Pasadena clinic netted $34 million in Medicare skin graft scam, investigators say

Federal prosecutors have seized more than $2 million from a Pasadena bank account “allegedly defrauded Medicare of millions of dollars” by returning it to patients who allegedly never received it, federal officials said Tuesday.

Working with the Department of Homeland Security Investigations, first assistant US attorney Bill Essayli revealed that Expert Wound Care, which does business as St. Victoria Home Care, targeted for government investigation. The Pasadena-based clinic is accused of fraud, according to an affidavit that federal prosecutors filed Monday and that a federal magistrate in Los Angeles approved.

The clinic received more than $34 million in federal payments, with claims involving a single patient worth more than $6 million, according to a US Secret Service affidavit in the investigation. Expert Wound Care and its principals could immediately be reached for comment on Tuesday.

No case has been opened against the principals of this clinic and the investigation is still ongoing.

The seizure is part of a larger Medicare-funded wound care investigation by the Centers for Medicare & Medicaid Services (CMS). Dr. Mehmet Oz told the Times in an interview earlier this year that his agency was dealing with a major fraud problem in the skin care and wound care industry, where the agency was paying tens of dollars per square centimeter for treatments, and in some cases even fake treatments.

Medicare reimburses providers for the use of skin instead of wound care. Skin grafts are a group of biological and synthetic materials that allow temporary or permanent closure of wounds. They have structural and functional properties closely related to the skin.

Medicare spending on these products has seen unprecedented growth, rising from $256 million in 2019 to more than $10 billion in 2024, according to Medicare Part B claims data. In 2025, the CMS Fraud Defense Operations Center stopped nearly $185 million in improper payments to providers suspected of charging skin fees.

To reduce spending, CMS in January implemented a national reimbursement rate for covered products in both physician offices and inpatient departments, a move that is projected to save billions of dollars annually.

In the case of the Pasadena clinic, an affidavit written by US Secret Service Agent, Seth Tugg, reveals that investigators believe the money is “pursuant to a felony health care fraud” and a conspiracy to commit such a crime.

“A review of Medicare claims data revealed that between September 2025 and April 2026, EXPERT WOUND CARE PC submitted claims to Medicare totaling approximately $46,621,769.37 for skin substitute products and wound care services purportedly provided to seventy-eight (78) Medicare beneficiaries between March 20 and 20 added. Medicare approved payments of $34 million in claims.

According to the affidavit, Expert Wound Care’s Medicare bills increased sixfold from $4.975 million last July to nearly $33 million in December. One beneficiary alone collected $6,232,645.29 in Medicare payments. On average, the business billed $299,639.45. per patient, according to an agent who worked with CMS investigators and the Health and Human Services inspector general’s office.

“There is probable cause to believe that, based on the national average prices of similar providers, PC WIND CARE PC has sent claims electronically to Medicare seeking reimbursement for skin substitutes and skin grafts, especially AMCHOPLAST and Tri-Membrane Wrap, which did not show the benefits actually provided to the beneficiaries,” said the affit agent.

Investigators interviewed five clinic patients who billed Medicare for reimbursement for skin grafts and skin grafts. They discovered that the listed office on Altadena Drive was actually Victoria Home Care, which remained locked during surveillance.

Another patient, listed only as JL, who was paid more than $2 million by Expert Wound Care to treat him, told investigators that a man named Tony, a physician’s assistant, came three times a week to treat a flesh wound on his left calf, and had never heard from the company and did not know the two doctors.

The patient’s sister-in-law told them that the nurse “came to the house several times to treat JL’s flesh infection and “didn’t treat the open wounds very often because they were infected.” The agent added, “according to his notes, JL did not receive any form of domestic service in the month of December (despite the fact that twenty-seven job applications were filed in his name for services allegedly provided in December.)”

Essayli said the seizure of the Pasadena clinic is part of an ongoing investigation.

Oz, in an interview earlier this year, said that his investigators examined the excessive use of skin and identified that a small number of doctors were arrested in this matter, and that it will face their role in the approval, while reducing the reimbursement rates.