Arizona Pair Admits to $1.2 Billion Healthcare Fraud

An Arizona couple has pleaded guilty to billing Medicare and other health insurers more than $1.2 billion in fraudulent claims for medically unnecessary wound grafts.

The U.S. Justice Department identified Alexandra Gehrke, 39, and her husband, Jeffrey King, 46, as orchestrators of the massive fraud scheme. The grafts involved were intended for elderly and terminally ill patients.

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) suffering from wounds, according to court documents. The sales reps would order amniotic wound grafts from a specific graft distributor; Gehrke reportedly instructed and financially incentivized the sales reps to order grafts measuring 4 centimeters by 6 centimeters or larger, even if the wound was much smaller, to maximize health insurance reimbursement.

Through her companies, Gehrke received more than $279 million in illegal kickbacks from the grafts distributor in exchange for the orders. Gehrke, in turn, paid the sales reps 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 healthcare program for U.S. service members and their families), CHAMPVA (the healthcare 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 reps, 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, the Justice Department charged.

From November 2022 through May 2024, Gehrke, King, and others—through their companies—submitted $1,21 billion in false and fraudulent claims to health insurance plans. This included more than $960 million in false and fraudulent claims to Medicare, TRICARE, and CHAMPVA. The federal and private healthcare insurers paid $614,990,420 based on the 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 more than $410 million in funds 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 healthcare fraud and wire fraud. She is scheduled to be sentenced Feb. 11 and faces a maximum 20-year prison term. King pleaded guilty on Jan. 31 to conspiracy to commit healthcare fraud and wire fraud and faces a maximum 20-year prison term. His sentencing date has not yet been scheduled.

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 healthcare 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 healthcare 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 healthcare fraud schemes.