An Arizona couple, Alexandra Gehrke, 39, and her husband, Jeffrey King, 46, both from Phoenix, have admitted to orchestrating a massive health care fraud scheme that led to over $1.2 billion in false claims to Medicare and other health insurance programs.

Their actions involved billing for expensive and medically unnecessary wound grafts applied to elderly and terminally ill patients.

The Scheme Unveiled

Between November 2022 and May 2024, Gehrke and King operated two companies: Apex Medical LLC and Viking Medical Consultants LLC. They hired untrained sales representatives to find elderly patients, including those in hospice care, with wounds at any stage. These representatives were instructed to order large amniotic wound grafts from a specific distributor, regardless of the actual wound size or necessity. The aim was to maximize reimbursements from health insurance programs.

To further inflate profits, the couple ensured that the grafts ordered were of larger sizes, even when smaller sizes would have sufficed. This strategy led to higher billing amounts. They also paid nurse practitioners a flat fee to apply these grafts, pressuring them to do so even when it wasn’t medically justified. Shockingly, some grafts were applied on the day of or just days before a patient’s death.

Financial Impact

The fraudulent activities resulted in over $1.2 billion in false claims submitted to various health insurance plans, including more than $960 million to federal programs like Medicare, TRICARE, and CHAMPVA. Out of these claims, approximately $615 million was paid out by federal and private insurers.

The couple used the proceeds from this scheme to fund a lavish lifestyle, purchasing luxury vehicles, expensive jewelry, and substantial life insurance annuities. Authorities have seized assets worth nearly $100 million, including $68 million from bank accounts, four luxury cars valued at nearly $1 million, $22 million in life insurance annuities, and a significant collection of jewelry and precious metals.

Legal Consequences

Gehrke pleaded guilty on October 24, 2024, to conspiracy to commit health care fraud and wire fraud. She is scheduled for sentencing on February 11, 2025, and faces up to 20 years in prison. King entered his guilty plea on January 31, 2025, to the same charges and also faces a potential 20-year sentence; his sentencing date has yet to be determined.

As part of their plea agreements, Gehrke has agreed to pay restitution of approximately $615 million, while King has agreed to repay about $605 million. These amounts reflect the funds they fraudulently obtained through their scheme.

Wider Implications

This case is part of a broader crackdown on health care fraud by the Department of Justice. In a recent sweep, nearly 200 individuals, including doctors and nurse practitioners, were charged in connection with various health care fraud schemes totaling over $2.7 billion in false claims. Attorney General Merrick Garland emphasized that the Department will hold accountable anyone who profits from the unlawful distribution of controlled substances, regardless of their position

Conclusion

The actions of Gehrke and King highlight the vulnerabilities in the health care system and the lengths to which individuals will go to exploit them for personal gain. Their scheme not only defrauded federal and private insurance programs but also took advantage of some of the most vulnerable members of society. As they await sentencing, this case serves as a stark reminder of the importance of vigilance and integrity in health care practices.