The president of Parsippany, N.J.-based Biodiagnostic Laboratory Services LLC (BLS), three employees, and three associates in June admitted to a conspiracy in which millions of dollars in bribes were paid to physicians in exchange for blood testing referrals. The admission comes after the president of Biodiagnostic, David Nicoll, and several senior employees were arrested in April on charges they participated in a long-running cash-for-referral scheme (GCA, May 2013, p. 1
). According to the U.S. Attorney’s Office for the District of New Jersey, the referrals were worth more than $100 million to the company. U.S. Attorney Paul J. Fishman has indicated that there could be more arrests to come as a result of this case. One physician has already been arrested, and charges are pending against him. Considering the time span that the conspiracy existed, 2006 through April 2013, it would seem likely that more physicians were involved. Typically we do not see physicians prosecuted in cases like this; however, as this plays out, we may yet see just that. (Details about the arrests and subsequent admission of guilt can be found at http://www.fbi.gov/newark/
). After reviewing the complaint from the U.S. District Court in New Jersey and reading the plethora of articles and commentary about this case, it is difficult to distill worthwhile lessons for honest providers. Now that some of the individuals and the president of the company have confessed to their crimes, it seems like an open-and-shut case in which these people sought to enrich themselves at the expense of the government and various insurance companies. The admission of guilt to the egregious allegations seems to confirm that the parties involved, including at least one physician who received kickbacks, were not honest providers. After all, what honest provider would knowingly commit these kinds of crimes? In that light, what lessons can we glean from this, if any? Compliance Point of View
From a compliance perspective, there were a number of interesting disclosures in the details of the complaint against BLS that may have bearing on how compliance officers think about questions or problems they receive for review. We read lots of articles and hear from attorneys that we should be careful what we put in e-mails and text messages. In the complaint, e-mails and text messages are used to provide evidence of incriminating activity by the parties involved that would seem to confirm that we should take that message seriously. Another interesting item in this case is the use of the federal Travel Act as a complementary statute. The Travel Act is a criminal statute that prohibits the use of the U.S. mail, or interstate or foreign travel, for the purpose of engaging in certain specified criminal acts. According to the Travel Act, bribery is within the criminal acts covered by this law. It is possible, even likely, that we will see the Travel Act used in future cases of anti-kickback and false claims allegations. As it turns out, BLS has been in trouble before for issues like those involved in this current case. In June 2009 a civil suit was filed against BLS by Horizon Blue Cross Blue Shield of New Jersey. G2 Compliance Report published an article in September 2009 describing the suit against BLS. In that case Horizon alleged that BLS had received in excess of $14 million based on fraudulent insurance claims. That case also involved kickbacks to physicians as well as a variety of other billing violations. One of the areas of focus for this lawsuit was a practice BLS had at the time of providing out-of-network services and writing off the penalty and balances the patient paid because they went out of network. BLS employees told physicians and patients that if the patient used their laboratory, even though it was out of network, the patient would pay no more than if they used an in-network laboratory. The laboratory industry still struggles with this issue today. The Lessons Learned
Perhaps one lesson we can learn from a case like this is to get a better perspective on why government agents and contractors have such a negative view of laboratories and other health care entities and often approach investigations with a guilty-first-and-prove-innocence-after attitude. Another lesson learned concerns the length of time obvious schemes and frauds can continue before prosecution occurs. During this lengthy period, the guilty lab’s competitors must deal with the impact of these activities on the local market, sometimes resulting in their engaging in risky behavior to effectively compete. Compliance officers should make it a practice to thoroughly investigate or research cases like the BLS prosecution because you never know what may be gleaned that could be applicable to current issues and problems you might be facing now or in the near future. The most effective compliance officer is one who has a broad scope of understanding of laws and regulations and how they are applied in actual cases. This requires compliance officers to read case details and research cases so they thoroughly understand the legal theories behind them. In this way they get a better understanding of how state and government prosecutors and agents are interpreting and applying the laws and regulations. It will serve both the compliance officer and the company well should they get into trouble with the government.