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Arizona Couple Sentenced to Prison Over “Skin Substitute” Fraud – Judge Called Them “Criminally Greedy”

by | Oct 16, 2025 | Cellular / Tissue-Based Products, CTP / Skin Substitute Arrests, CTP / Skin Substitutes | 0 comments

Arizona Couple Sentenced to Prison Over “Skin Substitute” Fraud – Judge Called Them “Criminally Greedy”

Alexandra Gehrke and her husband, Jeffrey King of Arizona pleaded guilty to over $1.2 billion of false and fraudulent Medicare and other insurance claims for, “expensive, medically unnecessary wound grafts that were applied to elderly and terminally ill patients.” The couple got nearly identical prison terms (15.5 and 14 years), with each having to pay more than $600M in restitution. They also agreed collectively to forfeit over $410 million in funds that they obtained from the fraud.

Here’s a breakdown of the charges:

  • 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 4×6 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.

The courthouse news service describes an emotional scene in which Gehrke read a prepared statement expressing remorse, taking responsibility, and apologizing to the court and her mother. US District Judge Roslyn Silver said, “What you were and how you are is exactly how you’ve defined yourself. And congratulations on doing that. What you are is greedy. Criminally greedy.”

In his recent guest blog, attorney David Traskey described a hypothetical example very similar to the scheme run by Gehrke and King, pointing out the ways in which similar arrangements could raise concerns about kickbacks.

Mr. Traskey warned practitioners to watch out for these red flags:

  • Reassigning your billing privileges without getting written confirmation that the entity submitting claims under your NPI will do so only for the services you personally perform.
  • Receiving patient referrals from providers with whom you have no prior relationship.
  • Receiving patient referrals from sales representatives, marketing agents, or recruiters.
  • Treating patients with whom you have no prior relationship (e.g., applying a skin substitute on the initial patient encounter).
  • Receiving compensation that is not commercially reasonable and/or exceeds “fair market value” for your services.
  • Receiving compensation or bonuses based on the volume of patients you treat or the value of the referrals you make.
  • Being asked to generate medical records for a patient that you did not personally treat or that you have never treated.
  • Being asked to generate or maintain two different sets of “books” or invoices or being asked to underreport financial information.
  • Providing care that is not medically reasonable or necessary, including that which stems from kickbacks or prohibited referrals, results from patient steering, or causes over-utilization.

Numerous other practitioners indicted in the DOJ “takedown” are awaiting trial or sentencing.

–Caroline

Additional Resources:

The opinions, comments, and content expressed or implied in my statements are solely my own and do not necessarily reflect the position or views of Intellicure or any of the boards on which I serve.

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