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Press Release

New Jersey Clinical Lab At Center Of Largest Physician Bribery Case Ever Prosecuted Pleads Guilty

For Immediate Release
U.S. Attorney's Office, District of New Jersey

Company Ordered to Forfeit All of its Assets

NEWARK, N.J. – Biodiagnostic Laboratory Services LLC (BLS), the Parsippany, New Jersey clinical lab at the center of a long-running and elaborate test referral scheme operated by its president and numerous associates, pleaded guilty and was sentenced today in federal court, U.S. Attorney Paul J. Fishman announced.

BLS pleaded guilty before U.S. District Judge Stanley R. Chesler in Newark federal court to an information charging it with one count of conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act and one count of conspiracy to commit money laundering. Following the plea, BLS was sentenced by Judge Chesler. The company, which is no longer operational, must forfeit all of its assets.

The investigation has resulted in 40 guilty pleas – 26 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.

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

The government is represented by Assistant U.S. Attorneys Joseph N. Minish, 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 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 $1.29 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: Steven Backfisch Esq., Westfield, New Jersey

Updated June 28, 2016

Health Care Fraud
Press Release Number: 16-186