An Arizona couple has pleaded guilty to causing more than $1.2 billion in fraudulent claims to be submitted to Medicare and other health insurance programs for unnecessary wound grafts that were applied to elderly and terminally ill patients.
Alexandra Gehrke, 39, and her husband Jeffrey King, 46, both of Phoenix, also agreed to pay $615 million and $605.7 million, respectively, in restitution, according to a Jan. 31 Justice Department news release.
The agency said the couple conspired with others to orchestrate the large-scale fraud scheme. Ms. Gehrke ran two companies that contracted medically untrained sales representatives to locate elderly patients who had wounds at any stage and order amniotic wound grafts from a specific graft distributor. She instructed and financially incentivized these representatives to order grafts only in sizes of 4x6 centimeters or larger, even if the wound was much smaller, to maximize health insurance reimbursement.
Through the companies she owned, Ms. Gehrke received more than $279 million in kickbacks from the distributor of the grafts in exchange for the orders. She, in turn, paid the sales representatives tens of millions of dollars in kickbacks. She then referred patients to a company co-owned by her husband, which contracted with nurse practitioners to apply the grafts.
Mr. King's company fraudulently billed Medicare, Tricare, CHAMPVA and commercial payers for the grafts. Ms. Gehrke and Mr. King, who had no medical training, directed the nurse practitioners to suspend their own medical judgment and apply all grafts ordered by the sales representatives.
From November 2022 through May 2024, the couple and others, through the companies they owned, submitted more than $1.2 billion in fraudulent claims, including more than $960 million in false claims to federal healthcare programs. Federal and private insurers paid nearly $615 million based on the fraudulent claims.
Ms. Gehrke and Mr. King both face a maximum of 20 years in prison after pleading guilty to conspiracy to commit health care fraud and wire fraud charges. Ms. Gehrke is scheduled to be sentenced Feb. 11. Mr. King's sentencing date has not yet been set.