An Arizona couple faces a maximum of 20 years in prison each after pleading guilty to operating medical companies that submitted $1.2 billion in false and fraudulent claims for unnecessary wound treatments to insurance programs that cover active-duty service members, disabled veterans and their families, the Justice Department said. (Justice Department)
WASHINGTON — An Arizona couple pleaded guilty for their role in orchestrating a $1.2 billion scheme to file fraudulent insurance claims for medically unnecessary treatments sold and administered to elderly and terminally ill military service members and veterans, the Justice Department said Tuesday.
Alexandra Gehrke, 39, and Jeffrey King, 46, admitted to running medical companies from 2022 to 2024 that submitted more than $1.2 billion in false claims to Medicare and insurance programs that cover active-duty service members, disabled veterans and their families, according to federal officials.
Both face a maximum of 20 years in prison for conspiracy to commit health care fraud and wire fraud charges.
The couple owned and operated Apex Medical and Viking Medical Consultants of Phoenix, which sold and supplied wound grafts that were inappropriate or unnecessary for the patients, the Justice Department said.
Insurers that received the fraudulent claims included Tricare, which covers active and retired service members and their families, and the Civilian Health and Medical Program of the Department of Veterans Affairs, or CHAMPVA, which is for veterans and their families. Medicare, the government program for the elderly and disabled, also was billed.
The case was investigated by the FBI, along with the inspectors general at Health and Human Services and the Department of Veterans Affairs.
The couple’s companies contracted with sales representatives with no medical training to identify elderly and dying patients, including some in hospice care, to purchase amniotic wound grafts through a specific distributor, according to the Justice Department.
Amniotic wound grafts act as artificial skin substitutes for treating chronic wounds, burns and other serious skin injuries.
The couple, who had no medical training, directed health care workers to “suspend their own medical judgment and apply all grafts ordered by sales representatives,” the Justice Department said.
Sales representatives received financial incentives to order large grafts regardless of whether they were needed by the patients to maximize the health insurance reimbursement, federal officials said.
As part of their plea agreement, Gehrke and King agreed to pay $615 million and $605.7 million, respectively, in restitution. They also agreed to forfeit $410 million in funds obtained through fraudulent means, the Justice Department said.
The government also seized nearly $100 million in assets, including bank account balances, life insurance annuities, $500,000 in gold, three Merecedes-Benz vehicles and one Ferrari Spider.
Gehrke is scheduled to be sentenced next week. King’s sentencing date has not been scheduled.
