Less than six months after the first arrests were in announced connection with corruption at Parsippany, N.J.-based Biodiagnostic Laboratory, the pile of guilty pleas is beginning to eclipse the region’s collection of smokestacks. Late last month, Angelo Calabrese, M.D., and Paul Ostergaard, M.D., both pleaded guilty to single charges of violating the U.S. Travel Act—using the Postal Service to commit a crime. A Biodiagnostic employee, David McCann, pleaded guilty to violating both the Travel Act and federal anti-kickback statutes. Their pleas add up to 17 to date involving Biodiagnostic’s business practices, federal officials said. According to the federal prosecutors, Calabrese accepted at least $130,000 in bribes from Biodiagnostic to refer some $600,000 worth of Medicare and commercial blood testing to its lab. Ostergaard accepted $50,000 in bribes to refer at least $150,000 worth of testing business. The payments were made through sham consulting, lease, and service agreements that began in 2006. The payments were made by a company called Advantech LLC—an entity formed by Biodiagnostic specifically to disburse illegal payments, according to prosecutors. Calabrese was accepting monthly $4,500 payments from Biodiagnostic as recently as last spring. Both doctors face up to five years in prison and $250,000 fines when they’re […]
Less than six months after the first arrests were in announced connection with corruption at Parsippany, N.J.-based Biodiagnostic Laboratory, the pile of guilty pleas is beginning to eclipse the region’s collection of smokestacks.
Late last month, Angelo Calabrese, M.D., and Paul Ostergaard, M.D., both pleaded guilty to single charges of violating the U.S. Travel Act—using the Postal Service to commit a crime. A Biodiagnostic employee, David McCann, pleaded guilty to violating both the Travel Act and federal anti-kickback statutes.
Their pleas add up to 17 to date involving Biodiagnostic’s business practices, federal officials said.
According to the federal prosecutors, Calabrese accepted at least $130,000 in bribes from Biodiagnostic to refer some $600,000 worth of Medicare and commercial blood testing to its lab. Ostergaard accepted $50,000 in bribes to refer at least $150,000 worth of testing business.
The payments were made through sham consulting, lease, and service agreements that began in 2006. The payments were made by a company called Advantech LLC—an entity formed by Biodiagnostic specifically to disburse illegal payments, according to prosecutors. Calabrese was accepting monthly $4,500 payments from Biodiagnostic as recently as last spring.
Both doctors face up to five years in prison and $250,000 fines when they’re sentenced next March. Calabrese will forfeit $334,000 and Ostergaard will forfeit $53,000.
Federal investigators began arresting Biodiagnostic employees—including Chief Executive Officer David Nicoll—and affiliated physicians last April, accusing them of a wide-ranging conspiracy to obtain more than $100 million in claims payments from Medicare and private insurers through the use of provider kickbacks. Some physicians have admitted to receiving kickbacks totaling nearly $2 million.
So far, about $3 million has been recovered through forfeitures. Federal officials say the investigation is continuing and that more guilty pleas should be expected.
Biodiagnostic also continues to limp on, although how the charges have impacted its business is unknown. Several of the links on the home page of its Web site are nonfunctioning.
Takeaway: A kickback scheme involving a single laboratory can entangle numerous providers.
