In one of the largest healthcare fraud cases in U.S. history, an Arizona couple has admitted to orchestrating a scheme that defrauded Medicare and other health insurance programs of over $1.2 billion in 18 months. Alexandra Gehrke, 39, and Jeffrey King, 46, both of Phoenix, pleaded guilty to conspiracy to commit healthcare fraud and wire fraud, shedding light on a simple operation that targeted vulnerable elderly and terminally ill patients. The case highlights serious deficiencies at HHS in stopping fraud and abuse cases before they cost taxpayers millions.
The Fraud Scheme
The fraudulent activities began in November 2022 and continued until May 2024, spanning approximately 18 months. During this period, Gehrke and King, through their companies Apex Medical LLC and Viking Medical Consultants LLC, implemented a sophisticated system to exploit Medicare and other health insurance programs.
Patient Recruitment
The couple employed a network of untrained “sales representatives” who were tasked with locating elderly patients, including those in hospice care, with wounds at any stage. These representatives targeted nursing homes and assisted living facilities, and hospice centers, where apparently, they could easily find vulnerable patients.
Salesperson Compensation
To incentivize their sales force, Gehrke and King implemented a lucrative kickback system. Sales representatives were paid based on the size and quantity of wound grafts ordered, regardless of medical necessity. This strategy led to the ordering of unnecessarily large grafts, often 4×6 cm or larger, to maximize reimbursement.
Medicare Billing
The fraudulent billing to Medicare was staggering. Between November 2022 and May 2024, Gehrke, King, and their companies submitted more than $1.2 billion in false and fraudulent claims to various health insurance providers. Of this amount, over $960 million was billed to federal programs including Medicare, TRICARE, and CHAMPVA.
The Masterminds Behind the Fraud
Alexandra Gehrke
Prior to her involvement in this scheme, Gehrke presented herself as an experienced founder in the medical device industry since 2018. According to Medical Justice.com, her since deleted LinkedIn profile boasted expertise in sales and marketing within the healthcare sector. Her other social media posts have her as an artist, art dealer, model and real estate agent prior to medical device work. Gehrke operated two key companies in this fraud: Apex Medical LLC and Viking Medical Consultants LLC.
Jeffrey King
King, Gehrke’s husband, co-owned a business Apex Mobile that contracted with nurse practitioners to apply the wound grafts. His background prior to the fraud according to this video was centered around music and working at music stores but is less clear from the available information.
Company Inception and Operations
While the exact dates of company formation are not specified in the search results, it’s clear that Apex Medical LLC, Viking Medical Consultants LLC, and other related entities were operational by November 2022 when the fraud scheme began. As far as we can ascertain the organizations together had less than 10 people working in them.
The Fraud Mechanism
- Patient Targeting: Sales representatives identified elderly patients with wounds in various care facilities.
- Graft Ordering: Representatives were instructed to order expensive amniotic wound grafts from a specific distributor, regardless of medical necessity.
- Oversized Grafts: Gehrke ensured that only large grafts (4×6 cm or larger) were ordered to maximize reimbursement, even for small wounds.
- Nurse Practitioner Involvement: King’s company contracted nurse practitioners to apply the grafts and not include physicians, often pressuring them to do so against their medical judgment.
- Fraudulent Billing: The couple submitted claims to Medicare and other insurers for these unnecessary and improperly applied grafts.
Financial Impact and Consequences
The scheme resulted in actual payments of over $614 million by federal and private healthcare programs. Gehrke received more than $279 million in illegal kickbacks from the allograft distributor. The couple used their money to fund a lavish lifestyle, purchasing luxury vehicles, multiple homes, recording studio and over $520,000 in gold and jewelry.
Alexandra Gehrke and Jeffrey King were apprehended on June 17, 2024, at Phoenix Sky Harbor International Airport as they were preparing to board a flight to London. The couple, who had recently married in February of that year, appeared to be attempting to flee the country. When authorities searched their home, they discovered incriminating evidence that suggested the couple was aware of impending charges. Among their possessions were books titled “How To Disappear: Erase Your Digital Footprint, Leave False Trails, and Vanish Without a Trace” and “Criminal Law Handbook: Know Your Rights, Survive The System,” which were found in one of their packed bags for the flight.
Both Gehrke and King have agreed to significant restitution amounts: $614,990,420 and $605,690,110 respectively, though it is unclear where that money is going to come from. They also face up to 20 years in prison, with Gehrke’s sentencing scheduled for February 11, 2025.
Why did HHS let this go so long?
Despite the significant resources and personnel dedicated to combating healthcare fraud, it took approximately 18 months to shut down the massive $1.2 billion fraud scheme orchestrated by Alexandra Gehrke and Jeffrey King who are not the world’s most sophisticated actors. One would think with all the “tools” at their disposal the government would have stopped their enterprise much sooner.
Several factors that potentially contributed to this extended timeline could include complexity of the scheme, volume of false claims, investigative process, coordination among agencies and resource limitations all could have come into play.
While the HHS OIG employs approximately 1,600 staff members, and the Center for Program Integrity (CPI) with over 500 personnel, these resources are spread across numerous ongoing investigations and oversight activities. Despite all these resources the company was still able to collect over $600 million from federal programs prior to being shut down.
Whereas the HHS OIG and CPI are tasked with daily oversight of healthcare programs, the sophisticated nature of modern fraud schemes and the vast scope of federal healthcare programs make it challenging to immediately detect and shut down all fraudulent activities.
Also, it seems that there maybe is an ongoing investigation into the unnamed allograph distributor/manufacture, and the DOJ may be waiting for a larger case, but how much will the taxpayers have to bleed before this stops. Speaking with one orthopedist off the record, according to him the wound care industry is perhaps the most corrupt he has ever seen, and ripe with multiple and unnecessary procedures.
This was not a victimless crime, some of the patients received the treatment died the same day or a few days later, needlessly suffering at the end of their lives.
This case highlights the ongoing need for enhanced detection methods including the use of AI, and improved coordination among agencies to more quickly identify and stop large-scale healthcare fraud schemes.
Additional Resources
DOJ Complaint APEX Medical, LLC
If you want to watch an entertaining video about this case The Shameful Case of the Deathbed Grifters
Indictments for Nurse Practitioners