Federal prosecutors called it a first-of-its-kind case: an Arizona wound-graft operation that, they said, turned the nation’s sickest and oldest patients into a billing engine, authorites announced last week.
Alexandra Gehrke, 39, of Phoenix was sentenced Oct. 7 to 15½ years in federal prison. Her husband, Jeffrey King, 46, also of Phoenix, was sentenced Oct. 10 to 14 years.
Court records say the couple ran a sweeping wound-care scheme from 2022 through 2024 built on kickbacks and volume. Gehrke’s companies hired medically untrained sales representatives to scour Arizona for Medicare beneficiaries with wounds — including many in hospice.
Once the patients were found, prosecutors said, the sales force ordered costly amniotic membrane allografts, bioengineered skin substitutes made from human placental tissue, for application to those wounds.
To increase profits, authorities said, Gehrke required the sales representatives to order only the largest graft sizes available, even when the size — or the graft itself — wasn’t medically reasonable.
Patients were steered through Medicare-enrolled companies owned by Gehrke and later a company co-owned by King, allowing claims to be submitted.
The companies bought grafts from a wholesale distributor, hired nurse practitioners to apply them, and billed Medicare and other insurers, according to court documents.
Prosecutors said the nurse practitioners were told to set aside their medical judgment and apply whatever quantities and sizes the sales representatives ordered.
The result, authorities allege, included large grafts placed on small wounds, multiple grafts used on single wounds, grafts billed for wounds that didn’t exist, and grafts applied to terminally ill patients receiving palliative care — some of whom died within days, or the same day, of application.
Over an 18-month span from November 2022 through May 2024, prosecutors said the group submitted about $1.212 billion in false claims, with insurers paying roughly $614.9 million.
Gehrke, through companies she owned, received more than $279 million in alleged kickbacks from the distributor, prosecutors said, and King’s company received an additional $130 million.
Investigators seized what they described as proceeds of the scheme, including $97 million from bank accounts, more than $21 million in annuities, luxury vehicles — including a Ferrari — as well as cash and precious metals.
Gehrke pleaded guilty Oct. 24, 2024, and King pleaded guilty Jan. 31, 2025, both to conspiracy to commit health care fraud and wire fraud.
In addition to prison time, the court ordered restitution and forfeiture running into the hundreds of millions.
Prosecutors also cited separate civil settlements under the False Claims Act, including an agreement by Gehrke and Apex Medical LLC to pay $279.9 million and an agreement by King to pay $30 million.