Three Doctors Admit Accepting Bribes for Test Referrals to New Jersey Clinical Laboratory

NEWARK, NJ—Three New Jersey doctors admitted today they accepted tens of thousands of dollars in bribes from Parsippany, New Jersey-based Biodiagnostic Laboratory Services LLC (BLS) as part of a long-running scheme operated by the lab, its president, and numerous associates, U.S. Attorney Paul J. Fishman announced.

Dennis Aponte, 46, of Cedar Grove, New Jersey; Claudio Dicovsky, 51, of Fort Lee, New Jersey; and Franklin Dana Fortunato, 63, of Montville, New Jersey, each pleaded guilty to violating the Federal Travel Act. Fortunato also pleaded guilty to filing a false tax return, admitting that from 2004 to 2008, he failed to disclose and report as income more than $640,000 in bribe money and patient co-pays and failed to pay more than $160,000 in taxes he owed as a result of that unreported income. The defendants entered their guilty pleas today before U.S. District Judge Stanley R. Chesler in Newark federal court.

“Decisions about medical care should not be influenced by doctors and providers who are more interested in lining their pockets than in providing quality health care,” U.S. Attorney Fishman said. “The doctors who pleaded guilty today admitted making decisions about the care they provided based on being paid in return for their referrals. We will continue to seek out and punish those doctors and other medical professionals who put profit before patient care.”

Newark FBI Special Agent in Charge Aaron T. Ford said, “Patients have every right to insist that their physician is making medical referrals based on what is best for the patient. However, these three physicians decided to accept bribes in exchange for referrals. These types of kickback arrangements cripple the health care industry and severely impact patient care. The FBI remains committed to investing its resources to combat these types of schemes.”

“Today’s pleas should send a loud and clear message that kickbacks and unnecessary billing have no place in our federal health care system,” Thomas O’Donnell, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Health and Human Region covering New Jersey, said. “We will aggressively investigate those suspected of defrauding taxpayers and the Medicare program.”

According to documents filed in this and other cases 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 used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and New Jersey physician Frank Santangelo, 43, of Boonton, New Jersey The charges against BLS and Santangelo are pending.

Dicovsky

Dicovsky admitted he agreed with David Nicoll to accept bribes from BLS in exchange for his referral of blood specimens. To disguise those bribes, Dicovsky and BLS entered into a sham lease agreement and a sham service agreement in which the monthly bribe payments of more than $5,000 were characterized as “lease” and “service” payments. While the lease agreement purported to be for 1,000 square feet of space, little or no space was allocated to BLS in Dicovsky’s medical office in Paterson, New Jersey. Between November 2006 and August 2009, Dicovsky received more than $224,000 in bribe payments from BLS, and BLS made more than $800,000 through testing on blood specimens referred by Dicovsky.

Fortunato

On May 2, 2013, two former sales representatives of BLS, Peter Breihof, 42, of Nutley, New Jersey, and William Dailey, 41, of Wall, New Jersey, pleaded guilty to an information charging them with conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act. They admitted 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.

Fortunato admitted entering into bribe arrangements with BLS through Breihof, with David Nicoll’s knowledge and approval, for the referral of blood specimens of patients of Fortunato’s Montclair, New Jersey practice. Fortunato received more than $100,000 in bribe payments—often more than $5,000 per month—from BLS disguised through sham lease and sham service agreements between 2006 and 2009, and BLS made more than $430,000 through testing on blood specimens referred by Fortunato.

Aponte

Aponte admitted that he and David Nicoll agreed that BLS would pay Aponte bribes to refer to BLS blood specimens from the patients of his West New York, New Jersey medical practice. From October 2012 to March 2013, Nordman, acting at David Nicoll’s direction, paid Aponte approximately $3,000 per month in cash in return for blood specimens referred to BLS. The lab made more than $175,000 through testing on blood specimens referred by Aponte.

The count to which Aponte, Dicovsky, and Fortunato each pleaded guilty is punishable by a maximum potential penalty of five years in prison and a $250,000 fine. Fortunato also faces a maximum potential penalty of five years in prison and a $250,000 fine on the filing a false tax return charge. Sentencing for all three defendants is scheduled for October 22, 2013.

Aponte has agreed to forfeit $235,000, Dicovsky has agreed to forfeit more than $220,000, and Fortunato has agreed to forfeit more than $635,000. The investigation has so far recovered more than $2 million through forfeiture.

On June 10, 2013, David Nicoll, Scott Nicoll, Nordman, and four other associates of BLS pleaded guilty to informations charging them with one count of conspiracy to violate the Anti- Kickback Statute and the Federal Travel Act and one count of money laundering. The charges and allegations against Santangelo and BLS are merely accusations, and the defendants are considered innocent unless and until proven guilty.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Ford; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge O’Donnell; IRS–Criminal Investigation, under the direction of Special Agent in Charge Shantelle P. Kitchen and 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 pleas.

The government is represented by Senior Litigation Counsel Andrew Leven, Assistant U.S. Attorney Joseph Minish, 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.