Federal agencies are intensifying their coordinated effort to combat fraud in the wound care space. The Department of Justice (DOJ) recently announced the criminal sentencing of the owners of Apex Medical LLC and the resolution of related civil liability under the False Claims Act (FCA). The scheme resulted in the reimbursement of hundreds of millions of dollars in false and fraudulent claims. According to the DOJ, the case ranks as “one of the most financially impactful health care fraud schemes in American history”. It stands as significant for both the volume of claims at issue and the parallel criminal and civil consequences imposed on the individuals involved.
The Fraudulent Scheme
According to the government, from November 2022 through May 2024, Apex’s owners, husband and wife Alexandra Gehrke and Jeffrey King, along with their co-conspirators, caused the submission of more than $1.2 billion in false and fraudulent claims to public and private health insurers. More than $960 million of those claims were billed to federal health care programs, including Medicare. Federal and commercial payors collectively reimbursed approximately $615 million based on those submissions.
The fraud centered on the procurement and application of amniotic membrane allografts—high-cost skin substitute products—used to treat patients suffering from chronic or slow-healing wounds like bed sores, ulcers, or surgical wounds. In clinical practice, skin substitutes are intended for specific wound types that have failed to respond to conventional treatments, and their use is guided by strict medical judgment.
Instead, Apex relied on medically untrained sales representatives to enter hospices, group homes, and adult living facilities to identify Medicare recipients with wounds and place graft orders. These representatives were allegedly compensated per graft, encouraging medically unnecessary graft procedures. They were further directed to select the largest graft sizes available—as amniotic allografts are priced by the square centimeter—regardless of wound characteristics or whether grafting was clinically appropriate. Patients identified through this process were referred to entities owned or controlled by Gehrke and King that were enrolled as Medicare providers.
The government further alleged that Gehrke received $279 million in illegal kickbacks from a wholesale graft distributor in exchange for ordering and using its products. Portions of those funds were used to pay commissions to sales representatives, with $100 million going to Gehrke’s personal accounts. DOJ contends that this kickback scheme and utilization-based incentives directly influenced which graft products were ordered, how they were used, and the claims ultimately submitted for reimbursement.
Nurse practitioners contracted by Apex-affiliated entities were then instructed to apply whatever quantities and sizes of grafts were ordered, even where those orders often lacked medical justification. DOJ identified cases in which grafts were applied to non-existent wounds, in which several grafts were applied to a single wound, and in which grafts were applied to patients receiving palliative care who died on the same day as the graft procedure.
Criminal and Civil Outcomes
Both Gehrke and King pleaded guilty to conspiracy to commit health care fraud and wire fraud and were sentenced to 14 and 15.5 years in federal prison, respectively. They were also ordered to pay restitution exceeding $1 billion collectively and to forfeit hundreds of millions in proceeds obtained through the scheme. The government also seized four luxury cars, including a Ferrari 488 Spider convertible, and nearly $1 million in cash and gold from their home.
In parallel, Gehrke, King, and Apex Medical LLC agreed to pay approximately $309 million to resolve civil FCA allegations.
Why the Apex Case Matters
Over the past year, wound care has emerged as a federal health care enforcement priority, with both DOJ and the Centers for Medicare & Medicaid Services (CMS) signaling heightened scrutiny of billing practices in this area through coordinated regulatory and enforcement action.
In November 2025, CMS revised its reimbursement approach for skin substitutes, replacing payment structures that had created outsized profit margins with standardized rates designed to reduce overutilization incentives. Also in November 2025, DOJ announced a $45 million settlement with Vohra Wound Physicians Management LLC resolving FCA allegations that the company billed federal programs for medically unnecessary wound care services and upcoded claims by manipulating electronic health records.
Federal leadership has underscored the significance of these changes. In November 2025 remarks, CMS Administrator Mehmet Oz characterized skin substitute billing as “massively inflating” Medicare costs and indicated that future fraud enforcement would prioritize these claims.
Collectively, these developments signal that wound care—particularly skin substitutes—has become a focal point of federal enforcement and policy reform, representing a coordinated shift in oversight strategy.
What This Means for Whistleblowers
The Apex FCA allegations were originally brought to the government’s attention by whistleblowers under the qui tam provisions of the False Claims Act. As the matter remains under seal while the investigation into the involvement of other parties continues, the whistleblowers’ share of the settlement has not been determined. Under the False Claims Act, whistleblowers can receive 15–30% of any recovery for reporting fraud against federal healthcare programs. The whistleblowers in this case can expect sizeable compensation for their crucial role in exposing this record-setting fraud.
If you have information about fraudulent wound care, you may have a claim under the False Claims Act. If you are considering becoming a health care fraud whistleblower or are aware of other types of fraud, contact us for a free, confidential consultation.