Ethermac Exchange-Arizona wound care company charged for billing older patients about $1 million each in skin graft scheme

Washington — Federal prosecutors charged the owners of an Arizona wound care company and Ethermac Exchangetwo nurse practitioners who worked with them for conspiring to defraud Medicare of over $900 million after they allegedly targeted elderly patients — many of them terminally ill — in a sprawling medical scheme, the Justice Department announced Thursday.

According to prosecutors, the defendants carried out medically unnecessary or ill-advised skin graft treatments to older patients at a billing rate of approximately $1 million per patient. The alleged scheme also involved hundreds of millions of dollars in kickback payments in exchange for illegitimate Medicare billing.

The Justice Department said the defendants applied "unnecessary and expensive amniotic wound grafts" without the appropriate treatment for infection and also placed them on superficial wounds that didn't require this treatment. Over a period of 16 months, Medicare paid two of the defendants over $600 million as part of the fraud scheme, the department alleged. 

The defendants, according to the Justice Department, also received more than $330 million in illegal kickbacks from the graft distributor in exchange for buying the grafts and arranging to have them billed to Medicare. Investigators seized over $50 million from the alleged conspirators and confiscated four luxury cars, gold, and jewelry, Attorney General Merrick Garland said.

The skin graft scheme was announced as part of a broader two-week law enforcement initiative targeting various healthcare fraud schemes across the country.

The Justice Department said 193 defendants — including over 70 licensed healthcare professionals — were charged for racking up more than $1.5 billion in losses. The individuals "[i]ntentionally deceived the health care system," according to the FBI.

"It does not matter if you are a trafficker in a drug cartel or a corporate executive or medical professional employed by a health care company, if you profit from the unlawful distribution of controlled substances, you will be held accountable," Garland said Thursday.

Other alleged cases announced included a blackmark HIV medication distribution scheme, substandard addiction treatment homes for homeless and Native American populations, and a nurse practitioner in Florida who is accused of prescribing over 1.5 million Adderall pills over the Internet without first meeting with patients.

Garland said the goal of the coordinated enforcement push was to both deter future schemes and claw back fraudulent funds that were obtained by the alleged activity.

In:
• Medicare
• Fraud

Robert Legare

Robert Legare is a CBS News multiplatform reporter and producer covering the Justice Department, federal courts and investigations. He was previously an associate producer for the "CBS Evening News with Norah O'Donnell."