Union County, New Jersey Salesman Admits to Bribing a Doctor in Test-Referral Scheme with New Jersey Clinical Lab
NEWARK, NJ—A Berkeley Heights, New Jersey, man today admitted 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, 48, pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging him with one count of conspiring to bribe a doctor and one count of money laundering.
Including Zarrelli, 37 people—24 of them doctors—have pleaded guilty 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. The investigation has to date recovered more than $10.5 million through forfeiture.
According to documents filed in this and related cases and statements made in court:
Zarrelli admitted he agreed with BLS president David Nicoll, 40, of Mountain Lakes, New Jersey, his brother, Scott Nicoll, 34, 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.
On April 9, 2013, federal agents arrested David and Scott Nicoll, as well as Craig Nordman, 36, of Whippany, New Jersey, a BLS employee and the CEO of Advantech Sales LLC—one of several entities used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Frank Santangelo, 45, of Boonton, New Jersey. In June 2013, David and Scott Nicoll, Nordman, and four other associates of BLS pleaded guilty to charges related to their involvement. Santangelo, a doctor, pleaded guilty in August 2013 to charges relating to his role in the scheme.
The bribery count to which Zarrelli pleaded guilty carries a maximum potential 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.
U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; the U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; IRS– Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen; and inspectors of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s guilty plea.
The Government is represented by Assistant U.S. Attorney Joseph N. Minish, Senior Litigation Counsel Andrew Leven, and Jacob T. Elberg, Chief 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.
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 $635 million 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.