Lab Is Sentenced as Prosecution of Individuals for Lab Kickbacks Continues

Amidst the guilty pleas and sentencing of dozens of individuals accused of receiving kickbacks for lab referrals, the laboratory company at the center of the case, Biodiagnostic Laboratory Services LLC (BLS) entered a guilty plea the end of June in New Jersey federal court. The company pleaded guilty to one count of conspiracy to violate the Anti-Kickback Statute and the Federal Travel Act and one count of conspiracy to commit money laundering, the Department of Justice (DOJ) announced. U.S. District Judge Stanley R. Chesler then sentenced the company, requiring forfeiture of all its assets (operations have already ceased).

So far, the case has led to 41 guilty pleas including 27 from physicians. Another New Jersey physician entered a guilty plea just days after the lab’s sentence was announced. That physician admitted to receiving “consulting fees” in exchange for referrals of patient blood specimens to the lab for testing. The DOJ has claimed the case is “believed to be the largest number of medical professionals ever prosecuted in a bribery case” and it has “recovered more than $12 million through forfeiture.” The government alleged millions of dollars in bribes were paid to providers to influence test referrals to the laboratory which yielded more than $100 million for the lab in Medicare and private payor payments. One of the most recent physician sentences involved a 37-month jail sentence to a physician who had pleaded guilty to accepting bribes in violation of the Anti-Kickback Statute. Those bribes were said to include cash payments as well as meals and entertainment such as tickets to professional sporting events, Katy Perry and Justin Bieber concerts, and a Broadway show.

In a separate New Jersey case also involving kickbacks for lab referrals, a physician recently pleaded guilty to conspiracy to accept cash bribes in exchange for referring patients to two lab companies. The government alleged two sales representatives from a marketing and sales company paid a physician thousands of dollars to induce him to refer patient specimens to two of its client laboratories. Those client labs are said to have no knowledge of or involvement in the arrangements. The sales representatives have already previously pleaded guilty to charges of conspiracy to bribe a physician.

These cases provide yet another reminder of the importance of paying close attention to how a lab’s services are marketed and what sales and marketing personnel are doing on behalf of the lab to sell its services. Last year, Health Diagnostic Laboratory and Singulex entered into settlement agreements totaling $48.5 million to resolve allegations that physicians were paid processing and handling fees to induce physicians to send specimens to their labs for testing.

Takeaway: The lab at the center of purportedly the largest physician bribery case is finally sentenced as the prosecution of individual physicians for receiving payments for lab referrals continues in that and other cases.