A clinical lab in New Jersey has pled guilty to physician bribery in one of the largest medical bribery cases in history. In 2014, Biodiagnostic Laboratory Services of Parsipanny (BLS) was charged with over $4 million in bribes to doctors to encourage the doctors to use their labs services. Dozens of doctors and staff associated with BLS have already pled guilty to the bribery charges. In total there are 40 people, including 26 doctors, that have plead guilty to charges in the case.
BLS benefited enormously from the bribery; court documents show that the company earned more than $100 million from Medicare and private health care insurers for the lab's work in diagnostic tests. Some estimates put the amount closer to $1.2 billion from private insurers alone. To hide the flow of money to physicians BLS created fake leases and consulting contacts. The company also enticed doctors to order unnecessary tests that were more expensive than the actual tests needed for patients.
So far, the investigation has recovered $12 million through forfeiture.
Bret Ostranger of Woodbury, New York is one of the doctors indicted in the case . Ostranger confessed to accepting monthly cash bribes worth $3,300 from BLS and its employees. He also received tickets to sports games and concerts. In exchange, Ostranger's referrals brought $909,000 worth of business to BLS labs.
The Code of Federal Regulations states:
No deduction shall be allowed…for any kickback, rebate, or bribe (whether or not illegal)…by any provider of services, supplier, physician…if such kickback, rebate, or bribe is made in connection with the furnishing of such items or services or the making or receipt of such payments. For purposes of this paragraph, a kickback includes a payment in consideration of the referral of a client, patient, or customer.
Ostranger was sentenced to one year of supervised release, was fined $30,000, and ordered to pay back $101,271. Many doctors and BLS staff face more severe punishments. At least 13 people involved in the bribery scandal were sentenced to jail time of 12 to 63 months.
BLS is one of the largest medical fraud cases because it involves so many people in one case, but medical fraud is committed by far more than 40 people each year. Earlier this month the Justice Department announced that 301 people were being charged with schemes to defraud government health programs (like Medicare) for over $900 million.
A Medicare Fraud Strike Force aimed at pinpointing instances of fraud has charged more than 2,900 people with medical care fraud for more than $8.9 billion of claims on government health programs.