Colorado firm Zynex forfeits nearly $100M as former executives face federal charges

By Shaina Cole | Contributing Writer, Rocky Mountain Voice

An Englewood medical device company has agreed to pay millions and walk away from nearly 100 million dollars in unpaid claims after a federal investigation into its TRICARE billing practices.

This week, the U.S. Department of Justice announced that Zynex, Inc. entered into a criminal Non-Prosecution Agreement. Prosecutors said the company submitted claims for medical supplies “in quantities that exceeded physician orders” and, in some instances, were “not medically necessary.”

At the same time, a federal grand jury indictment charging former CEO Thomas Sandgaard and former Chief Operating Officer Anna Lucsok was unsealed.

The company secured a deal.

Its former executives now face criminal charges in federal court.

What Federal Investigators Found

The alleged billing conduct, prosecutors say, dates to 2018 and continued into 2024.

The company’s core product is an electrotherapy device prescribed to treat pain, along with the replacement supplies that generate recurring revenue.

The devices themselves are one piece of the business. The recurring supply shipments — electrodes, batteries, replacement components — are another. Federal investigators focused heavily on those repeat shipments.

In the statement of facts attached to the agreement, Zynex admitted that it submitted claims that “exceeded what physicians ordered.” The document also acknowledges that certain supplies were billed even when they were not medically necessary under TRICARE rules.

The Justice Department described the matter as involving “claims of millions of dollars of health care fraud.” In the same release, officials said protecting military health programs “is critical to maintaining the integrity of benefits earned by service members and their families.”

The Office of Inspector General at the Department of Health and Human Services and the FBI led the investigation.

The Financial Fallout

The Non-Prosecution Agreement requires Zynex to pay between 5 million and 12.5 million dollars in criminal penalties and restitution. The final number will depend on earnings during the term of the agreement.

But the larger number is tied to forfeiture.

According to federal filings, Zynex agreed to forfeit all unpaid claims submitted before September 1, 2025. Those unpaid claims include more than 85 million dollars billed to TRICARE during a suspension period. They also include more than 13 million dollars billed to other payors and patients.

In total, the forfeiture approaches 100 million dollars.

That is revenue the company will not collect.

In earlier SEC disclosures, Zynex acknowledged that TRICARE represented roughly 20 to 25 percent of company revenue during certain periods. In one filing, the company stated that “TRICARE has suspended certain payments while reviewing our billing practices,” adding that the suspension had a “material impact” on liquidity.

The stock price reflected that impact. Shares that traded above 12 dollars in early 2024 declined sharply as reimbursement uncertainty became public. Layoffs followed. Eventually, the firm filed for Chapter 11 bankruptcy protection, all while negotiations with federal officials were taking place in the background.

The new agreement formalizes this process. It calls for increased compliance measures, improved documentation review, ongoing cooperation with the investigation, and federal supervision. Should the firm fail to comply with the agreement, prosecutors could move forward with criminal charges based on the firm’s admitted wrongdoing.

The Indictment

The corporate resolution does not resolve the case against Sandgaard and Lucsok.

The indictment accuses Sandgaard and Lucsok of conspiracy to commit health care fraud, mail fraud and securities fraud, along with multiple related counts. Prosecutors allege they helped generate millions in payments from government and private insurers while giving investors a misleading sense of how reliable the company’s revenue stream was.

The charging document describes the conduct as “a scheme to defraud federal and private health care benefit programs.”

Court records show the indictment was filed under seal in mid January and unsealed shortly afterward. Sandgaard was arrested in Colorado following the unsealing.

For now, the charges are just that — allegations that prosecutors will have to prove in federal court.

What It Means in Englewood

At Zynex’s headquarters in Englewood, operations continue. Devices are still manufactured and distributed. Employees still report to work.

The company remains in business, but now under federal oversight, with nearly 100 million dollars in unpaid claims it has agreed to forfeit. Prosecutors say those claims stemmed from billing practices that violated TRICARE rules.

The agreement allows Zynex to avoid criminal charges if it meets the conditions laid out by federal authorities. Meanwhile, the case against Sandgaard and Lucsok moves forward in federal court.

For a firm that once counted TRICARE as a major revenue source, the legal battle is no longer about reimbursement disputes. It is about whether prosecutors can prove the billing practices crossed into fraud.