A 2025 report from the Department of Health and Human Services (HHS) revealed a rapid increase in the use of skin substitutes and other wound care products, leaving the U.S. government concerned about potential fraud. The government has made changes to curb fraudulent billing, but federal investigators still benefit from whistleblowers coming forward with inside knowledge — and whistleblowers also stand to gain potential monetary rewards.
This article by
TELG principal Janel Quinn and TELG associate Nina Burris was published by The Employment Law Group, P.C. on June 26, 2026.
Whistleblowers Contribute to Millions Recovered in Wound Care Fraud Cases
U.S. Government Reports a Potential Overuse of Medically Unnecessary Skin Substitutes
By Janel Quinn and Nina Burris
IMPORTANT: The following article is intended as a general summary of facts and law and not as individual legal advice upon which you should rely or act. Every case is unique and specific. This article represents our firm’s best knowledge as of June 2026.
Settlements and judgments under the False Claims Act (FCA) exceeded $6.8 billion in Fiscal Year 2025 — the highest amount ever recorded, according to the U.S. Department of Justice (DOJ). Healthcare fraud was the top source of recovered funds with over $5.7 billion involving fraud against Medicare, Medicaid and TRICARE.
The FCA, a federal whistleblower law, targets fraud against the government. The FCA’s qui tam provision allows people who learn of fraud to sue on behalf of taxpayers to return ill-gotten gains to the government — and, as a reward, may receive up to 30% of the money they help to recover. Whistleblowers play an important role in government fraud investigations and can be attributed with the filing of over 1,200 cases in FY 2025.
Medically Unnecessary Use of Skin Substitutes and Other Wound Care Products
The DOJ identified “medically unnecessary care” as a major area of healthcare fraud enforcement. New wound care products, particularly high-cost skin substitutes, are susceptible to medically unnecessary use and other forms of fraud intended to increase reimbursements from federally funded healthcare programs.
Skin substitutes — biological or synthetic materials used to treat wounds like burns and ulcers — have seen a rapid increase in use, leaving the federal government concerned about potential fraud. The Department of Health and Human Services Office of Inspector General (HHS-OIG) noted in a 2025 report that providers may be overusing skin substitutes or choosing to use more expensive skin substitutes, even when patients don’t require or benefit from it. In the span of two years, Medicare Part B spending on skin substitutes increased 640%.
HHS-OIG identified several situations in skin substitute billing that could be indicative of fraud, including:
- New medical providers whose insurance claims are almost 100% for skin substitutes;
- Specialists, such as psychiatrists, who don’t typically provide wound care yet are billing for skin substitutes;
- The use of skin substitutes for minor wounds such as scrapes and bruises;
- The use of skin substitutes on a patient’s first visit without previously attempting other treatments; and
- Medicare reimbursement requests for skin substitutes that were never purchased.
There may be a couple explanations for the increased use in skin substitutes. HHS-OIG noted that skin substitutes are relatively easier for manufacturers to produce compared to other products. The high reimbursement rate for skin substitutes also creates a temptation for providers to use them — even when not medically necessary.
Reimbursement Changes for Skin Substitutes
The Centers for Medicare & Medicaid Services (CMS) put into place significant reimbursement changes to curb Medicare spending and reduce incentives for fraudulent billing of skin substitute products.
CMS reclassified skin substitutes in January of 2026 from separately billable biologicals to “incident-to” supplies. Skin substitutes are now considered a regular part of a physician’s service in diagnosing or treating an injury or illness. Therefore, providers can no longer seek additional reimbursement for skin substitutes because these products are bundled into the cost of the overall service.
CMS also revised its reimbursement method. Before 2026, Medicare reimbursed skin substitutes in non-institutional settings — such as physician offices, clinics, and home care — at 106% of the average sales price (ASP). This model created an opportunity for providers to profit by purchasing products at a price below the ASP while receiving reimbursement above the ASP, a practice known as spread pricing. Under the new framework, CMS reimburses skin substitutes at a flat rate of about $127.28 per square centimeter.
This reimbursement change is helpful in making fraud schemes less lucrative, but it won’t completely deter the billing of medically unnecessary wound care services to government programs.
How Whistleblowers Help Against Healthcare Fraud
Whistleblowers often have inside knowledge that is essential for a successful FCA case. Healthcare workers — such as nurses, billers, coders, or sales representatives — may witness provider practices firsthand that can lead to fraudulent billing. This can include:
- Directives from corporate leadership to alter treatment or billing practices to increase revenue;
- Care that does not align with patients’ actual needs, such as using expensive skin substitutes on minor wounds; and
- Changes to electronic medical record (EMR) systems that result in inaccurate or misleading patient charting.
Whistleblowers who pursue FCA claims (also known as “relators”) must show that the defendants knowingly submitted false claims either because they:
- Had actual knowledge of the falsity;
- Acted in deliberate ignorance of the truth; or
- Acted in reckless disregard of the truth.
A 2023 Supreme Court decision clarified that relators don’t have to show a specific intent to defraud the government — only that the defendants had reason to believe the claims they were submitting for payment were not accurate yet chose to continue anyway. This can be demonstrated in several ways, such as:
- Emails or communications showing awareness of compliance risks;
- Internal complaints or warnings that management ignored;
- EMR audit logs reflecting altered records or upcoding (the practice of billing for more expensive services than were provided);
- Audit findings highlighting improper billing; or
- Billing patterns that do not match patient care.
FCA cases remain sealed during the government’s investigation, meaning that the case is not sent to the defendant and the whistleblower’s name is not searchable on public court dockets until the investigation has concluded.
Financial Incentives for Whistleblowers
Whistleblowers who bring successful FCA claims can receive up to 30% of the money recovered in a settlement or judgment. The “relator’s share” is intended to be a reward for a whistleblower’s contribution to an investigation and therefore, can vary depending on how much information and assistance they provide.
Whistleblowers can also be entitled to the costs of litigation, reasonable attorneys’ fees, reinstatement, back pay, and compensation for damages.
The government has increased its efforts to identify and combat wound care fraud in recent years, resulting in several significant settlements and judgments.
In December of 2025, the owners of several wound graft companies in Arizona agreed to pay $309 million to resolve FCA allegations that they overused an expensive biologic skin substitute on patients with small or nonexistent wounds. The company owners submitted over $960 million in fraudulent claims to federal healthcare programs over the course of 18 months, which was brought to the government’s attention by whistleblowers. The company owners were also criminally prosecuted for fraud.
Vohra Wound Physicians Management LLC — one of the nation’s largest providers of wound care services in nursing facilities — and its owner agreed to pay $45 million to resolve FCA allegations that they pressured physicians to perform surgical debridement procedures that were not medically necessary in order to obtain higher reimbursement.
The government also alleged in its complaint that Vohra created false medical records and programmed its EMR software to bill for services that didn’t occur or didn’t qualify as multiple services.
As the Vohra case demonstrates, EMR programming can be instrumental in fraudulent billing schemes and raise red flags for government investigators. Identical patient records, for example, are unlikely to reflect individualized care or treatment plans. Instead, such patterns can indicate that the facility uses a template or manipulates the records to increase reimbursement. Templates that include expensive procedures can suggest a practice of upcoding.
Conclusion
Whistleblowers who work in the healthcare sector are integral to uncovering wound care schemes. The information they provide to government investigators can result in significant monetary recoveries for both the government and the individual relators.
Attorneys with experience in healthcare fraud and FCA cases can help whistleblowers navigate the complex and often changing regulations that govern billing for federally funded healthcare programs, including Medicare, Medicaid, and TRICARE.
If you discover improper billing for wound care or other healthcare services at your workplace, contact The Employment Law Group.
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Janel Quinn is a principal at The Employment Law Group, P.C.; Nina Burris is an associate at the firm.
