PARSIPPANY — A Boonton doctor was sentenced to 63 months in prison for accepting $1.8 million in bribes to refer millions of dollars in business to Biodiagnostic Laboratory Services LLC (BLS), of Parsippany, as part of a long-running scheme operated by the lab, its president, and numerous associates, U.S. Attorney Paul J. Fishman announced.

Frank Santangelo, 45, previously pleaded guilty before U.S. District Judge Stanley R. Chesler to an information charging him with violating the Travel Act, money laundering and failing to file tax returns. Judge Chesler imposed the sentence today in Newark federal court.

“Santangelo admitted he violated the trust of his patients, who should be able to count on their doctors’ prescribing only tests that are necessary and recommending providers based solely on their qualifications,” U.S. Attorney Fishman said. “This type of fraud compromises patient care and drives up the cost of health care.”

“Today’s sentencing of Frank Santangelo is the result of a long-term, multi-agency investigation into a complex health care fraud scheme which involved millions of dollars,” Richard M. Frankel, FBI Special Agent in Charge, Newark Division, said. “Santangelo’s arrest and sentencing send the message the FBI and its law enforcement partners will continue to zealously investigate these fraud and abuse schemes, which divert critical resources from of our already overburdened health care system and contribute exponentially to the rising cost of health care.”

Including Santangelo, 38 people – 26 of them doctors – have pleaded guilty in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and various private insurance companies.

According to documents filed in this and other cases and statements made in court:

Santangelo, with offices in Montville and Wayne received more than $1.8 million in bribe payments from BLS for referrals for which the lab was paid more than $6 million by Medicare and various insurance companies. After receiving more than $800,000 from BLS through sham lease agreements and sham service agreements between 2006 and 2010, Santangelo began receiving bribes from BLS through a third party – often tens of thousands of dollars a month – totaling more than $1 million between 2010 and his arrest in April 2013.

Santangelo acknowledged the authenticity of text messages between himself and BLS president and part owner David Nicoll in which Santangelo referred to ordering unnecessary tests to increase referrals to BLS in exchange for bribes. In one text message conversation, Santangelo said he and another doctor had “put our heads together and added a significant amount of testing…. The testing is 90 percent legit.” Santangelo detailed his plan to send $1 million per month in blood testing referrals to BLS by increasing the number of blood tests being ordered, including medically unnecessary tests.

In another text message conversation, David Nicoll wrote to Santangelo about the status of their referral agreement, stating that BLS “really can’t afford the 40-50,000 [dollars] a month if the girls aren’t going to be drawing any blood,” to which Santangelo responded by stating, “U no u can count on me!” and “I never let u down!”

He also pleaded guilty to money laundering, admitting that he used another individual in an attempt to hide the bribes from BLS, and to failing to file tax returns from 2009-2011 and pay taxes owed during that time period.

On April 9, 2013, federal agents arrested David Nicoll, 41, of Mountain Lakes; Scott Nicoll, 34, of Wayne, a senior BLS employee and David Nicoll’s brother; and Craig Nordman, 36, of Whippany, a BLS employee and the CEO of Advantech Sales LLC – an entity used by BLS to make illegal payments. They were charged by federal complaint with the bribery conspiracy, along with the BLS company and Santangelo. David and Scott Nicoll and Nordman are awaiting sentencing.

“Physicians who accept kickbacks in exchange for patient referrals and ordering medically unnecessary blood tests undermine the public’s faith in the medical profession and the financial stability of Medicare,” said Special Agent in Charge Scott J. Lampert, U.S. Department of Health and Human Services Office of Inspector General. “OIG will continue to protect both taxpayers and patients by holding physicians accountable for such wrongdoing.”

In addition to the prison term, Judge Chesler sentenced Santangelo to three years of supervised release and fined him $6,250. Santangelo must also forfeit more than $1.8 million as part of his plea agreement. The investigation has so far recovered more than $11.5 million through forfeiture.

U.S. Attorney Fishman credited special agents of the FBI, under the direction of Special Agent in Charge Richard M. Frankel; U.S. Department of Health and Human Services, Office of Inspector General, under the direction of Special Agent in Charge Scott J. Lampert; IRS–Criminal Investigation, under the direction of Special Agent in Charge Jonathan D. Larsen, and the U.S. Postal Inspection Service, under the direction of Inspector in Charge Maria L. Kelokates, with the ongoing investigation leading to today’s sentencing.

The government is represented by Senior Litigation Counsel Andrew Leven, Assistant U.S. Attorney Joseph Minish, and Jacob T. Elberg, Chief of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark, as well as Assistant U.S. Attorney Barbara Ward of the office’s Asset Forfeiture and Money Laundering Unit.

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 $635 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.