turning herself in, she published a long post on her entry into medicine at the age of 52, a decision she wrote that she made in response to a God’s calling.

“I have never hurt a person in my life. No one should ever have to go through this. I guess taking the “The Road Less Traveled” was maybe not so smart- but I did,” she wrote. “What was I thinking? I guess I wasn’t thinking.”

Derges didn’t answer calls Monday. One phone number listed for her directed to an Ozark Valley Medical Clinic location. The automated answering service said the clinic was offering Covid-19 tests for $167 and does not take any insurance.

Jonathan Shorman is The Kansas City Star’s lead political reporter, covering Kansas and Missouri politics and government. He previously covered the Kansas Statehouse for The Star and Wichita Eagle. He holds a journalism degree from The University of Kansas.

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