On March 28, the Department of Justice (DOJ) announced that Diopsys Inc., a medical device company based in Middletown, Pennsylvania, agreed to pay up to $14.25 million to resolve allegations that it caused healthcare providers to submit claims for reimbursement to Medicare and Medicaid for certain vision testing services.
The settlement addresses the use of Diopsys’ NOVA device, which had been cleared by the U.S. Food and Drug Administration (FDA) for visual evoked potential (VEP) testing. According to the government, between January 1, 2015, and December 31, 2021, the NOVA device was used by providers for electroretinography (ERG) testing, a different type of vision test for which the device lacked FDA clearance. The government also alleged that Diopsys made significant changes to the NOVA device that were not submitted to the FDA for clearance or approval.
Under the terms of the agreement, Diopsys will pay a guaranteed $1,225,000 and may pay up to an additional $13,025,000 in contingent payments based on its financial condition. Of that total, approximately $1.12 million of the guaranteed payment and up to $11.9 million of the contingent payments represent the federal portion.
The settlement also resolves a lawsuit filed under the qui tam provisions of the False Claims Act, which allow a private individual to file suit on behalf of the government and share in any recovery. In this case, the whistleblower was Dr. Atul Jain, a California ophthalmologist, who will receive at least approximately $207,000 from the federal recovery.
The claims resolved by the settlement are allegations only. There has been no determination of liability.
This matter highlights the continued government attention on reimbursement practices involving medical devices and federal healthcare programs.
The attorneys at Chilivis Grubman have extensive experience representing clients in False Claims Act matters, government investigations, and complex healthcare litigation. Our team is available to assist companies and providers seeking guidance on compliance and enforcement risks. If you need help with such a matter, please contact us today.