Diopsys Inc. Agrees to Pay $14.25 Million to Settle Allegations of False Medicare and Medicaid Claims in New Jersey

Diopsys Inc., a medical device company based in Middletown, Pennsylvania, has agreed to pay up to $14.25 million to settle allegations of fraud involving Medicare and Medicaid claims.

The company faced accusations of knowingly submitting false claims related to certain vision testing services, violating the federal False Claims Act, as well as various state laws.

Allegations Involving the NOVA Device and Medically Unnecessary Testing

The settlement centers around Diopsys’ NOVA device, an electrophysiological device cleared by the U.S. Food and Drug Administration (FDA) for visual evoked potential (VEP) testing.

Between January 1, 2015, and December 31, 2021, the U.S. government alleges that Diopsys caused healthcare providers to submit false claims for services where the NOVA device was used for electroretinography (ERG) vision testing.

ERG is a different test that the NOVA device was not FDA-approved for. Additionally, the government contends that Diopsys made significant modifications to the NOVA device without seeking the necessary FDA clearance.

Government Reaffirms Commitment to Protecting Medicare and Medicaid Programs

In a statement about the resolution, U.S. Attorney John Giordano for the District of New Jersey said, “Today’s resolution reaffirms our commitment to protect the integrity of the Medicare and Medicaid programs.

Health care companies must not encourage doctors to submit claims for payment for medically unnecessary tests.”

The settlement is seen as a strong reminder of the government’s ongoing efforts to combat fraud within the healthcare industry.

Diopsys to Pay Both Guaranteed and Contingent Payments

As part of the settlement, Diopsys will make guaranteed payments of $1,225,000.

Additionally, contingent payments of up to $13,025,000 may be paid depending on the company’s financial situation.

The settlement also addresses claims brought under the False Claims Act’s whistleblower provisions, with a portion of the recovery going to Dr. Atul Jain, a California ophthalmologist who helped bring the case forward.

Dr. Jain is set to receive at least $207,000 as his share of the federal recovery.

Collaborative Effort to Address Healthcare Fraud

The settlement is the result of a coordinated effort by several government agencies, including the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of New Jersey, and the U.S. Department of Health and Human Services Office of Inspector General.

The case highlights the government’s continued focus on fighting healthcare fraud, with the False Claims Act serving as a key tool in these efforts.

Reporting Fraud and Protecting Healthcare Integrity

The government encourages individuals to report tips or complaints related to potential fraud, waste, or abuse within the healthcare system.

People can contact the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The case was handled by Assistant U.S. Attorney David Simunovich and Trial Attorney Daniel Meyler from the Justice Department.

The legal proceedings are captured under the case titled United States ex rel. Jain v. Diopsys Inc., et al., Civil Action No. 21-18151 (D.N.J.), though the settlement is based on allegations, not a determination of liability.