$1.2 Billion in Wound-Graft Claims, Grafts on Patients Who Died Within Days

Untrained sales reps ordered the largest amniotic skin grafts for any wound — including on terminally ill patients who died within days — billing CHAMPVA, Medicare and TRICARE $1.2B. Both owners convicted; $309.9M civil settlement on top of prison.

From November 2022 to May 2024, the couple used medically untrained sales representatives to find elderly and hospice patients with wounds of any kind and order the largest available amniotic skin grafts regardless of medical need. Nurse practitioners were instructed to suspend their medical judgment and apply whatever was ordered.

The grafts went on non-existent wounds and on terminally ill patients receiving palliative care, some of whom died within days. Of the $1.21 billion in claims, over $960 million was billed to federal programs — Medicare, TRICARE and CHAMPVA combined (no CHAMPVA-only split is stated, and this page invents none). The programs paid $614,945,420.

Gehrke’s companies took over $279 million in illegal kickbacks from the wholesale graft distributor; King’s company took $130 million more. Both pleaded guilty to conspiracy to commit health care fraud and wire fraud. VA OIG was among the agencies that investigated the criminal case.

"grafts applied to terminally ill patients receiving palliative care, some of whom died within days"
— U.S. Department of Justice, Office of Public Affairs

Source: U.S. Department of Justice, Office of Public Affairs. Case file in the VA Fraud case files — part of the VA Fraud record. Cases are published as the courts decided them; amounts are stated as the Justice Department states them (billed, stolen, or ordered in restitution, as labeled).