Executive Summary

• The U.S. Department of Justice (DOJ) issued its first healthcare-related corporate declination (the Declination) under its revised Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP), declining to prosecute a management services organization (MSO) while simultaneously indicting its former CEO and founder of the underlying optometry practice and surgery center.
• The Declination illustrates the potential benefits available to healthcare companies that maintain robust healthcare compliance programs and voluntarily self-disclose misconduct, fully cooperate with government investigations, and undertake meaningful remediation.
• The Declination is also significant for healthcare organizations with a management services organization-professional corporation (MSO-PC) model because it underscores the role an MSO should play in administering enterprise-wide compliance, governance, and remediation functions while preserving the professional corporation’s clinical independence.
• The related indictment of the former CEO and founder of the underlying optometry practice also illustrates that individual accountability for Anti-Kickback Statute violations and improper financial relationships with referral sources may persist independent of the entity-level outcome.

Background

On July 29, 2026, the DOJ announced its first healthcare-related declination under its revised CEP, declining to prosecute Campus Eye Management Holdings LLC and Campus Eye Management LLC (together, Campus Eye) while simultaneously announcing criminal charges against the company’s former CEO and founder of the underlying optometry practice. For more details on the CEP, see our previous client alert on this topic.

Campus Eye is a New Jersey private equity-backed MSO that provides billing, collection, and other support services to an optometry practice and an affiliated ambulatory surgery center. The founder of the optometry practice and surgery center, optometrist E. Bruce DiDonato, is also the former CEO of Campus Eye. The DOJ alleges in its indictment against DiDonato that he orchestrated the following scheme:

DiDonato paid kickbacks and bribes to ophthalmologists for eight years. In exchange, they referred patients who needed eye surgeries to him. DiDonato then gave those patients diagnostic eye tests that were duplicative of tests they had already received or unnecessary for the type of surgery being performed. In most instances, neither DiDonato nor the optometrist reviewed the tests, and the referring ophthalmologists did not review or rely on them in making treatment decisions before surgery.

To conceal these arrangements, DiDonato disguised the kickbacks to ophthalmologists as consulting fees under sham agreements and paid them as monthly “flat fees” that were, in fact, calculated as a percentage of the optometry practice’s Medicare reimbursement for the diagnostic tests performed on the referring providers’ patients during the prior year. DiDonato then used the inflated reimbursement revenues from this scheme to market and sell Campus Eye to private equity investors.

Ultimately, according to the DOJ, DiDonato’s scheme caused Medicare and other insurers to pay approximately $3.7 million to his optometry practice for the duplicative and medically unnecessary diagnostic tests procured through kickbacks.

The Compliance Function Is a Core MSO Responsibility

The Declination is particularly noteworthy because of its application to the MSO-PC model. Campus Eye served as the MSO in an MSO-PC structure. This structure, which is commonly used to comply with state corporate practice of medicine (CPOM) laws, allocates non-clinical business and administrative functions to the MSO. These functions often include billing, revenue cycle management, finance, information technology, contracting, human resources, and other operational support, while preserving the affiliated PC’s and its licensed providers’ exclusive authority over the practice of medicine, including clinical decision-making and patient care.

The factors that the DOJ identified as reasons that it declined to prosecute Campus Eye—including voluntary self-disclosure, full cooperation, and timely remediation—are relevant to any company seeking cooperation credit under the DOJ’s CEP. These considerations are particularly notable in the MSO context because many of the activities underlying a healthcare compliance program—including implementing enterprise-wide policies and controls, conducting risk assessments, coordinating internal investigations, overseeing compliance personnel, and driving remediation efforts—are administrative and operational functions that naturally align with the traditional role of an MSO.

It also highlights the important role that a well-governed MSO can play in supporting enterprise-wide compliance. As healthcare organizations grow in size and complexity, the MSO is often best positioned to establish and administer organization-wide compliance policies, reporting and escalation mechanisms, enterprise risk assessments, internal investigations, compliance training, third-party oversight, and corrective action plans across affiliated provider organizations. These activities are designed to support the organization’s compliance objectives while remaining separate from clinical judgment and the delivery of patient care.

Finally, the Declination is significant because the DOJ treated Campus Eye itself, and not its affiliated PC, as the corporate actor responsible for conducting these compliance functions. In addition to crediting Campus Eye’s voluntary disclosure, cooperation, and remediation, the DOJ required Campus Eye to continue cooperating with the government’s ongoing investigation. The Declination therefore underscores that the DOJ viewed the MSO as the entity responsible for maintaining the governance, compliance infrastructure, and institutional knowledge necessary to identify potential misconduct, support government investigations, and implement organization-wide corrective actions.

The Declination Reinforces the Value of a Robust Compliance Program

More broadly, the Declination reinforces that an effective healthcare compliance program is more than a paper exercise—it can materially influence prosecution decisions. In declining prosecution of Campus Eye, the DOJ specifically cited the company’s timely and voluntary self-disclosure, full and proactive cooperation, timely and appropriate remediation, and substantial improvement of its compliance program. The DOJ highlighted the company’s ongoing risk assessments and monitoring, hiring of new personnel with compliance responsibilities, and implementation of compliance training.

Companies, however, should still carefully weigh the costs and benefits of self-disclosing potential misconduct to the DOJ and do so with guidance from experienced counsel. Companies that self-disclose to the DOJ can suffer reputational harm and significant financial costs—including investigation costs and disgorgement of profits—even if they receive declinations. In addition, the DOJ, not a neutral party like a court, will decide if a company meets the CEP’s requirements.

The Declination also demonstrates the increasing convergence between the DOJ’s CEP and the longstanding guidance from the U.S. Department of Health and Human Services Office of Inspector General (OIG) regarding effective healthcare compliance programs. The compliance measures the DOJ specifically credited, including ongoing risk assessments, auditing and monitoring, compliance training, and dedicated compliance personnel, closely mirror core elements that the OIG has long identified as hallmarks of an effective compliance program. While healthcare organizations have historically viewed these measures as best practices for preventing fraud and abuse, the Declination reinforces that they may also materially influence the DOJ’s charging decisions when misconduct occurs. Investments in compliance infrastructure therefore serve not only to reduce regulatory risk, but also to meaningfully improve an organization’s ability to obtain cooperation credit and potentially avoid criminal prosecution.

Former CEO and Founder’s Individual Accountability for Anti-Kickback Violations Survives the Corporate Declination

On the same day the DOJ announced the Declination, it unsealed a seven-count indictment against DiDonato, Campus Eye’s former CEO and founder of the underlying optometry practice and surgery center, for conspiring to commit healthcare fraud and Anti-Kickback Statute violations. If convicted, DiDonato faces a maximum sentence of 10 years imprisonment on the healthcare fraud conspiracy and substantive healthcare fraud counts, five years imprisonment on the kickback conspiracy count, and 10 years imprisonment for each of the substantive kickback counts.

As described above, DiDonato is alleged to have disguised referral payments as flat consulting fees that were, in fact, tied to referral volume. This highlights the real-world consequences of failing to review arrangements with referral sources for compliance with the Anti-Kickback Statute, state fee-splitting prohibitions, and the Stark Law, where applicable. This is particularly important as part of diligence in healthcare acquisitions. It also highlights the government’s focus on Anti-Kickback compliance and the significant penalties, including imprisonment, for executives and founders who structure arrangements where money is exchanged for referrals.

Key Takeaways

For healthcare organizations with an MSO-PC model, the Declination serves as a reminder that enterprise compliance is a core responsibility for the MSO. MSOs should invest in a robust enterprise-wide healthcare compliance program, informed by best practices from industry and OIG guidance. MSOs should perform regular operational audits to ensure the compliance program has been implemented across the enterprise and is effective. Organizations that identify reportable misconduct should work closely with counsel to evaluate the appropriateness and potential outcomes of self-disclosure.

Companies reviewing their governance structures in light of the Declination should also consider whether their MSO-PC structure continues to reflect evolving state CPOM requirements and enforcement priorities. For a broader discussion of the MSO-PC model and practical structuring considerations, see our client advisory: “The Corporate Practice of Medicine: Essential Guidance for Digital Health Companies and Investors.”

Contact Us

Wilson Sonsini advises healthcare companies on compliance programs, self-disclosure, and related investigations and remediation efforts.

For more information, please contact Andrea Linna, Tarek Helou, Nicholas Hakun, Nawa Lodin, Seamus Taylor, Abigail Hermes, or any member of the firm’s Digital Health, White Collar Crime, or Government Investigations practices.