Zynex class action alleges $873 million insurance overbilling scheme

www.insurancebusinessmag.com, Tez Romero, February 24, 2026

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.

The case, Beidel v. Sandgaard et al. (Case No. 1:26-cv-00714, US District Court for the District of Colorado), pulls together allegations from lawsuits by Travelers, Allstate, and a federal criminal indictment to tell a story that should trouble every claims department in the country.

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. Continue article