A federal securities class action filed on February 20, 2026 has laid bare what prosecutors describe as an $873 million insurance billing fraud machine run by the former top executives of medical device maker Zynex, Inc.
Here is the short version: Zynex, a Colorado-based manufacturer of electrotherapy devices for pain management, allegedly made its money not by selling good products but by flooding patients with supplies they never asked for - electrode pads, batteries, the works - and then billing insurers for all of it. According to a federal indictment unsealed on or about January 21, 2026, former CEO Thomas Sandgaard and former COO Anna Lucsok caused the company to collect more than $873 million, with over $600 million of that coming from supplies. The indictment states the vast majority of those supply billings were unnecessary and improperly billed, with volumes reaching as high as 32, 64, or even 128 electrode pairs per patient per month.
The scale of the alleged scheme drew action from some of the biggest names in insurance. Travelers Casualty Insurance Company of America and its affiliates filed suit under seal in August 2023 in the Superior Court of Los Angeles County, alleging violations of the California Insurance Frauds Prevention Act and attaching more than 140 pages of alleged fraudulent claims. Travelers alleged Zynex had an internal policy to automatically ship supplies every month without checking whether patients actually needed them. Patients who tried to stop the shipments were allegedly told to keep the supplies so Zynex could continue billing their carriers.
Allstate Insurance Companies and its affiliates filed their own 138-page complaint in September 2025, alleging Zynex employees filled out prescription forms themselves, bypassing medical professionals entirely. Allstate identified apparent signature forgery on order forms and called the pattern "an intent to defraud."
Tricare - the US military's health insurance program and Zynex's largest customer at 20–25% of revenue - suspended payments after detecting fraud that had been flagged as early as 2022. A 2023 investigation by The Capitol Forum found that Zynex's annual Tricare billings for electrodes alone skyrocketed from $1.7 million to $90.5 million between 2015 and 2022.
The fallout was swift. Zynex filed for Chapter 11 bankruptcy on December 15, 2025. Its NASDAQ-listed stock was suspended nine days later and delisted on January 13, 2026. Sandgaard and Lucsok now face federal charges including conspiracy to commit health care fraud, mail fraud, and securities fraud.
No court has made findings on the merits of any of these claims. The case remains in its earliest stage.
