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Anatomy of a Healthcare Scam – UPDATE

January 15, 2013

(Editor’s note: On April 9th the U.S. Department of Justice issued a press release. The following is an excerpt from that release. The article that follows by Dr. Evan Levine was written in early January.)

Clinical laboratory president and new jersey doctor, others Charged with company in multimillion-Dollar cash for referral scheme


 Biodiagnostic Laboratory Services LLC and Employees Allegedly Bribed
Physicians to Refer Blood Samples and Order Unnecessary Tests

NEWARK, N.J. – Federal agents arrested the president and part-owner of Parsippany, N.J.-based Biodiagnostic Laboratory Services LLC (BLS), a New Jersey physician and two other BLS employees this morning on charges they participated in a long-running scheme to bribe doctors to refer patient blood samples to BLS and to order unnecessary tests, resulting in tens of millions of dollars in profit for the company.  The charges were announced today by New Jersey U.S. Attorney Paul J. Fishman.

Original Article

Put your phone on top of my car!” You might expect to hear this from a criminal who was just making sure that no one could listen in to his private conversation, and in this case, you would be right. But this was no ordinary drug deal or covert mob transaction. Instead it was a request made by a very affluent physician to a salesperson.“He asked me to take my phone and put it on top of his car, a nice car at that; I believe a Mercedes C Class. I guess ‘cause he thought I might record what he was going to ask me for,” Mr. X, a salesperson for a blood lab company, would later tell me as part of his tale of greed and duplicity.

The physician in question, let’s call him Dr. Money, was having some trouble paying his bills for his $100,000 car, the kids’ schools, and especially for both his wife’s and mistresses’ needs and he wanted to offer Mr. X a deal that would make both of them “lots of money.” He just wasn’t sure if Mr. X was interested in his proposition or if he might even record their conversation.

Dr. Money wanted to continue to send his patients’ bloods to the salespersons’ lab but told him that he was offered $5,000 in cash a month, to use another lab. “I like you and I have been very loyal to you, so if you match what they are going to give me I will continue sending you labs and even send you more than before,” Dr. Money told my source. Mr. X did on occasion do favors for his clients and provide them with small fees to speak at dinner conferences, but this request, which if he agreed to could land him in jail, was something he had to decline. Almost as quickly as the doctor’s eight cylinder German coupe could vanish, so did his account.

As the pharmaceutical industry became more scrutinized by the media and the FDA, it has become more difficult for the crooks with an MD after their name to find ways to profit without laying a hand on a patient. While reimbursements to physicians have fallen significantly, reimbursements for blood tests, especially complex blood analyses like allergy tests, hormone levels, and sophisticated rheumatologic tests, can be quite significant — as much as a few hundred dollars for each exam.

The simple mathematical equation of greedy businessman + greedy doctor = lots of expensive blood tests, is now more common than the public or the regulators realize. I suspect billions of dollars of inappropriate blood tests are being performed though arrangements like that of Dr. Money’s.

During the past few months, through interviews with salespeople, like Mr. X, and my own encounters with patients who visited with these duplicitous MDs, I have uncovered a scam that is likely costing insurers and tax-payers billions.

Some blood labs appear to be paying doctors cash to sign up with their lab and in return these doctors are given a list of tests that they should order on their patients — usually unnecessary studies that can cost thousands of dollars for each patient.

Unfortunately it appears that Medicare and many insurers, provided the right diagnostic code is submitted, pay for these tests.

Nothing illustrates my point better than the following case I recently witnessed.

Mr. P, an otherwise healthy man about the age of 40, wasn’t feeling well, or sleeping well, and he was very anxious and complained of feeling tired and of being very nervous and had lots of body aches that included a vague and constant chest pain. Worried that something was wrong, he sought care with a local doctor, a doctor like Dr. Money, who enhanced his profits in a way honest physicians would not; a doctor that seemed to order every allowable test, even if he wasn’t trained to do them; a man who likely made some illegal backroom deal like Dr. Money had with an opportunistic lab company: I send you blood tests and you give me cash.

When Mr. P noticed the bills submitted to a local blood lab, he recalled reading my book and sought me out to review his care. He brought all his records and bills for me to review. He told me that he finally left the care of his doctor after being prescribed thyroid hormones, even though his thyroid labs were normal. He was upset that this doctor had prescribed a medication that he did not require, as he later learned when he saw a thyroid specialist, and that he had ordered blood tests that his insurance paid thousands of dollars for.

Below are the actual labs tests ordered on Mr. P:

Thyroid Profile
Free Thyroxine
T3 Uptake
T3, Total
Free T3
FT4 Index
Thyroid Peroxidase AB
Thyroglobulin Antibodies
Diabetic Profile
Hepatitis Profile
Hepatitis A Total
Hepatitis A IGM
Hepatitis B Surface AG
Hepatitis B Surface AB
Hepatitis B Core AB
Hepatitis B Core AB IGM
Hepatitis C AB
Comprehensive Metabolic
Beta 2 Microglobulin
Free Testosterone
Estriol Serum Total
Sex Hormone Binding
Sedimentation Rate
C-Reactive Protein
ANA Screen
Anti DNA
Herpes Simplex Type 1
Herpes Simplex Type 2
Rheumatoid Factor
Cyclic Citrulline IGG
Compliment C3
Compliment C4
Tumor Markers
CA 123
AFP tumor marker
Free PSA
% Free PSA
CA 19-9
Alergy tests

For this 41 year-old fit man I would have ordered the following:

  • Chemistry
  • Blood count – I did not notice if that was ordered
  • Thyroid lab that would have only included a T4 and TSH for screening
  • Lipid profile – I did not see that test ordered.

With just a few vials of blood, that took less than a minute to draw, thousands of dollars of inappropriate tests were generated.

Some reading this will be shocked and others upset and suggest that I have fabricated this story, but it is real and endemic in some areas. You’re not likely to find these meretricious acts in affluent towns or at university hospitals and I’m guessing many physicians, perhaps because they are sheltered or naïve, will take offense to what I have written. But go into an office in one of the working-class areas of a major city and you may find a physician all too willing to be an accomplice to this scam. I’m willing to bet there are thousands of doctors and hundreds of these smaller labs, ripping off billions of dollars from private and government funded healthcare. Billions!

While many insurers now require doctors to obtain their approval (a tedious and difficult process that creates a horrible working environment for honest physicians), it would be impractical for them to ask doctors to get approval for every single blood test, and just about impossible. And so… this is now a favorite ploy used by the worst of the worst, in my profession, to get rich, again.

But people are beginning to talk and the honest salespeople, who work for honest labs, know which labs and often which doctors are involved in this criminal scheme. If government could make it both easy and rewarding for anyone to report this type of crime, and if the laws had teeth and law enforcement were bold enough to parade these doctors and business owners in front of cameras just before they were incarcerated, then I suspect we could significantly reduce or virtually eliminate these kinds of criminal shenanigans and in the process save our healthcare system precious money.


[i] Acute
[ii] This includes several chemistry tests and is a reasonable test to order


Dr. Evan S. Levine is a cardiologist in New York and a Clinical Assistant Professor of Medicine at Montefiore Medical Center – Albert Einstein College of Medicine. He is also the author of the book “What Your Doctor Won’t (or can’t) Tell You”. He lives in Connecticut with his wife and children.


5 Responses to Anatomy of a Healthcare Scam – UPDATE

  1. heartdude on December 31, 2015 at 8:14 pm


    I just listened to “Menopause + Brisdelle = $$$$$$$$$$” of the “Real Medicine’s Podcast” podcast on PodOmatic.

    Check it out:


    Sent from my iPhone

  2. heartdude on March 6, 2013 at 10:50 am

    This is common enough, causes the loss of billions, and has no response from regulators. It is another big mess in the health-not-care system.

  3. SteveH on March 1, 2013 at 10:11 pm

    Could we please have a not-for-profit healthcare system? One that provides everyone with care — especially preventative care and incentives to live healthy lives. This is capitalism; we have to make it unprofitable for the American people to be sickly or they will be kept sickly.

  4. liberalvoice on February 2, 2013 at 2:34 pm

    I’m wondering how common this is. It would be in the interest of a lot of people and institutions (gov. insurance companies) to put a stop to tests-for-profit doctors. Have there ever been any busts?

  5. globalcitizen on January 23, 2013 at 3:49 pm

    There are aspects of for-profit medicine that will inevitably lead to this kind of fraud. The incentives are there, obviously, while the policing seems not to be. We can but hope that someone is or begins policing this kind of fraudulent activity. Thank you Dr. Levine, for exposing this scam.

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