NEWARK, N.J. – Diopsys, Inc., a medical device manufacturer based in Middletown, Pennsylvania, will pay up to $14.25 million to resolve allegations that it caused false claims to be submitted to Medicare and Medicaid using a vision testing device that lacked proper FDA clearance, federal prosecutors announced.
The settlement centers on Diopsys’ NOVA device, which was cleared by the U.S. Food and Drug Administration for visual evoked potential (VEP) testing. Federal authorities alleged that between 2015 and 2021, Diopsys knowingly promoted the use of its NOVA device for electroretinography (ERG) testing—a different procedure for which the device was not FDA-cleared—and failed to report significant modifications made to the device during that time.
Key Points
- Diopsys allegedly encouraged use of its NOVA device for unapproved ERG vision testing.
- The settlement includes $1.225 million in guaranteed payments and up to $13.025 million in contingent payments.
- Whistleblower Dr. Atul Jain will receive at least $207,000 as part of the federal recovery.
“Healthcare companies must not encourage doctors to submit claims for payment for medically unnecessary tests,” U.S. Attorney John Giordano said in a statement. The U.S. contended that Diopsys’ actions led to improper billing by healthcare providers, violating the federal False Claims Act and various state laws.
The settlement resolves a qui tam lawsuit brought by Dr. Atul Jain, a California ophthalmologist, under the whistleblower provisions of the False Claims Act. These provisions allow private individuals to sue on behalf of the government and receive a portion of the recovery.
Of the total settlement, $1.12 million in guaranteed funds and up to $11.9 million in contingent payments will go to the federal government. The company’s obligation to pay the full amount will depend on its financial condition.
Diopsys did not admit liability in the settlement, and the claims resolved by the agreement remain allegations.
