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Zynex Faces Securities Fraud Lawsuit After Bankruptcy, Federal Settlements
Lawsuit alleges Zynex engaged in 'oversupplying' scheme to inflate billings to government and private payors.
Mar. 13, 2026 at 4:03pm by Ben Kaplan
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A securities class action lawsuit has been filed against Zynex, Inc. (ZYXI/ZYXIQ) and its former top executives following the company's delisting and Chapter 11 bankruptcy filing. The lawsuit alleges Zynex systematically 'oversupplied' patients with excessive medical equipment to inflate billings to government and private payors, leading to a $85 million forfeiture settlement and criminal indictments of the former CEO and COO.
Why it matters
The case highlights growing concerns around healthcare fraud and the impact on investors when companies engage in predatory billing practices. Zynex's collapse also raises questions about the oversight and controls in place to prevent such schemes, especially for companies serving government healthcare programs.
The details
The lawsuit, filed in the U.S. District Court for the District of Colorado, alleges Zynex violated federal securities laws by failing to disclose its 'oversupplying' scheme that targeted patients and defrauded payors. The complaint claims Zynex shipped patients excessive medical supplies, in some cases up to 128 electrode pairs per month, regardless of medical necessity, in order to inflate billings. In early 2025, Zynex's largest payor, Tricare, suspended all payments to the company, but management allegedly concealed the severity of this suspension until Zynex was forced to agree to a massive $85 million forfeiture settlement. The exposure of these practices led to Zynex's bankruptcy filing and delisting from the Nasdaq, resulting in near-total losses for common equity holders.
- In early 2025, Zynex's largest payor, Tricare, suspended all payments to the company.
- On January 21, 2026, former CEO Thomas Sandgaard and former COO Anna Lucsok were indicted for health care and securities fraud.
- Zynex filed for Chapter 11 bankruptcy following the exposure of its practices and the $85 million forfeiture settlement.
The players
Zynex, Inc.
A medical device company that filed for Chapter 11 bankruptcy after revelations of a massive overbilling scheme.
Thomas Sandgaard
The former CEO of Zynex who was indicted for health care and securities fraud.
Anna Lucsok
The former COO of Zynex who was indicted for health care and securities fraud.
What they’re saying
“The allegations suggest that Zynex's purported growth was not the result of legitimate demand, but was instead driven by a predatory 'oversupplying' scheme that targeted patients and defrauded payors.”
— Reed Kathrein, Hagens Berman partner
What’s next
The judge in the case will decide on April 21, 2026 whether to appoint a lead plaintiff for the securities class action lawsuit.
The takeaway
This case highlights the need for stronger oversight and controls in the healthcare industry to prevent fraudulent billing practices that can devastate investors and patients alike. The collapse of Zynex underscores the importance of transparency and accountability for companies serving government healthcare programs.
