Illegal Kickback Results in a List of Charges Against Biodiagnostic Laboratory Services

U.S. Attorney Paul J. Fishman of New Jersey announced that the government is filing charges against four defendants in a Medicare fraud and illegal kickback scheme in North New Jersey.

Biodiagnostic Laboratory Services (“BLS”) and four defendants are accused of bribing doctors with millions of dollars for laboratory referrals and paying enormous fees to physicians to rent minimal and unnecessary office space within their offices. In exchange, the physicians referred patients to BLS for laboratory blood tests that were not always medically necessary. The lab work was always handled by BLS, while private insurance companies, Medicare and Medicaid were all left paying the bills.

Criminal charges were filed against BLS, three of its executives and one physician who referred patients to BLS for unnecessary medical laboratory tests. The individuals named in the official indictment are as follows:

1. David Nicoll, President and part-owner of BLS
2. Scott Nicoll, BLS executive and brother of David Nicoll
3. Craig Nordman, BLS  employee and CEO of Advantech Sales LLC
4. Frank Santangelo, M.D., referring physician of BLS

U.S. Attorney Fishman fears that the potential for “future harm is devastating, as hundreds of patient charts may have been compromised by doctors pushing false diagnoses simply to justify tests.”

Do you know someone who is engaged in a kickback scheme? If so, contact a Berger Montague whistleblower lawyer to have a free, confidential discussion about your claims.

Details About the Fraud

From 2006 through 2013, BLS allegedly paid out millions of dollars to physicians, bribing them to refer patient blood samples to BLS for testing. As a result of these referrals, BLS made tens of millions off of both private health insurance companies and Medicare. In fact, from 2006 to 2013, BLS’s revenue reached a staggering level, topping more than $200 million.

BLS President Enjoyed a Life of Luxury

According to the government, BLS President David Nicoll personally enjoyed a great deal of the company’s monetary success. Nicoll directly removed at least $33 million in cash distributions from BLS from 2006 to 2013.

According to authorities, Nicoll spent more than $5 million to purchase many extravagant items for himself. Some of the items purchased by Nicoll during the time in question are:

1. $580,000 for a Yenko Nova
2. $365,000 for a Yenko Chevelle
3. $300,000 for a Ferrari
4. $291,000 for a Corvette
5. $700,000 for a penthouse located in Manhattan, allegedly purchased for a “female companion”
6. $600,000 for chartering private jets
7. $392,000 for purchasing sporting event tickets
8. $216,000 toward high-tech electronics items
9. $154,000 on visits to various gentleman’s clubs and restaurants

BLS Used Well-Known Bribery Tactics

US Attorney Fishman went on to describe how BLS attempted to cover their tracks and disguise the illegal kickback payments.

“Numerous physicians were bribed under the guise of lease, service, and/or consulting agreements. Under the lease and service agreements, between 2006 and 2009, physicians were frequently paid thousands of dollars a month by BLS for space in medical offices that BLS did not need or actually use and to perform routine blood drawing services that had little real dollar value,” alleged Fishman.

For example, during the time in question, BLS signed a bogus lease agreement with a New Jersey physician as a means to bribe the doctor for patient referrals. BLS paid $2,200 a month for the alleged lease and use of 676 square feet of the doctor’s office. In truth, the space that was allocated to BLS was only 100 square feet, and BLS paid the doctor an additional $2,400 each month for a “service agreement.” This illegal kickback scam was just one way BLS attempted to disguise payments to a physician.

Doctors Reaped Rewards for Patient Referrals to BLS

One of the doctors who received illegal kickbacks from BLS was Frank Santangelo. Dr. Santangelo is an internist who practiced in both Wayne and Montville, New Jersey. According to authorities, he received an astounding $700,000 in exchange for patient referrals. For the cash Dr. Santangelo was paid, he sent at least $4.2 million worth of blood tests to BLS. Dr. Santangelo was also charged with using interstate commerce to promote commercial bribery.

In a text message David Nicoll wrote to Santangelo about the patient referral scam, Nicoll stated that BLS “really can’t afford the 40-50,000 [dollars] a month if the girls aren’t going to be drawing any blood.”  Dr. Santangelo responded to Nicoll in a follow-up text message, stating, “U no u can count on me!” and “I never let u down!”

David Nicoll, Scott Nicoll and Craig Nordman are all charged with one count of conspiring to violate the Anti-Kickback Statute and the Federal Travel Act. Dr. Santangelo is charged in two counts with violations of the Anti-Kickback Statute and the Federal Travel Act.

If convicted, they face a maximum penalty of five years in prison for each of the charges.  Each charge also carries a maximum $250,000 fine, or twice the gross gain or loss from the illegal kickback scam.  BLS itself is also charged in the conspiracy and faces a maximum potential penalty of five years of probation and a $500,000 fine.

U.S. Attorney Fishman also acknowledged that two co-conspirators in the illegal kickback scheme were not charged as defendants, but instead chose to plead guilty and cooperate with authorities. The co-conspirators are Peter Briehof and William Dailey. Both men have admitted to accepting bribes in return for lab test referrals.

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