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The perpetrators of a $900 million healthcare scam targeted nursing homes and other facilities where seniors lived, looking for Medicare patients whom they could dupe into receiving expensive wound care they did not need, according to government officials.

The Department of Justice late last week announced that it had arrested more than 190 people and charged them with $2.75 billion in false claims in a sweeping roundup. Included in an extensive list of indictments were charges against the owners of the wound care firms Apex Mobile Medical LLC, Apex Medical LLC, Viking Medical Consultants LLC, and APX Mobile Medical LLC. 

Federal officials allege Alexandra Gehrke, 38, and Jeffrey King, 49, of Scottsdale, AZ, committed conspiracy and healthcare fraud, gave kickbacks, and laundered money in connection with a scheme revolving around highly expensive amniotic allografts.

The Department of Justice said King instructed sales representatives to go to facilities with elderly populations, “such as nursing homes, assisted living facilities and hospice facilities, and identify patients with a ‘wound or wounds of any stage’ that would ‘benefit from healing faster.’” Gehrke, the government alleged, told the sales team to target hospice because that’s “where the most money [was] at with [her] company.”

The skin-substitute grafts were applied to vulnerable, often terminally ill patients’ wounds “indiscriminately, without coordination with the patients’ treating physicians, without proper treatment for infection, to superficial wounds that did not need this treatment, and in sizes excessively larger than the wound,” the government said in a press release.

In just 16 months, Medicare paid the defendants more than $600 million, averaging more than a million dollars per patient. The defendants received more than $330 million in illegal kickbacks from the graft distributor in exchange for purchasing, ordering and arranging for the purchasing of the grafts billed to Medicare, the government said.

The government Thursday said it seized luxury vehicles, gold and bank accounts totaling more than $70 million from the defendants.

In a related case, Carlos Ching, 55, of Phoenix, was charged with conspiracy to commit healthcare fraud. He was paid by APX to apply allografts to Medicare patients that were procured through kickbacks and bribes. Between June 2023 and January 2024, APX fraudulently billed Medicare more than $87 million for allografts applied by Ching, the government said. 

Bethany Jameson, 53, of Gilbert, AZ, also was charged with conspiracy to commit wire fraud in the wound care scheme. Between November 2022 and August 2023, Apex Mobile Medical and APX billed Medicare more than $71 million for allografts that she applied.

Court documents dated June 18 show that in addition to kickbacks paid to sale reps based on size and quantity of grafts sold, Gehrke and King paid nurse practitioners a flat rate of $500 to $1,000 to apply them to wounds. They pressured those practitioners to use grafts even if “medically unreasonable and unnecessary,” and grafts were sometimes applied on the day of or within days of a patient’s death.

The coordinated law enforcement initiative also targeted more than $1.1 billion in telemedicine and laboratory fraud; more than $450 million in other healthcare fraud and opioid schemes;

the unlawful distribution of millions of Adderall pills and other stimulants; the distribution of adulterated and misbranded HIV medication; and more than $146 million in fraudulent addiction treatment schemes.