Neurometrix Says Department of Justice Investigating
Neurometrix Inc., a maker of devices to find nerve damage such as carpal tunnel syndrome, said it is aware of an investigation by the U.S. Department of Justice.
The Waltham, Massachusetts-based company said it didn't know the reason for the investigation. It also said today in a securities filing that a material weakness in its accounting controls over sales tax liability and related expense accounts led it to restate results for 2002 through 2005.
The restatement slashed Neurometrix's 2005 net income by 73 percent to $249,000, or 2 cents a share, and increased its 2004 net loss by $503,000 to $4.7 million, or $2.42 a share. It converted last year's income from operations to a loss.
Neurometrix has faced questions in recent months for the billing practices it recommends to doctors. It has encouraged doctors to bill insurers at the rate normally charged for full nerve exams, which require specialists, even though its products are designed to be used by less trained personnel. Companies that manage Medicare payments for 20 states have issued statements forbidding doctors from billing at that rate, the company said today in its statement.
Calls to Chief Financial Officer Brad Smith and to the assistant of Chief Executive Officer Shai Gozani weren't immediately returned. The stock rose 61 cents, or 6.4 percent, to $10.08 in Nasdaq Stock Exchange composite trading before the filing. It has fallen 74 percent in the past year.