An Arizona couple has pleaded guilty to orchestrating a $1.2 billion health care fraud scheme involving medically unnecessary wound grafts billed to Medicare and other insurers.

According to the Justice Department, Alexandra Gehrke, 39, and Jeffrey King, 46, both of Phoenix, conspired with others to submit fraudulent claims for amniotic wound grafts applied to elderly and terminally ill patients. Gehrke owned and operated Apex Medical LLC and Viking Medical Consultants LLC, which worked with untrained sales representatives to find patients with wounds and order grafts from a specific distributor. The representatives were financially incentivized to order larger grafts, regardless of medical necessity, to maximize insurance reimbursements.

Gehrke’s companies received more than $279 million in kickbacks from the graft distributor. A company co-owned by King then applied the grafts, billing Medicare, TRICARE, CHAMPVA, and private insurers for the procedures. Prosecutors say nurse practitioners were directed to follow orders from sales representatives rather than using their medical judgment, leading to unnecessary treatments, including grafts applied to healed or infected wounds.

Between November 2022 and May 2024, the scheme generated more than $1.2 billion in fraudulent claims, with insurers paying out approximately $615 million. In their plea agreements, Gehrke and King agreed to pay restitution of $615 million and $606 million, respectively, and forfeit over $410 million in fraud proceeds. Authorities have already seized nearly $100 million in assets, including luxury vehicles, bank accounts, life insurance annuities, and jewelry.

Gehrke pleaded guilty in October 2024 and is set for sentencing on Feb. 11, facing up to 20 years in prison. King entered his guilty plea on Jan. 31 and awaits a sentencing date, also facing a maximum 20-year term.

The FBI, the Department of Health and Human Services Office of Inspector General, the Defense Criminal Investigative Service, and the Department of Veterans Affairs Office of Inspector General investigated the case. The Justice Department’s Health Care Fraud Strike Force led the prosecution.

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