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United States of America v. David Nicoll and Scott Nicoll
District of New Jersey Federal Courthouses
Case Number: 2:13-cr-00385-SRC
Judge: Stanley R. Chesler
Court: United States District Court for the District of New Jersey (Essex County)
Plaintiff's Attorney: Joseph N. Minish, Danielle Alfonzo Walsman, Jacob T. Elberg, Barbara Ward
Defendant's Attorney: John Whipple for David Nicoll
Tim Donohue for Scott Nicoll
Description: Newark, NJ - President Of New Jersey Clinical Laboratory And His Brother, A Senior Employee, Sentenced To Prison In $100m+ Test Referral/Bribery Scheme
The president of Parsippany, New Jersey-based Biodiagnostic Laboratory Services LLC (BLS) and his brother – a senior employee at the now-defunct company – were sentenced today to federal prison terms for their respective roles in a conspiracy in which millions of dollars in bribes were paid to physicians for blood sample referrals worth more than $100 million to the company, U.S. Attorney Craig Carpenito announced.
David Nicoll, 44, of Mountain Lakes, New Jersey, was sentenced to 72 months in prison; Scott Nicoll, 37, of Wayne, New Jersey, was sentenced to 43 months in prison. Each defendant had previously pleaded guilty before U.S. District Judge Stanley R. Chesler to an information charging one count of conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act and one count of money laundering. Judge Chesler imposed the sentences today in Newark federal court.
“Today, the president of a diagnostic lab company and his brother were sentenced for their leading roles in a scam that led to one of the largest ever prosecutions of medical professionals in a bribery case,” U.S. Attorney Carpenito said. “Medical referrals from a doctor should be based on what’s in the patient’s best interest, not on how much money the doctor is offered in kickbacks. The number of doctors and medical professionals sent to prison in this case should make that message abundantly clear.”
The investigation has resulted in the convictions of 53 defendants – 38 of them of 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 recovered more than $15 million through forfeiture. On June 28, 2016, BLS, which is no longer operational, pleaded guilty and was required to forfeit all of its assets.
“The FBI views health care fraud as a severe crime problem that impacts every American,” FBI Special Agent in Charge Gregory W. Ehrie said. “Fraud and abuse take critical resources out of our health care system, and contribute to the rising cost of health care for everyone. Today’s sentencing of David Nicoll and his brother Scott Nicoll are the result of a multi-agency investigation into a complex health care fraud scheme, requiring substantial investigative resources. The FBI, with its law enforcement partners, will continue to allocate a significant amount of expert resources to investigate these crimes and prosecute all those that are intent in defrauding the American public.”
“These two individuals masterminded an elaborate health care fraud scheme based on nothing more than greed,” Scott J. Lampert, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, said. “We trust that the work with our law enforcement partners – especially the U.S. Attorney’s Office, FBI, IRS, and Postal Inspection Service – will send a clear message and dissuade individual health ‘professionals’ from making such corrosive schemes possible.”
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; Scott Nicoll, a senior BLS employee and others, who were charged by complaint with bribery conspiracy, along with the BLS company. The conspiracy made millions in illegal profits between 2006 and April of 2013. David and Scott Nicoll admitted that BLS made substantially more than $100 million from Medicare and private insurance companies – just from bills related to blood specimens sent to BLS by bribed doctors.
BLS paid doctors millions of dollars – in cash or under the guise of sham lease, service, and consulting agreements through an elaborate network of shell entities used for that purpose. The defendants also admitted that one component of the bribery scheme was to pay some doctors a fee per test to induce them to increase their ordering of certain tests.
“Health care fraud of this magnitude cannot be tolerated, and today’s sentencings are the direct result of the tremendous investigative skills of all the participating law enforcement agencies,” Bryant Jackson, Acting Special Agent in Charge, IRS - Criminal Investigation, Newark Field Office, said. “IRS - Criminal Investigation is proud to have been a part of this investigative team that helped to bring down and dismantle this massive health care conspiracy.”
“Throughout the course of this long-running investigation, Postal Inspectors, federal prosecutors and our law enforcement partners have diligently worked to unravel this elaborate bribery conspiracy,” Acting Inspector in Charge Judy Ramos of the U.S. Postal Inspection Service said. “Although, the final defendants in this matter face sentencing today, Postal Inspectors will continue to tirelessly investigate complex fraud schemes that target consumers and businesses through the U.S. Mail.”
In addition to the prison terms, Judge Chesler sentenced the Nicolls to one year of supervised release.
U.S. Attorney Carpenito credited special agents of the FBI, under the direction of Special Agent in Charge Ehrie; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Lampert; IRS–Criminal Investigation, under the direction of Acting Special Agent in Charge Jackson, and inspectors of the U.S. Postal Inspection Service, under the direction of Acting Inspector in Charge Ramos, with the investigation leading to today’s sentencings.
The government is represented by Senior Litigation Counsel Joseph N. Minish; Assistant U.S. Attorney Danielle Alfonzo Walsman, Co-Chief of the Public Protection Unit; Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark; and Senior Litigation Counsel Barbara Ward of the office’s Asset Recovery and Money Laundering Unit.
Outcome: David Nicoll was sentenced to 72 months in prison and Scott Nicoll was sentenced to 43 months in prison.