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Sham Consulting Agreements Revealed in NJ Lab Referral Scheme

January 16, 2014

The NJ US Attorney announced on January 6, 2014 the uncovering of a bribery scheme involving “millions of dollars in bribes” that resulting in more than $100 million in payments to Biodiagnostic Laboratory from Medicare and private payors.  11 Physicians pleaded guilty in connection with the scheme. 

What did the physicians do, and how could this happen to you?   The press release targets a family medicine practitioner who admitted to accepting bribes in exchange for test referrals.  Here, money was not handed over per patient, or under the table and not accounted for, instead, the Lab entered into a consulting agreement for  a flat fee, set in advance of $1,500 with the Physician, which was intended to represent payments for filling out a “Consultant Advisory Board Data Sheet” for each patient.  The Physician admitted to the US Attorney he knew the Data Sheet had no real value to the Lab and were designed to disguise the bribe payments.   
The bribery count the physician pleaded guilty to carries a maximum potential penalty of five years in prison and a $250,000 fine.

Of particular note (and applicable to most states!!), the Press Release states - U.S. Attorney Paul J. 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 $520 million 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.

Why is this happening worthy of a newsletter?  It is a simple example of where poor judgment and greed can easily lead to very negative ramifications.  This instance also highlights a common misnomer, that just because a third party approaches you with a legal document, does not mean the scenario presented is legal.  Be sure to run any and all contracts by your healthcare attorney before signing.  Another reason this news is noteworthy is, this is not an isolated occurrence.  US Attorneys nationwide are turning their attention to healthcare.  The allowable margin of operating in noncompliance is narrowing.
 


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