Skin Graft Fraud Under the False Claims Act: What Healthcare Professionals Need to Know

“Our prosecutors charged 7 defendants …with approximately $1 billion in fraudulent claims to Medicare…for performing medically unnecessary skin grafts on dying patients who were seeking to spend their final days with dignity and peace.” Matthew Galeotti, Head of the Department of Justice (DOJ) Criminal Division

Performing unnecessary skin grafts on terminal patients purely for profit should get under your skin, just like it did to them. It’s a tragic indictment of unchecked greed when vulnerable individuals, nearing the end of life, are subjected to painful, medically unjustified procedures just to pad someone’s pockets.

Skin grafting has become one of the most expensive and abused forms of Medicare and Medicaid fraud. Fraudsters see an opportunity in high-dollar procedures, weak oversight, and the assumption that medical decisions won’t be questioned. But when greed takes the scalpel out of the hands of healers and cuts patients into profit centers, the consequences are more than financial.

Fortunately, when insiders blow the whistle on skin graft fraud, the False Claims Act gives the public a fighting chance. And no number of grafts can cover up the grift.

Skin grafts are vital in treating burns, chronic wounds, and surgical repairs, but they have been the focus of healthcare fraud investigations. The False Claims Act (FCA) is being used to crack down on scams involving skin graft procedures and biologic skin substitutes.

Former FBI Special Agent Jason T. Brown, head of the whistleblower law firm Brown, LLC, commented:

“We’ve seen a spike in skin graft fraud cases because it’s too easy to grift with the grafts. These are high-dollar products and procedures, sometimes generating a million dollars or more from a single patient, which has proven irresistible to unscrupulous providers. It’s one thing when the motive is profit; that can be remedied when the money comes back threefold under the False Claims Act. But when patients are actually harmed, when the patient becomes the product and the physician stops caring about healing and only cares about billing, that’s when skin grafting crosses the line into criminality. People go to jail for that. It’s critical for insiders to step up and speak out to protect patients from this kind of abuse.”

The False Claims Act and Healthcare Fraud

The False Claims Act (FCA) is the U.S. government’s primary civil weapon against fraud involving federal programs. In the healthcare context, the FCA makes it illegal to submit claims to Medicare, Medicaid, or other government payors that you know (or should know) are false or fraudulent. This includes billing for services not provided, not medically necessary, or miscoded to receive higher payment. Violators can face steep civil penalties – up to three times the government’s loss plus per-claim fines (tens of thousands of dollars each).

Medicare and Medicaid are frequent targets of fraud, and the FCA has proven to be a powerful tool for recovering funds and deterring misconduct. The whistleblower law (“qui tam”) provisions enable insiders – such as clinic staff or billing personnel – to report fraud and even sue on the government’s behalf. Whistleblowers are entitled to a share of any recovery, which incentivizes reporting of wrongdoing. In fact, healthcare whistleblowers have helped the government recover billions (over $75 billion since 1986) and in turn have received billions of dollars in whistleblower awards themselves. The Department of Justice (DOJ) and Office of Inspector General (OIG) actively encourage reporting; tips about suspected fraud can be reported to HHS at 800-HHS-TIPS (800-447-8477). HOWEVER, if you report directly to them, you are NOT eligible to receive a whistleblower award unless and until you are the first one to file your own skin graft False Claims Act lawsuit with the help of an experienced whistleblower law firm like Brown, LLC, which offers free confidential consultations at (877) 561-0000.

As the above chart shows – Medicare spending on skin graft cases has reached nearly a billion dollars a year, which is a $700 million exponential increase. Unless there’s been a boom in necessity, it’s indicative of an awful lot of fraud.

Recent False Claims Act Cases Involving Skin Graft Fraud

Healthcare fraud enforcement has ramped up, and skin graft schemes have been squarely in the DOJ’s sights. Below are some major recent cases and takedowns (civil and criminal) involving skin graft fraud. These examples, starting with the most recent, show the variety and scale of fraud – from individual clinics to nationwide plots:

• Amniotic Wound Graft” Mega-Scheme (2022–2025) – In what prosecutors called one of the largest Medicare frauds ever, an Arizona couple orchestrated a $1.2 billion scheme involving unnecessary skin grafts. Alexandra Gehrke and Jeffrey King pleaded guilty in 2024 to deploying untrained salespeople to find elderly (often hospice) patients with any wound, then ordering costly amniotic tissue grafts for every patient. They insisted on using oversized grafts (4×6 cm or larger) regardless of wound size to maximize billing and received kickbacks from the graft supplier for their high-volume orders. Over 18 months, the conspirators submitted more than $1.2 billion in false claims and were paid about $615 million by Medicare and other insurers. Astonishingly, the scheme billed over $1 million per patient on average for these unnecessary graft applications. When the fraud collapsed, authorities seized luxury cars, gold, and over $100 million in cash assets from the alleged perpetrators. Gehrke and King now face up to 20 years in prison each for healthcare fraud.
• Dermatology Practice Settlement (2024) – Tareen Dermatology, P.A. in Minnesota agreed to pay $1.63 million to settle civil False Claims Act allegations in June 2024. Whistleblowers alleged several billing improprieties, including claims that certain skin grafts were used in situations where they were not medically justified. For example, the clinic allegedly billed for advanced graft applications that weren’t warranted by the patients’ conditions. The settlement also covered other misconduct like billing for Mohs surgery services on days the supervising doctor wasn’t present, and improperly waiving copays to attract patients. Without admitting liability, the practice paid to resolve the claims. This case was a qui tam (whistleblower) action, reinforcing that insiders play a key role in identifying fraud.
• Beverly Hills Plastic Surgeon Settlement (2023) – A famous plastic surgeon and his affiliated companies paid nearly $24 million in April 2023 to settle FCA allegations of skin graft billing fraud. According to the DOJ, Dr. Aronowitz billed Medicare and Medicaid for skin graft procedures at an ineligible location (falsifying the place-of-service codes to get higher reimbursement) and billed multiple times for single-use skin substitute products. In practice, his wound care clinic was accused of cutting one skin substitute kit (intended for one patient) into pieces and using it on several patients – more than double-billing the government for each reuse. This long-running scheme “illegally maximized profits” and cost public health programs millions. As part of the resolution, defendants agreed to a 15-year exclusion from Medicare/Medicaid – a career-ending penalty. Several whistleblowers (including an office billing manager and a podiatrist) had filed suits that prompted the investigation, exemplifying how front-line healthcare workers can help expose fraud.
• Nationwide Wound Care Kickback Case (2017) – In a landmark corporate case, Shire Pharmaceuticals (and its acquired company Advanced BioHealing) paid $350 million to settle federal and state FCA allegations involving Dermagraft, a bioengineered skin graft product. The government alleged that from 2007–2011, Shire/ABH doled out lavish kickbacks to clinics and doctors – such as cash, credits, travel and entertainment – to induce them to purchase and overuse Dermagraft. These inducements led to many unnecessary or excessive applications billed to Medicare and Medicaid. Because claims arising from kickbacks are considered false claims, the company faced massive liability. This settlement was one of the largest FCA settlements in the medical device/biologics arena, sending a strong warning that manufacturers must ensure legitimate use of skin substitute products. (Notably, several individual Shire/ABH executives were also held accountable in related cases for their roles in the scheme.)
• In April 2025, the Department of Justice filed a False Claims Act complaint against Vohra Wound Physicians Management LLC and VHS Holdings, alleging a nationwide scheme to defraud Medicare. The complaint states the defendants used an EMR system to misclassify non‑surgical wound debridement as surgical and pressured physicians to meet debridement quotas. They also allegedly improperly used Modifier 25 to inflate reimbursement on nearly all claims.

Other notable cases: Authorities have pursued numerous smaller cases as well. In mid-2025, a Seattle-based provider paid $1.1 million to resolve claims of improperly billing Medicare for an unapproved amniotic graft injection (the product was marketed despite lacking coverage approval). In Texas, a podiatrist was charged in 2023 for a $45 million skin substitute fraud, allegedly continuing improper billing even after audits flagged his practices. The DOJ’s 2025 national health care fraud takedown included over 20 defendants charged or settled civilly for skin graft-related fraud as part of a broader sweep. The clear message: regulators are cracking down on graft-related fraud, big and small.

Red Flags and Warning Signs of Skin Graft Fraud

What can medical staff, coders, and billing departments watch to catch potential skin graft fraud early? Here are some red flags and irregular patterns that might indicate something is amiss:

• Unusually High Volume of Graft Billing: A provider or clinic that bills an excessive number of skin graft procedures or applications, especially relative to peers, should raise suspicion. Medicare contractors now use analytics to spot providers who bill skin substitutes far more frequently than others. For example, a small wound clinic regularly billing dozens of high-cost graft applications per patient (when typical care might be 1–3 applications) is a red flag.
• Use of Oversized or Multiple Units Without Justification: Check if the quantity of graft material billed makes sense for the wound size. Fraudulent schemes have involved ordering grafts much larger than necessary (e.g. a 4×6 cm graft or a 1×1 cm ulcer) just to charge more. Likewise, billing for multiple graft units on the same patient at one time should match clinical need – if not, it could signal “padding” the bill.
• Medically Unnecessary Applications: Not every wound needs an expensive skin substitute. Watch for grafts being used on minor wounds or applied despite lack of medical necessity. For instance, applying a costly amniotic membrane graft on a superficial skin tear, or on a patient whose wound was healing well with standard care, is suspect. In legitimate care, Medicare generally expects that standard wound therapy has failed for a few weeks before skin substitutes are used. Skipping straight to grafts without documentation of necessity could indicate fraudulent intent.
• Cookie-Cutter” Treatment of All Patients: A fraudulent clinic may apply the exact same graft product to every patient on a routine basis, ignoring individual needs. If you see identical documentation and treatment plans (e.g. all patients supposedly getting the same size graft weekly), it suggests a protocol driven by profit rather than patient care. In the Arizona case, salespeople ordered grafts for every referred patient “indiscriminately,” and nurse practitioners were told not to exercise independent medical judgment. Such one-size-fits-all grafting is a big warning sign.
• Frequent Use of the Most Expensive Products: Be cautious if a clinic consistently uses a high-cost skin substitute brand when cheaper or established alternatives exist. As Dr. Caroline Fife (a wound care expert) noted, some offices gravitate to extremely expensive graft products (average cost ~$1,000+ per cm²) instead of more affordable options, often because those expensive products yield higher profits or involve lucrative deals. Using “only Product X” for every graft, especially if Product X is known to be pricey or experimental, warrants scrutiny.
• Improper Coding or Billing Practices: Billing staff should verify that place-of-service codes and procedure codes are accurate. Red flags include: a provider billing all graft procedures as if done in a hospital outpatient department when they were done in-office (or vice versa) to exploit higher reimbursement; using unlisted codes to hide what was done; or billing adjunct procedures (debridements, evaluations) with modifiers to unbundle payments inappropriately (as seen in some wound care fraud cases). In short, mismatches between the medical record and the claim (or unusual code combinations) deserve a closer look.
• Routine Waiver of Co-pays/Deductibles: Front desk and billing staff might notice if a clinic habitually tells Medicare patients “you don’t have to pay your 20%.” While occasional waivers for hardship are allowed, a pattern of waiving co-pays for graft patients can indicate the clinic is trying to remove cost barriers to perform more billable grafts – a practice OIG considers potential fraud. One clinic that did this was caught and penalized. Patients who never receive bills or EOBs for high-cost graft treatments may be unaware huge claims are being paid on their behalf.
• Pressure from Sales Reps or Unusual Supplier Relationships: If wound care staff observe that product distributors or sales representatives are heavily involved in patient care decisions, that’s a red flag. For example, non-clinical sales reps shouldn’t be “prescribing” treatments – yet in some scams, salespeople effectively directed providers to order certain grafts and received kickbacks in return. Also be wary if a clinic is receiving rebates, “consulting” payments, or other perks from a graft manufacturer – these could be kickbacks influencing overutilization.
• Patient Complaints or Anomalies: Sometimes patients themselves provide clues – a patient may question, “Why am I getting this painful graft every week when it’s not helping?” or “I noticed the doctor only looked at my wound for 5 minutes but billed a surgery.” Complaints about lack of improvement despite numerous grafts, or signs of patient harm (infections, worsening wounds due to unnecessary applications), should prompt review of whether the grafting is truly indicated or part of a scheme.

The Cost of Fraud: Impact on Patients, Providers, and Taxpayers

Skin graft fraud isn’t a victimless paperwork offense – it has real consequences for everyone involved:

• Patient Harm: When medically unwarranted grafts are performed, patients are exposed to needless risk. Skin graft procedures (and the frequent clinic visits they entail) can be painful and carry risks of infection, bleeding, graft failure, or allergic reactions. Unneeded treatments can delay or replace the correct care the patient should have received. Moreover, unethical providers may neglect standard wound care (cleaning infection, offloading pressure, etc.) in favor of chasing billable graft fees, potentially leading to complications or amputations that could have been avoided.
• Cost to Taxpayers and Programs: Fraudulent skin graft billing drains public healthcare funds. Medicare and Medicaid have finite resources; dollars siphoned by fraud mean less money for legitimate patient care. The cases above involve staggering losses – tens of millions in some settlements, and over $600 million actually paid out in the huge graft scheme. These costs ultimately fall to taxpayers. Widespread fraud can drive up premiums and out-of-pocket costs as insurers and CMS adjust for losses.
• Consequences for Providers Involved: Healthcare professionals who commit FCA violations face severe repercussions. Civilly, they can be liable for massive financial penalties – treble damages and up to ~$27,000 per false claim (after inflation adjustments). This can easily bankrupt a practice, as seen by multi-million-dollar settlements like Dr. Aronowitz’s $23.9M payout. Providers may also be subjected to exclusion from federal health programs (effectively barring them from working in Medicare/Medicaid settings). In egregious cases, criminal prosecution is on the table: healthcare fraud and related charges can bring prison sentences (the Arizona conspirators face up to 20 years) and criminal fines. Additionally, physicians might lose their medical licenses or board certifications due to fraud findings. The reputational damage is irrevocable – trust from patients and peers evaporates. Even staff at offending organizations can suffer career fallout if they are found complicit. In sum, participating in graft fraud is professionally and personally ruinous. As one U.S. Attorney put it, these abuses “line the pockets of unscrupulous providers” at the expense of public programs – and those providers will be held accountable.

Frequently Asked Questions: Skin Graft Fraud and the False Claims Act

What is skin graft fraud under the False Claims Act?

Skin graft fraud refers to billing Medicare, Medicaid, or other government programs for medically unnecessary, unperformed, misrepresented, or falsely documented graft procedures or skin substitute products. It includes upcoding, using unapproved products, kickbacks, and overutilization schemes.

Who can file a whistleblower case for skin graft fraud?

Whistleblowers can be employees, billing staff, nurses, sales reps, patients, or anyone with non-public information about the fraud. These individuals can bring a qui tam case under the False Claims Act and may receive 15–30% of the government’s recovery.

Is using a sales rep to guide treatment decisions fraud?

Yes, if a non-clinical salesperson is directing medical decisions (e.g., insisting certain grafts be used on all patients), that can be part of a kickback or fraudulent scheme, especially if linked to financial incentives.

What makes a skin graft “medically necessary?

Medical necessity is based on clinical need and standard guidelines. A graft is typically necessary when a chronic wound fails to heal after standard care for several weeks, not for minor or healing wounds. Documentation should reflect this.

Can waiving Medicare co-pays be illegal?

Yes. Routinely waiving co-pays to attract patients or increase graft volume can violate the Anti-Kickback Statute and result in False Claims Act liability, especially when done systematically to drive billing volume.

Are reused graft materials a red flag?

Absolutely. Single-use biologics or skin substitute kits reused on multiple patients can constitute both fraud and a serious health risk, and lead to criminal exposure under healthcare fraud statutes.

What if a doctor uses an unapproved product?

Billing for an FDA-unapproved or off-label skin substitute without clinical justification or proper disclosure can violate Medicare coverage rules and trigger FCA claims. This is particularly true for experimental amniotic or fluid-based graft products.

What happens to providers who commit skin graft fraud?

They may face civil FCA liability (treble damages, penalties per claim), exclusion from Medicare/Medicaid, loss of licenses or board certification, reputational damage, and in egregious cases, criminal prosecution and prison time.

How can I report skin graft fraud?

You can report fraud confidentially by filing a qui tam lawsuit through a whistleblower law firm (although your identity may eventually be disclosed). Reporting directly to the government (e.g., HHS-OIG) is possible but does not entitle you to a financial reward.

Does Medicare audit skin graft use?

Yes. Due to the dramatic rise in skin substitute spending, Medicare and its contractors have increased audits and are analyzing graft billing volumes, frequency of application, and proper documentation for necessity.

BOLO Checklist: Spotting Skin Graft Fraud Under the False Claims Act

This checklist is designed for healthcare professionals, billing staff, compliance officers, and potential whistleblowers to help identify red flags related to improper skin graft billing. If you encounter multiple red flags below, consider consulting a whistleblower law firm.

☐ Unusually high volume of skin graft billing per patient or per clinic.

☐ Routine use of high-cost skin substitute products without medical justification.

☐ Grafts applied on wounds that are already healing or do not require advanced therapy.

☐ Identical or ‘cookie-cutter’ documentation for every patient encounter involving grafts.

☐ Use of oversized grafts (e.g., 4×6 cm) on small wounds to inflate billing.

☐ Grafts applied without documentation of prior standard wound care attempts (e.g., 4 weeks of non-graft therapy).

☐ Double billing: Using single-use graft kits on multiple patients.

☐ Use of Modifier 25 to bill grafts with unrelated E/M visits at high frequency.

☐ Place-of-service misrepresentation (e.g., billing office procedures as hospital outpatient).

☐ Routine waiving of Medicare co-pays or deductibles for graft procedures.

☐ Excessive use of unapproved or experimental products billed to Medicare.

☐ Presence of aggressive sales reps directing clinical care or decisions.

☐ Patient complaints of repeated, painful, or unexplained skin grafts.

☐ Sudden spike in clinic revenue or billing tied to graft-related codes.

☐ Pressure from administrators to increase skin graft procedures or volume.

Fighting Back: Reporting Health Care Fraud – A Call to Action

Many of the cases discussed began because honest employees, clinicians, or patients noticed something wrong and reported it. The False Claims Act protects whistleblowers from retaliation and rewards them with a portion of funds recovered, recognizing the courage it takes to come forward.

Skin grafts and advanced wound therapies should be tools for healing, not schemes for profit. Healthcare professionals can ensure it stays that way by staying informed, following the rules, and remaining vigilant. Remember that every false claim undermines trust in our system and diverts resources from patient care. By learning the red flags and acting when something isn’t right, you play an essential role in the fight against fraud. Together we can uphold the integrity of treatments that genuinely help patients – and make sure that those who grift the system under the guise of grafts are brought to justice under the False Claims Act.

https://www.justice.gov/opa/pr/beverly-hills-plastic-surgeon-and-companies-pay-24-million-settle-false-claims-act

https://www.justice.gov/opa/pr/minnesota-dermatology-practice-pays-over-16-million-resolve-false-claims-act-allegations

https://www.justice.gov/opa/pr/shire-agrees-pay-350-million-resolve-false-claims-act-allegations

https://www.justice.gov/usao-wdwa/pr/seattle-medical-practice-pays-over-11-million-resolve-false-claims-act-allegations

https://clearhealthcosts.com/blog/2023/08/wound-care-and-skin-substitutes-rising-costs/

https://www.justice.gov/opa/pr/national-health-care-fraud-enforcement-action-results-criminal-charges-against-78-defendants

https://oig.hhs.gov/reports-and-publications/workplan/ (search “skin substitutes”)