Man Who Ran 7-year Health Fraud Scam Sentenced To 6 Years


One of two brothers who ran a bribes-for-referrals health fraud scam that brought in more than $100 million over several years was sentenced to six years in federal prison Wednesday.

David Nicoll and his brother, Scott, were arrested in 2013 and pleaded guilty to conspiracy and money laundering through their New Jersey company, Biodiagnostic Laboratory Services. Of more than 50 people who have pleaded guilty since then, more than three dozen were doctors who admitted taking bribes.

In a wavering voice, David Nicoll told the court Wednesday he was “embarrassed and ashamed” by his crimes. In addition to the prison term, he has been ordered to forfeit $50 million in proceeds from the scheme.

The charges carried a combined 25-year maximum sentence, but Nicoll was given credit for cooperating with the government. Prosecutors had sought a term up to seven years, while Nicoll’s attorney had argued for a sentence of five years.

Scott Nicoll was to be sentenced later Wednesday.

At the time of the Nicolls’ arrest, the U.S. attorney’s office in New Jersey estimated the fraud was one of the largest of its kind ever uncovered.

David Nicoll was a trained nurse and former pharmaceutical sales rep, and his brother had worked selling concert tickets when they bought a struggling lab in northern New Jersey in 2005. Within a year, they had hit upon a way to drastically increase their income: Bribe doctors to steer blood samples to BLS for testing, whether the tests were necessary or not.

They accomplished this first by signing bogus agreements to rent office space in doctors’ offices; then, when New Jersey discontinued that practice, they switched to bribing doctors with bogus consultant agreements paid for by shell corporations formed specifically for that purpose.

The limited liability corporations “were just a vehicle for us to pay the doctors,” David Nicoll testified last year during one of two trials to arise from the scandal. “They really didn’t do anything.”

Nicoll testified he dealt with “probably hundreds” of doctors during his years at BLS. When asked how many had been bribed, he replied: “The large majority.”

The company also wined and dined doctors at fancy restaurants, took some on private jet trips and even provided some with prostitutes.

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