Preheat oven to 425 degrees F In a large bowl thoroughly mix flour, baking powder, sugar, salt, and nutmeg. Toss blueberries with the flour mixture. Stir whipping cream into the flour mixture until just moistened.
Turn out dough on a floured work surface. Gently lift and fold dough four or five, making a quarter turn between each fold. Place dough on a parchment-lined baking sheet. Form dough in a 7- to 8-inch square, approximately 1 inch thick. Using a floured pizza cutter or knife, cut 12 to 16 squares in dough, leaving biscuits intact. Bake in upper half of oven for 17 to 20 minutes or until golden brown. Cut through or pull apart biscuits. Serve warm with Blueberry Sauce.
In a medium saucepan combine 1 cup of the blueberries, the sugar, and water. Bring to simmering; cook and stir until blueberries pop and sauce has thickened. Remove from heat, then stir in the vanilla and remaining blueberries. Serve warm or at room temperature.