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Skin Substitute Fraud Indictments Update

by | Jul 15, 2026 | Cellular / Tissue-Based Products, CTP / Skin Substitute Arrests, CTP / Skin Substitutes | 0 comments

Skin Substitute Fraud Indictments Update

Since 2022, federal prosecutors have brought an escalating wave of civil and criminal actions targeting skin substitute (cellular and/or tissue-based product, or “CTP”) billing — from single-clinic settlements to the billion-dollar amniotic allograft scheme in Arizona that federal officials have called the first prosecution of its kind. Skin subs can serve a valuable purpose in medical practice; our data shows that they aid in wound healing, but some bad actors, such as those listed below, tried to take advantage of an under-regulated system. Below is a chronological summary of the publicly documented cases, drawn from Department of Justice press releases and official case summaries. Many of you have been sending me links to indictments so I thought I would collate them.

A note on language: Except where a guilty plea or sentencing is specifically noted, all of the conduct described below is alleged. Criminal charges are accusations, not findings of guilt, and civil settlements are typically resolved with no admission of liability. This summary is for informational purposes and should not be read as a legal conclusion about any individual or company’s conduct.

Recurring Themes in Indictments:

Looking across these cases , there are clear recurring themes across what might appear to be unrelated organizations. Recognizing that many of these are as yet unproven allegations, the indictments often describe willful disregard of federal regulations around kickbacks and billing for services not rendered.

1. The defendants are often not advanced practitioners

Included in indictments are registered nurses, sales executives, practice owners, mobile wound-care companies, marketing companies, billing companies, sales representatives and non-clinician entrepreneurs.

2. Sales representatives frequently directed clinical decisions

When advanced practitioners are indicted, they tend to be nurse practitioners who left the operational and financial decisions were driven by businesspeople or marketers. See attorney David Traskey’s excellent guest blog explaining potentially problematic arrangements. Repeatedly, indictments allege that sales representatives found patients, selected the graft, determined its size, determined how often it would be applied, and referred patients to clinicians willing to perform the applications. Several indictments specifically allege that the practitioner failed to exercise independent medical judgment and simply followed the recommendations of the sales force — a very different dynamic than traditional pharmaceutical or device sales.

3. The patients were usually extremely vulnerable

The alleged victims were disproportionately nursing home residents, homebound patients, hospice patients, patients with dementia, and frail elderly Medicare beneficiaries. The hospice cases are particularly striking because several indictments allege grafts were placed on patients with limited life expectancy despite little chance of clinical benefit.

4. The fraud centered on volume, not subtle coding issues

Business models that were built around maximizing graft utilization rather than individualized wound management. Unlike many historical Medicare fraud cases involving upcoding or documentation deficiencies, these cases generally allege grafts that were medically unnecessary, grafts much larger than the wound, repeated applications after wounds had healed, applications to wounds expected to heal with conservative care, and grafts never actually applied. In other words, prosecutors are generally alleging that the entire treatment course lacked medical necessity, not merely that documentation was incomplete. In some cases, it is alleged that claims were submitted for patients who did not have wounds at all.

5. Kickbacks are almost always present

The Anti-Kickback Statute appears repeatedly. Common allegations include payments per graft, payments based on square centimeters used, consulting agreements with little legitimate purpose, marketers receiving a percentage of reimbursement, and clinicians receiving compensation tied to utilization. The government repeatedly characterizes these financial arrangements as driving clinical decision-making.

6. The alleged profits were extraordinary

One reason DOJ appears to have devoted substantial resources to these investigations is the magnitude of the financial returns. Several indictments describe hundreds of millions of dollars in Medicare payments, luxury homes, exotic cars, expensive jewelry, cryptocurrency, beach resorts, and fine art collections. The alleged return on a single day’s wound rounds could be enormous because reimbursement was tied to the amount of graft applied.

The pace of enforcement has accelerated sharply since 2022:

WordPress Tables

The Big One: The Arizona Amniotic Allograft Scheme

The largest and most consequential story in this space by far is a multi-defendant scheme centered in Arizona involving Apex/APX-related companies and amniotic wound allografts. The pattern alleged across more than a dozen related charges is consistent focusing on elderly and hospice patients, medically unnecessary or oversized grafts, kickbacks to the nurse practitioners and sales representatives who ordered and applied them, and product selection driven by sales targets rather than clinical judgment.

  • Alexandra Gehrke & Jeffrey King — were the scheme’s central figures. Prosecutors alleged their companies submitted $1.2 billion in claims, with roughly $614.9 million actually paid. Both were sentenced in October 2025 — Gehrke to 15.5 years, King to 14 years — and agreed to a $309 million civil False Claims Act settlement, with collective forfeiture exceeding $410 million. The Department of Justice described it as the first prosecution of its kind for this type of scheme.
  • A cluster of related individuals were charged in connection with the same broader scheme:
    • Carlos Ching / H3 Medical Clinic — allegedly billed more than $5 million through H3 while receiving payments from APX tied to over $87M in claims.
    • Bethany Jameson — allegedly billed roughly $71 million, with Medicare paying more than $49M.
    • Tyler Kontos, Joel “Max” Kupetz & Jorge Kinds — allegedly responsible for over $1 billion in billing, with more than $600 million paid and over $7.2M in assets seized; the scheme allegedly used medically untrained individuals to order and recommend grafts.
    • Ira Denny — a nurse practitioner allegedly applying allografts at frequencies set by sales reps rather than clinical judgment; $209.4 million billed, $138.6 million paid.
    • Gina Palacios — a similar NP-directed pattern; $59.5 million billed, $28.4 million paid.
    • Susie Kamien — a medical biller allegedly submitting claims tied to more than $918 million in claims.
    • Sandra Peters — a sales representative allegedly ordering/recommending grafts; over $10 million in claims.
    • Brian Rowan — a VP of sales allegedly at the center of kickback and sham-invoice arrangements tied to the broader $1.2 billion scheme; personally alleged to have made more than $24M.
  • A related but separate Nevada matter, Paulino Gonzalez, a nurse/wound-care practitioner, allegedly received kickbacks from an allograft distributor tied to over $94 million billed and $7.39 million in alleged kickback payments; and Mary Huntly, an NP who pleaded guilty in July 2025 to receiving kickbacks tied to $14.3M billed and $9.1M paid.

Standalone Cases by Year

2022

  • Ronald Bergman / Bergman Cosmetic Surgery (Iowa) — Resolved a civil False Claims Act matter alleging medically unnecessary skin substitute applications and supervision issues, for an $800,000 settlement.

2023

  • Bryan Andrew Blanck / Valley View Foot and Ankle Center (Oklahoma) — Settled allegations of administering skin substitutes without required preliminary wound care documentation for $7 million.
  • Joel Aronowitz / Tower Multi-Specialty Medical Group (Beverly Hills) — Settled allegations of place-of-service manipulation, double billing, and reuse of single-use products for nearly $24 million, with a 15-year federal program exclusion.

2025

  • David Sidwell Jenson & Nestor Rafael Romero Magallanes / Doctor’s Inc. (Texas) — Charged via superseding indictment with billing over $90 million for bioengineered skin substitutes on patients without qualifying wounds and falsifying wound documentation; more than $45M allegedly paid. Both have pleaded not guilty.
  • Marlen Veliz Rios / Loves Community Health Mental Health Inc. (Florida) — Charged with billing $15.3 million for wound care/skin graft products allegedly not provided, with alleged money laundering through shell companies; $10 million allegedly paid.
  • Pinnacle Health PC & Daniel Rasmussen (Washington) — Settled civil allegations of billing Medicare/TRICARE for an injectable amniotic product (FlowerAmnioFlo) considered experimental, for $1,115,976.
  • Felipe Ruiz & Jose Gabriel Aguirre / West Coast Podiatry (California) — Ruiz, a podiatrist, allegedly purchased skin substitutes and let Aguirre — not a licensed healthcare provider — apply them to Medicare and Medi-Cal patients. Both pleaded guilty and were sentenced in April 2026 to 63 months each, with forfeiture of 9 properties and money judgments of $2.6 million (Aguirre) and $12.1 million (Ruiz).

2026

  • Expert Wound Care PC (Pasadena) — A civil seizure action alleging false claims for skin substitutes/grafts never performed across 78 beneficiaries; $46.6 million submitted, roughly $2.04 million seized.
  • Dr. Brett Ellsworth, Kailee Kelly & Stephanie Broadbent (Utah) — Charged with submitting false claims for non-qualifying wounds and unnecessary continued applications, with RN scope-of-practice and supervision allegations.
  • 12 South Florida clinics (including Always Medical Center Corp.) — Civil seizure/forfeiture actions against alleged “bust-out” clinics billing for allografts and services never provided; $27.4 million seized.
  • Casilda Muniz Rodriguez (Florida) — Allegedly set up South Florida clinics billing for products/services never provided; over $117 million billed, roughly $56 million paid.
  • Marizel Yukee / Wound Medic, MBH, AllCare, Oracle (Texas) — Charged with providing medically unnecessary grafts to elderly/hospice patients without conservative therapy first; roughly $906 million billed, $297 million paid, and $35.2 million in assets seized.
  • Michael McMillan (Texas) — Charged in connection with roughly $268 million in claims for wound care products, with kickback allegations.
  • Robert Tesar, Brandy Presha & Haley Evans (Florida) — Charged with targeting Medicare patients with unnecessary, expensive wound allografts via referral kickbacks; over $118 million billed, roughly $61 million paid.
  • Blanca Cardenas & Raquel Pasillas (California) — A mother-daughter mobile wound care scheme allegedly involving unlicensed and not-personally-performed services — notably, the nurse practitioner was allegedly incarcerated during part of the billing period; $9.5 million billed, $5.5 million paid.

Official Sources / Indictments and Case Announcements

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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