Ferraris and Shell Companies: Five Charged in Medicare Fraud Schemes

Medicare paid over $10 billion in 2024 for expensive wound coverings called skin substitutes, a sudden spending spike that analysts have called one of the largest examples of waste in the federal health program’s history.The spending was fueled by multiple kickback schemes that enriched both the companies that manufactured skin substitutes and the doctors and nurses who applied them, according to charges the Justice Department is planning to unveil on Tuesday.The department is charging five people, including an executive of a skin substitute company featured in an investigation by The New York Times in 2025 and a nurse practitioner who owned a network of wound care clinics.The government claims they used their Medicare earnings to buy expensive cars, homes, jewelry and, in one instance, to fund the construction of a luxury resort in the Philippines.For decades, skin substitutes, which are made from dried placenta, were a niche product with mixed evidence of efficacy that doctors occasionally used to treat wounds.That changed in the early 2020s, when skin substitute manufacturers began taking advantage of a policy loophole that allowed them to set reimbursement rates for their products.

In 2019, the most expensive skin substitutes cost $1,042 per square inch.By 2025, some products on the market cost more than $21,000, despite no major advances to the technology.The Trump administration closed the loophole in July 2025, setting a fixed rate of $806, after initially delaying a Biden-era proposal to limit Medicare’s coverage of the bandages.

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