Salesman For New Jersey Clinical Lab Sentenced To 20 Months In Prison For Bribing A Doctor In Test-Referral Scheme

NEWARK, N.J. – A Berkeley Heights, New Jersey, man was sentenced today to 20 months in prison for bribing a doctor in exchange for test referrals as part of a long-running and elaborate scheme operated by Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, New Jersey, its president and numerous associates, U.S. Attorney Paul J. Fishman announced.

Michael J. Zarrelli, 50, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to an information charging him with one count of conspiring to bribe a doctor and one count of money laundering. Judge Chesler imposed the sentence today in Newark federal court.

According to documents filed in this and related cases and statements made in court:

Zarrelli admitted he agreed with BLS president David Nicoll, 42, of Mountain Lakes, New Jersey, his brother, Scott Nicoll, 36, of Wayne, New Jersey, and others to pay cash bribes to a doctor in return for referring patient blood specimens to BLS. The referrals sent to BLS by the doctor that Zarrelli bribed generated more than $400,000 in lab business for BLS.

In addition to the prison term, Judge Chesler sentenced Zarrelli to one year of supervised release. Zarrelli must also forfeit $247,264, representing the payment he received from BLS.

The investigation has thus far resulted in 41 guilty pleas – 27 of them from doctors – in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies. It is believed to be the largest number of medical professionals ever prosecuted in a bribery case.

The investigation has to date recovered more than $12 million through forfeiture. On June 28, 2016, BLS, which is no longer operational, pleaded guilty and was required to forfeit all of its assets.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Timothy Gallagher in Newark; inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge James V. Buthorn; IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; and the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert with the ongoing investigation

The government is represented by Assistant U.S. Attorneys Joseph N. Minish and Danielle Alfonzo Walsman, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Barbara Ward, Acting Chief of the office’s Asset Forfeiture and Money Laundering Unit.

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $1.32 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

Defense counsel: Michael Critchley Esq., Roseland, New Jersey