PROVIDENCE, R.I. — Zynex, Inc., a Colorado-based medical device company, has agreed to enter into a non-prosecution agreement with the U.S. Attorney’s Office in Rhode Island and admit to participating in a conspiracy to commit health care fraud, securities fraud, mail fraud, and other violations.
Under the agreement, which is subject to approval of the bankruptcy court in Zynex’s ongoing Chapter 11 proceedings, Zynex will pay between $5 and $12.5 million depending on the company’s earnings and profit over the period of the agreement, U.S. Attorney Charles Calenda said in a statement on Tuesday.
Zynex will also forfeit all unpaid claims submitted before Sept. 1, 2025, including claims submitted during the period of suspension of TRICARE payments, Calenda said. These forfeited claims include more than $85 million billed to TRICARE during a suspension period and more than $13 million billed to other payors and patients.
In the non-prosecution agreement, Zynex also admits the following:
- Zynex fraudulently obtained millions of dollars from government and private health care payors and patients by submitting excessive and improper claims for medical devices and supplies.
- During the relevant period, Zynex collected more than $873 million for its products, including more than $600 million for supplies, the vast majority of which were the result of fraud.
- Zynex shipped and billed for medically unnecessary supplies in excess quantities, sometimes as large as 32, 64, or 128 electrode pairs per patient each month.
- Zynex misled investors by concealing that its revenues were driven by fraudulent billing practices.
As part of the resolution, Zynex agreed to implement enhanced compliance and corporate governance reforms designed to prevent future misconduct, strengthen internal oversight, and ensure accountability under its new leadership, Calenda said.
The company also agreed to fully cooperate with the government’s ongoing investigations.
“This resolution addresses the seriousness of the fraud committed by Zynex while recognizing the substantial turnaround in conduct implemented under new management,” Calenda said. “It also demonstrates that when new management confronts the fraudulent conduct, reforms its practices, and fully cooperates, the Government will take those actions into account in reaching an appropriate resolution.”
Thomas Sandgaard, the former CEO of Zynex, and Anna Lucsok, the former Chief Operating Officer of Zynex, were previously indicted for related conduct and charges. They made an initial appearance in federal court on Jan. 21. Lucsok was released with electronic monitoring, and on Jan. 26, Sandgaard was ordered detained.
“The FBI remains steadfast in uncovering and deterring fraud against our health care system,” said Amanda Koldjeski, Acting Special Agent in Charge of FBI Denver. “Each year, acts of health care fraud cost patients, insurers, and the government billions of dollars. In order to maintain the integrity of our health care system, the FBI will hold any individual or entity engaging in health care fraud responsible for their conduct.”
“As the law enforcement arm of the Department of Defense’s Office of Inspector General, the Defense Criminal Investigative Service remains fully committed to tenaciously investigating fraudulent conduct that wastes taxpayer dollars and undermines the integrity of TRICARE, the uniformed services primary health care program,” said Special Agent in Charge Chad Gosch, DCIS Southwest Field Office. “These efforts reaffirm our unwavering dedication to protecting the DoD community, its resources, and programs that are essential to military readiness.”
“This agreement reinforces the Veterans Affairs Office of Inspector General’s commitment to protecting the integrity of VA’s health care programs and preserving taxpayer funds,” said Special Agent in Charge Anthony Heddell with the VA OIG Western Field Office. “The VA OIG thanks the Department of Justice, and our law enforcement partners for their efforts in this investigation.”
“Zynex’s former executives engaged in a scheme that defrauded taxpayer-funded health care programs and deceived investors,” said Roberto Coviello, Special Agent in Charge of the U.S. Department of Health and Human Services, Office of Inspector General. “This outcome makes clear that corporate fraud against federal health care programs will be detected and met with decisive action, and companies should always uphold their responsibility to operate ethically.”
This is a developing story. Check back for updates as more information becomes available.
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