A couple from Arizona has pleaded guilty to a large-scale healthcare fraud scheme involving false claims submitted to Medicare and other health insurance programs.
The scheme, which spanned from November 2022 to May 2024, led to over $1.2 billion in fraudulent claims being filed, affecting elderly and terminally ill patients.
The Key Players: Alexandra Gehrke and Jeffrey King
- Alexandra Gehrke (39) and her husband Jeffrey King (46), both from Phoenix, ran a fraudulent operation that targeted vulnerable individuals for unnecessary medical treatments.
- Gehrke operated two companies, Apex Medical LLC and Viking Medical Consultants LLC, which hired unqualified “sales representatives” to find elderly patients with wounds, including hospice patients. The goal was to order expensive amniotic wound grafts from a specific distributor, regardless of the patient’s actual needs.
How the Scheme Worked
- Grafts Ordered for Financial Gain: Gehrke instructed sales reps to order grafts of 4×6 cm or larger, even if the wound was much smaller. This was done to maximize health insurance reimbursement.
- Kickbacks: In exchange for placing these orders, Gehrke received over $279 million in illegal kickbacks from the distributor of the grafts, which she then shared with sales reps.
- Fraudulent Billing: Gehrke referred patients to King’s company, which contracted nurse practitioners to apply the grafts. Despite having no medical training, Gehrke and King directed the nurse practitioners to apply grafts to wounds that were infected, already healed, or not suitable for the treatment.
Financial Impact
- The couple submitted over $1.2 billion in false claims to health insurance programs, including Medicare, TRICARE, and CHAMPVA.
- Of this total, $960 million was billed to federal programs, with $614.99 million in payments made by insurers based on the false claims.
- As part of their plea agreements, Gehrke and King are required to pay restitution amounts of $614.99 million and $605.69 million, respectively. They will also forfeit over $410 million in funds derived from their fraud.
Seized Assets
To date, the government has seized nearly $100 million in assets from the couple, including:
- Bank accounts with balances exceeding $68 million.
- Luxury vehicles valued at over $980,000.
- $22 million in life insurance annuities.
- Jewelry and precious metals.
Legal Proceedings and Sentencing
- Gehrke pleaded guilty to conspiracy charges on October 24, 2024, and is scheduled for sentencing on February 11, 2025. She faces a maximum sentence of 20 years in prison.
- King pleaded guilty on January 31, 2025, and also faces up to 20 years in prison. His sentencing date has not yet been scheduled.
- A federal judge will determine their final sentences, taking into account the US Sentencing Guidelines and other statutory factors.
Ongoing Investigation
The case was investigated by several law enforcement agencies, including the FBI, the Department of Health and Human Services Office of Inspector General (HHS-OIG), and the Department of Veterans Affairs Office of Inspector General (VA-OIG).
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Crackdown on Healthcare Fraud
This case is part of the Health Care Fraud Strike Force Program, which has been combating health care fraud since 2007. The program has charged over 5,800 defendants, with fraud exceeding $30 billion in claims to Medicare and private health care programs.
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Key Takeaways
- Significant Fraud Impact: The scheme cost health insurers and the federal government over $614 million in fraudulent payments.
- Legal Ramifications: Gehrke and King face up to 20 years in prison each for their roles in this massive fraud.
- Government Action: Authorities have seized millions in assets and are actively pursuing restitution to recover funds.
This case highlights the ongoing efforts by federal agencies to crack down on health care fraud, ensuring that those who take advantage of vulnerable populations face severe consequences.
