Two Former Employees of Clinical Laboratory Admit Roles in Multi-Million-Dollar Cash-for-Referral Scheme
Former Biodiagnostic Laboratory Services LLC Sales Reps Acknowledge Bribing Physicians

NEWARK—Two former sales representatives of Biodiagnostic Laboratory Services LLC (BLS) admitted today to conspiring with others to bribe doctors to refer patient blood samples to BLS, U.S. Attorney Paul J. Fishman announced.

Peter Breihof, 42, of Nutley, New Jersey, and William Dailey, 41, of Wall, New Jersey, both pleaded guilty before U.S. District Judge Stanley R. Chesler to informations charging them with conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act.

According to documents filed in this case and statements made in court:

On April 9, 2013, federal agents arrested BLS president and part-owner David Nicoll, 39, of Mountain Lakes, New Jersey; Scott Nicoll, 32, of Wayne, New Jersey, a senior BLS employee and David Nicoll’s brother; and Craig Nordman, 34, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC—an entity allegedly used by BLS to make illegal payments. They were charged with participating in a long-running scheme to bribe doctors to refer patient blood samples to BLS and order unnecessary tests, resulting in tens of millions of dollars in profit for the company. The complaint noted that two former BLS employees—Breihof and Dailey—had agreed to plead guilty and had cooperated in the investigation.

Between 2006 and 2013, BLS, headquartered in Parsippany, New Jersey, and entities it funded paid millions of dollars to physicians to induce them to refer patient blood samples to BLS. From these referrals, BLS received tens of millions of dollars from private health insurance companies and Medicare. 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. Breihof and Dailey admitted today to using phony lease and service agreements to bribe physicians to send their patients’ blood samples to BLS. Breihof and Dailey also admitted that they paid various physicians a fee per test on behalf of BLS in order to induce those physicians to order more of the blood tests than they otherwise would have.

Breihof and Dailey each face a maximum potential penalty of five years in prison. Each count also carries a maximum $250,000 fine, or twice the gross gain or loss from the offense. In addition, Breihof has agreed to forfeit $1,179,556, and Dailey has agreed to forfeit $558,405. Sentencing for both defendants is scheduled for Sept. 19, 2013.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Aaron T. Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Tom O’Donnell; IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Shantelle P. Kitchen, and the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Maria Kelokates, with the investigation leading to today’s guilty pleas.

The government is represented by Senior Litigation Counsel Andrew Leven, Assistant U.S. Attorney Melissa Jampol, and Deputy Chief Jacob T. Elberg of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.

The charges and allegations against the other defendants are merely accusations and they are presumed innocent unless and until proven guilty.