Phoenix, AZ – A Phoenix couple is facing significant prison time after pleading guilty to orchestrating a colossal healthcare fraud scheme that bilked Medicare and other health insurance programs out of over $1.2 billion. Alexandra Gehrke, 39, and her husband, Jeffrey King, 46, admitted to conspiring to submit fraudulent claims for expensive and medically unnecessary wound grafts, often applied to elderly and terminally ill patients. Their elaborate scheme, spanning from November 2022 to May 2024, has sent shockwaves through the healthcare system and sparked renewed calls for stricter oversight of medical billing practices.
A Web of Deceit: How the Scheme Unraveled
Gehrke and King’s operation centered around the use of amniotic wound grafts, a costly treatment often used for chronic wounds. Gehrke, through her companies Apex Medical LLC and Viking Medical Consultants LLC, employed medically untrained “sales representatives” tasked with finding elderly patients, including those in hospice care, with wounds – regardless of the wound’s severity or stage. These representatives were incentivized to order grafts exclusively in 4×6 centimeter sizes or larger, even if the patient’s wound was significantly smaller. This practice was designed solely to maximize insurance reimbursements, not patient care.
The ordered grafts were supplied by a specific distributor who, in exchange for the inflated orders, paid Gehrke’s companies over $279 million in illegal kickbacks. Gehrke then funneled tens of millions of dollars in kickbacks to the sales representatives, further fueling the fraudulent activity. The patients were then referred to a company co-owned by King, which contracted with nurse practitioners to apply the grafts. King’s company subsequently submitted fraudulent claims to 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.
Adding to the egregious nature of the scheme, Gehrke and King, neither of whom had any medical training, instructed the nurse practitioners to disregard their medical judgment and apply every graft ordered by the sales representatives. This resulted in the application of grafts to infected wounds, wounds that had already healed, and wounds that showed no signs of responding to the treatment. This blatant disregard for patient well-being underscores the couple’s prioritization of profit over ethical medical practice.
The Staggering Scale of the Fraud
The sheer scale of the fraud is staggering. From November 2022 to May 2024, Gehrke, King, and their associates submitted over $1.2 billion in false and fraudulent claims to health insurance providers. Of this amount, over $960 million was directed at federal healthcare programs – Medicare, TRICARE, and CHAMPVA. Based on these fraudulent claims, insurers paid out over $614 million.
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Justice Served: Guilty Pleas and Impending Sentences
The elaborate scheme began to unravel under the scrutiny of federal investigators. Gehrke pleaded guilty on October 24, 2024, to conspiracy to commit healthcare fraud and wire fraud. She faces a maximum sentence of 20 years in prison and is scheduled to be sentenced on February 11. King followed suit, pleading guilty on January 31 to the same charges and also faces a maximum of 20 years behind bars. His sentencing date has yet to be set. A federal district court judge will determine the final sentences, taking into account the U.S. Sentencing Guidelines and other statutory factors.
Beyond prison time, the couple has agreed to pay substantial restitution. Gehrke is responsible for $614,990,420 in restitution, while King is responsible for $605,690,110. They have also agreed to forfeit over $410 million in assets acquired through the fraudulent scheme. The government has already seized nearly $100 million in assets, including over $68 million in bank accounts, four luxury vehicles valued at over $980,000, $22 million in life insurance annuities, and a collection of jewelry and precious metals.
A Multi-Agency Investigation Uncovers the Truth
The investigation that brought Gehrke and King to justice was a collaborative effort involving multiple agencies. The Justice Department’s Criminal Division, the U.S. Attorney’s Office for the District of Arizona, the FBI, the Department of Health and Human Services Office of Inspector General (HHS-OIG), the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), and the Department of Veterans Affairs Office of Inspector General (VA-OIG) South Central Field Office all played crucial roles in uncovering the complex fraud.
The case is being prosecuted by 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.
A Call for Increased Vigilance in Healthcare Fraud
This case highlights the ongoing battle against healthcare fraud and the lengths to which some individuals will go to exploit the system for personal gain. The Justice Department’s Fraud Section, through its Health Care Fraud Strike Force Program, remains committed to combating this type of criminal activity. Since 2007, the program has charged over 5,800 defendants who have collectively billed federal healthcare programs and private insurers for more than $30 billion. The Centers for Medicare & Medicaid Services, in partnership with HHS-OIG, are also actively working to hold providers accountable for their involvement in healthcare fraud schemes. The scale of the Gehrke-King case serves as a stark reminder of the need for constant vigilance and robust investigative efforts to protect the integrity of the healthcare system and safeguard taxpayer dollars. The case also emphasizes the vulnerability of elderly and terminally ill patients, who are often targeted in such schemes. Increased public awareness and reporting of suspicious activity are crucial in preventing future occurrences of this type of fraud. The Justice Department encourages anyone with information about potential healthcare fraud to come forward and report it. More information about the fight against healthcare fraud can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.
