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Doctors guilty in $100 million test-referral fraud, bribery scheme

In total, 37 people have pleaded guilty to scheme in which doctors were paid to refer blood tests to Biodiagnostic Laboratory Services in New Jersey.

Susan Morse, Senior Editor

Photo of U.S. District Courthouse in New Jersey from Google.Photo of U.S. District Courthouse in New Jersey from Google.

Thirty-seven people, including 24 doctors, have pleaded guilty to a massive healthcare bribery scheme resulting in more than $100 million in payments from Medicare and various private insurance companies to Biodiagnostic Laboratory Services in New Jersey, according a statement from the U.S. Attorney’s Office District of New Jersey.

On March 3, Michael J. Zarrelli, 48, of Berkeley Heights, New Jersey pleaded guilty to bribing a doctor in exchange for test referrals, according to a statement from U.S. Attorney Paul J. Fishman. Zarrelli also pleaded guilty to one count of money laundering. 

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Zarrelli admitted to agreeing with Biodiagnostic Laboratory Services President David Nicoll, 40, of Mountain Lakes, N.J., his brother, Scott Nicoll, 34, of Wayne, N.J., and others to pay cash bribes to a doctor in return for referring patient blood specimens to BLS, according to the release. The referrals generated more than $400,000 in lab business for BLS, court documents stated.

Zarrelli is among 37 people, including 24 doctors, who have pleaded guilty in connection with the scheme involving millions of dollars in bribes, according to Fishman.

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On April 9, 2013, federal agents arrested David Nicoll and Scott Nicoll, as well as BLS employee and Advantech Sales LLC CEO Craig Nordman, 36, of Whippany, New Jersey, according to the U.S. Attorney’s Office. Advantech Sales LLC was among several entities used by BLS to make illegal payments, according to court documents. The men, and doctor Frank Santangelo, 45, of BLS, were charged with the bribery conspiracy, according to the release.

In June 2013, David and Scott Nicoll, Nordman, and four other associates of BLS pleaded guilty, according to the release. In August 2013, Santangelo pleaded guilty to charges relating to his role,  according to the U.S. Attorney’s Office.

On the bribery count, Zarrelli faces a potential maximum penalty of five years in prison and a $250,000 fine. The money laundering count carries a maximum potential penalty of 20 years in prison and a $500,000 fine.

Sentencing is scheduled for June 30, 2015. As part of his guilty plea, Zarrelli must forfeit $247,264, representing the payment he received from BLS, according to Fishman.

The investigation has to date recovered more than $10.5 million through forfeiture, he said.

Twitter: @SusanMorseHFN