An Arizona couple pleaded guilty for causing over $1.2 billion of false and fraudulent claims to be submitted to Medicare and other health insurance programs for expensive, medically unnecessary wound grafts that were applied to elderly and terminally ill patients.
According to court documents, Alexandra Gehrke, 39, and her husband, Jeffrey King, 46, both of Phoenix, conspired with others to orchestrate the massive scheme. Gehrke ran two companies, Apex Medical LLC and Viking Medical Consultants LLC, that contracted with medically untrained “sales representatives” to locate elderly patients, including hospice patients, who had wounds at any stage and order amniotic wound grafts from a specific graft distributor. Gehrke instructed and financially incentivized the sales representatives to order grafts only in sizes 4x6 centimeters or larger, even if the wound was much smaller, to maximize health insurance reimbursement. Gehrke, through companies she owned and controlled, received over $279 million in illegal kickbacks from the distributor of the grafts in exchange for the orders. Gehrke in turn paid the sales representatives tens of millions of dollars in unlawful kickbacks. Gehrke then referred the patients to a company co-owned by King, which contracted with nurse practitioners to apply the grafts. King’s company fraudulently billed Medicare, TRICARE (the health care program for U.S. service members and their families), CHAMPVA (the health care program for spouses and children of permanently disabled veterans), and commercial insurance plans for the grafts. Gehrke and 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, even when medically unreasonable and unnecessary, which resulted in the application of grafts to infected wounds, wounds that had already healed, and wounds that were not responding to the grafts.
From November 2022 through May 2024, Gehrke, King, and others, through companies they owned, operated, and controlled, submitted $1,212,005,778 in false and fraudulent claims to health insurance plans. This included over $960 million in false and fraudulent claims to the federal health care programs — Medicare, TRICARE, and CHAMPVA. The federal and private health care insurers paid $614,990,420 based on the false and fraudulent claims.
In their plea agreements, Gehrke and King agreed to pay restitution in the amounts of $614,990,420 and $605,690,110, respectively. They also agreed collectively to forfeit over $410 million in funds that they obtained from the fraud. To date, the government has seized nearly $100 million in assets that Gehrke and King accumulated from the scheme, including bank account balances exceeding $68 million, four luxury vehicles valued over $980,000, $22 million of life insurance annuities, and jewelry and precious metals.
Gehrke pleaded guilty on Oct. 24, 2024, to conspiracy to commit health care fraud and wire fraud. She is scheduled to be sentenced on Feb. 11 and faces a maximum penalty of 20 years in prison. King pleaded guilty on Jan. 31 to conspiracy to commit health care fraud and wire fraud and faces a maximum penalty of 20 years in prison. His sentencing date has not yet been scheduled. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Supervisory Official Antoinette T. Bacon of the Justice Department’s Criminal Division; U.S. Attorney Gary M. Restaino for the District of Arizona; Acting Special Agent in Charge Sean Burke of the FBI Atlanta Field Office; Deputy Inspector General Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG); Director Kelly Mayo of the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS); and Special Agent in Charge Kris Raper of the Department of Veterans Affairs Office of Inspector General (VA-OIG) South Central Field Office made the announcement.
The FBI, HHS-OIG, DCIS, and VA-OIG investigated the case.
Trial Attorney Shane Butland of the National Rapid Response Strike Force of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Matthew Williams for the District of Arizona are prosecuting the case.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,800 defendants who collectively have billed federal health care programs and private insurers more than $30 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.
