Medical Device Firm Zynex Faces Lawsuit
A class-action lawsuit has been filed against medical device company Zynex for alleged securities violations. This kind of legal trouble can increase buyer caution across the health-tech sector, reinforcing the need for vendors to demonstrate financial stability and transparent operations.
The class-action lawsuit covers Zynex securities purchased between February 25, 2021, and December 15, 2025. The core allegations include the company shipping excessive and medically unnecessary products to inflate its revenue and management prioritizing aggressive sales over regulatory compliance. This legal action compounds existing troubles for Zynex, which had already faced scrutiny from insurers. Travelers filed a lawsuit in August 2023, alleging a fraudulent overbilling scheme seeking over $23 million in damages. Allstate also filed a complaint in September 2025, alleging employees filled out prescription forms themselves. A federal indictment unsealed around January 21, 2026, charges former CEO Thomas Sandgaard and former COO Anna Lucsok with orchestrating a scheme that collected over $873 million, with the majority of supply billings alleged to be unnecessary. The charges include conspiracy to commit health care fraud, mail fraud, and securities fraud. The company's largest customer, the U.S. military's Tricare health program, accounted for 20-25% of revenue and suspended payments as it reviewed prior claims. Zynex eventually agreed to forfeit more than $85 million in claims billed to Tricare. The fallout led Zynex to file for Chapter 11 bankruptcy on December 15, 2025. Its stock was suspended from the NASDAQ exchange on December 24, 2025, and subsequently delisted. The company has since installed a new management team and board members. In a non-prosecution agreement with the U.S. Attorney's Office, Zynex admitted to its role in the conspiracy and agreed to pay between $5 and $12.5 million, contingent on earnings.
