Occupancy sensors, timers, dimmers, and other "smart" switches often are required to be independently powered. If you look at this diagram from the devices documentation (PDF), you'll see that there are three ways this requirement is achieved.
![Selection Matrix](https://i.stack.imgur.com/xOujm.png)
Neutral Wire Required
The first method, is to simply require a neural wire. In this configuration, the device draws power using the ungrounded (hot) conductor and grounded (neutral) conductor. It also has a separate switched conductor, that it uses to control the load.
This setup would be wired like this...
![Neutral Wire Required Wiring](https://i.stack.imgur.com/0LySs.png)
Minimum Load Required
This method draws power using the ungrounded (hot) conductor, and the switched conductor. So the device is actually in line with the load.
This setup is wired like this...
![Load Required Wiring](https://i.stack.imgur.com/vEYBW.png)
Ground Wire Required
This method draws power using the ungrounded (hot) conductor, and the grounding conductor. It's wired similar to the Neutral Required devices, however, it uses the grounding conductor instead of the grounded conductor. This means that there will be a small amount of current on the grounding conductor, and that the grounding conductor is required for the device to operate.
This setup would be wired like this...
![Ground Required Wiring](https://i.stack.imgur.com/O72DX.png)
Notice there's a bare, and green wire connected to ground in this diagram.
tl;dr
Your device
The device you're using (MS-OPS5M-XX) requires a ground to operate, according to the documentation.
Solutions
Install grounding conductors
One solution, would be to install a grounding conductor with this circuit. This will likely require quite a bit of work, and might be quite costly.
Install a grounded conductor
It may be possible to extend a grounded (neutral) conductor from the light to the switch box, which could then be used to power the device. In this case you'd have to purchase a different device (one that requires a neutral rather than a ground).
According to the documentation for the switch you're using, a grounded (neutral) conductor is not required. The wiring diagram for your device looks like this
![Wiring diagram for Leviton’s IPV02/IPS02 Universal Vacancy and Occupancy Sensor](https://i.stack.imgur.com/Q8PMi.png)
If your device isn't working, it's possible that you've reversed the wires. Make sure the black wire from the switch is connected to the line wire, and the red wire is connected to the load wire.
If the switch still does not function, verify that the grounding conductor is solidly connected, and that the ground is good.
If the switch still does not function, the device may be defective and need to be replaced.
Best Answer
My bet: you have turned off Off-While-Occupied
Lutron occupancy sensors have what's called an Off While Occupied mode, as described in Lutron's advanced programming guide. With this mode enabled, turning the lights off manually with the tapswitch while you are in the controlled space causes the sensor to keep them off as long as it detects occupancy. However, if you disable this mode, turning the lights off manually with the tapswitch while you are in the controlled space turns the lights off for 30 seconds, but if you are still there once that 30 seconds is up, the occupancy sensor turns the lights back on for you.
So, following the instructions in the advanced programming guide to re-enable the Off-While-Occupied mode should fix your issue.