DOJ cracks down on $1.2B Medicare fraud in wound care industry

The US Department of Justice (DOJ) has stepped up its crackdown on fraud in the wound care industry. Two company owners were recently sentenced to lengthy prison terms for submitting over $1.2 billion in false claims to Medicare. Meanwhile, Medicare spending on skin substitutes has surged from $256 million in 2019 to more than $10 billion in 2024.

In a high-profile case, two owners of a wound care company pleaded guilty to orchestrating a scheme that led to $1.2 billion in fraudulent Medicare claims. One received a 15.5-year prison sentence, while the other was jailed for 14 years. The DOJ has also secured a $45 million settlement from Vohra Wound Physicians Management LLC over allegations of unnecessary medical procedures.

The surge in Medicare spending on skin substitutes—rising from $256 million in 2019 to over $10 billion in 2024—has raised concerns. Officials attribute much of this increase to alleged abusive pricing practices within the sector. In response, the Centers for Medicare & Medicaid Services (CMS) issued a final rule cutting payment rates for skin substitutes by $19.6 billion starting in 2026.

The DOJ's focus on fraud in this area remains sharp. A top civil fraud enforcement official confirmed that many more skin substitute cases are under investigation. Global Wound Care Medical Group is currently being probed for potential violations of the False Claims Act (FCA). Legal experts warn that providers, manufacturers, and distributors should expect heightened scrutiny and prioritise compliance measures.

The DOJ is expected to keep investigating medical necessity, billing irregularities, and alleged kickbacks in wound care. With Medicare spending under intense scrutiny and payment cuts already in place, companies in this sector face growing legal and financial risks. The recent convictions and settlements signal a continued push for stricter enforcement.