Marian Houk was rehabbing from a serious spinal surgical procedure in 2022 when her bodily therapist at UCHealth in Aurora really helpful she attempt electrical stimulation to handle the ache.
Like many suppliers across the nation, UCHealth despatched Houk to Zynex Inc., an Englewood-based medical gadget firm that manufactures and sells devices used for ache administration and rehabilitation.
When insurance coverage didn’t cowl {the electrical} nerve stimulation gadget, Zynex promised Houk that she may make 10 funds of $25 to cowl the price. What the Westminster affected person didn’t know was that this is able to kick off a 12 months of preventing with an organization decided to invoice Houk and her insurance coverage suppliers as usually as attainable.
The firm billed her outdated insurance coverage. It billed her new insurance coverage. And it despatched her payments for greater than $2,000 for the $250 gadget, when she was already paying it off in installments.
“The billing was relentless and terrifying,” Houk stated in an interview.
Houk was considered one of quite a few Coloradans caught up in what federal investigators say was a years-long scheme by Zynex to oversupply medical units and overbill sufferers looking for opioid-free ache reduction. A federal grand jury indicted two former prime executives in January, accusing them of orchestrating the fraudulent practices that netted Zynex almost $1 billion. The firm final month averted additional prosecution by admitting to collaborating in a conspiracy to commit well being care fraud, securities fraud, mail fraud and different violations.
Former Zynex staff, in interviews with The Denver Post, stated they felt uncomfortable following directives that had been unethical or outright unlawful. The firm routinely fell behind on paying distributors, at the same time as management touted fast development and file income. Staff stated they had been instructed to proceed sending units and provides to sufferers, even after they didn’t request them. Executives instructed employees to not inform Medicare and Medicaid sufferers that they might be on the hook for the units if their insurance coverage didn’t cowl them.
“It felt like that was poor business practice to essentially lie to your patients and scam them and create a bad reputation for the company,” stated Cori Latousek, a former Zynex worker.
More than a dozen sufferers instructed The Post they obtained provides that they didn’t order and didn’t want. The scheme has prompted a number of lawsuits from insurance coverage corporations and shareholders who say they had been duped by Zynex.
At the highest of the pyramid stood a chief govt officer who marketed the corporate’s work because the antidote to the opioid epidemic. Thomas Sandgaard began a basis to assist fund alternate options to painkillers and produced a film on the opioid disaster. He was additionally identified for driving costly sports activities automobiles, taking part in guitar across the workplace and selling himself at each flip, former staff say.
Zynex served as a Colorado startup success story — a one-man operation turned public firm with a whole lot of tens of millions of {dollars} in income. This is the story about the way it all fell aside.
Sandgaard, a Castle Rock resident, remained in federal custody as of late February, in response to the U.S. Marshall’s Office. His lawyer, when contacted by The Post, stated he was now not engaged on the case. Anna Lucsok, Zynex’s former chief working officer, who was additionally indicted, is free on bond. Her lawyer, Bill Leone, stated, “the allegations in this indictment are just that — allegations. We look forward to vindicating our client at trial.”
Zynex, in a press release, stated the corporate, in its take care of the Justice Department, “took responsibility for past business practices implemented by former company executives.”
“Our new management team is committed to the highest standards of integrity and compliance in everything we do, so we can better serve patients who can truly benefit from our prescription medical devices,” the corporate stated. “We have completely broken from the past and look forward to closing this chapter and making an important contribution to the health care needs of Americans living with chronic pain.”
Rapid development fueled by ‘moral conundrums’
Sandgaard, a twin citizen of the U.S. and Denmark, based Zynex in 1996 after a profession within the semiconductor, telecommunications and medical tools industries. He positioned the corporate’s merchandise as a protected various to opioids by means of the event of electrotherapy know-how that alleviates continual ache.
In February 2019, the corporate went public. Sandgaard referred to as the second a “milestone achievement” that will assist increase the Zynex crew.
Rapid development adopted — and business watchers began taking be aware.
The firm ranked thirteenth in income development amongst all medical gadget corporations within the U.S. and Canada on Deloitte’s 2020 Technology Fast 500. Jim Cramer, the favored host of “Mad Money” on CNBC, in 2021 instructed viewers to purchase Zynex stock.
Zynex, within the first quarter of 2023, reported 36% year-over-year income development. Orders elevated 61%. The following quarter, income jumped 22%.
At the top of 2024, Sandgaard stated his firm hit $200 million in income, and he anticipated to see 10% to fifteen% development in 2025.
“The company is built by our employees,” the founder stated in a 2024 interview.
Privately, although, a lot of those self same staff grew involved over how Zynex was making its cash.
Latousek served as a territory supervisor in Seattle, focusing on bodily remedy, ache clinics and surgical procedure facilities for enterprise. The gross sales pitch: non-opioid ache administration.
She recalled management instructing her to not inform sufferers who obtained the units that they mechanically get enrolled for provides, equivalent to batteries and electrodes. Many sufferers, because of this, she stated, obtained expenses that they didn’t authorize.
“That felt really sketchy,” Latousek stated. “I would always tell my patients to make sure they opted out.”
Most of the time, Medicare wouldn’t cowl the stimulation gadget or the electrodes. When Zynex handled these sufferers, workers stated they instructed them it value $250 out of pocket.
But within the spring of 2021, management modified the directive. Going ahead, the coverage was to not inform Medicare sufferers the price if their insurance coverage didn’t cowl it, former staff stated.
“We’re pretty much locking in older vulnerable people on Social Security or fixed incomes who don’t have much money,” stated one former Zynex employee, who spoke to The Post on the situation of anonymity as a result of they feared profession penalties for being related to the corporate.
This led to fixed “moral conundrums,” the previous worker stated. They recalled telephone calls with aged sufferers who stated they couldn’t afford the gadget. Yet Zynex nonetheless discovered a method to ship them the models, charging them $250.
When this worker introduced up issues from workers that they had been profiting from individuals, they stated they had been let go.
“I never felt good,” the person stated. “Me getting fired was definitely a blessing.”
Former Zynex staffers stated this incidence was frequent: Workers who expressed issues concerning the firm’s practices can be fired or reassigned to completely different roles. As a outcome, few staff stayed for lengthy, exterior of prime executives.
Meanwhile, Zynex was usually late paying distributors, staff stated. The firm provided to pay half if it may obtain a few of the stock — an association that left employees feeling uncomfortable.
People within the shopping for division rapidly grew alarmed that their provide orders for batteries and electrodes had been so regular. Normally, on this enterprise, there must be fluctuating stock ranges based mostly on buyer demand, staff stated. But at Zynex, the numbers remained fixed.
That was as a result of they had been transport batteries and electrodes time and again to the identical sufferers, these employees stated they realized. Many individuals would return the packages to the warehouse with notes telling Zynex to cease sending them provides.
Unwanted provides, unexplained payments
More than a dozen sufferers instructed The Post that they obtained provides from Zynex that they by no means ordered and didn’t want.
Josh Kahn, 39, underwent a spinal fusion in 2023, and his surgeon really helpful {an electrical} nerve stimulation machine. The Denver resident obtained a prescription for the Zynex gadget.
The implement labored effectively, Kahn stated, however each month he obtained batteries and electrodes that had been pointless given his utilization of the machine. He stuffed a drawer with all of the provides.
In January 2025, Kahn requested Zynex to discontinue the recurring orders. The firm acknowledged his request.
But Kahn continued to get charged $45 a month for the gadget and provides, in response to the payments he offered to The Post.
“This is becoming a nuisance,” he instructed the corporate in an e-mail.
Chris Basser, 49, used a Zynex machine for a again harm he sustained in 2021 after getting hit by a drunk driver. Medicaid coated every part, the Colorado Springs resident stated, however he nonetheless obtained packs of six or 9 batteries each three weeks.
He stated he tried calling the corporate to cancel the orders, however no one ever responded. He ultimately gave up.
“I thought it was maybe a miscommunication,” Basser stated. “I didn’t think of fraud.”
It didn’t appear to matter whether or not sufferers paid their payments. Zynex continued to demand cost.
For almost 4 years, Zynex has been looking for $250 from Michael Raizen, regardless of the Denver resident negotiating a take care of the corporate to pay for his gadget.
“It’s like a bad rash,” Raizen’s spouse, Gail DeVore, stated. “No matter what you do, you can’t get rid of it.”
Sports automobiles, electrical guitars and large banners
Sandgaard served because the face of Zynex — and he wasn’t shy about letting everybody know.
The CEO confirmed as much as the Englewood workplace in a McLaren Model 72S Spider sports activities automobile, and appreciated to stroll across the workplace together with his electrical guitar, blasting music, ex-employees stated. One former staffer recalled carrying round his amp and handing out T-shirts “like a little groupie.”
Sandgaard hung a big banner on the fourth ground, a spoof of a preferred George Washington meme wherein the Zynex founder is holding a machine gun in a single hand, a bald eagle perched on his different arm. He’s standing on a fiery hill with a white Zynex flag behind him. Dollar payments flutter round his toes.
“He came off as a man incredibly full of himself,” the previous staffer who felt like a groupie stated, talking on the situation of anonymity because of fears about future profession penalties. “It felt very toxic male CEO.”
Complicating issues was the fusion of Sandgaard’s skilled and private lives.
He was within the midst of a divorce when he enlisted the companies of an area psychologist, Dr. Raelynn Maloney. In 2014, the 2 began relationship.
Despite the Zynex founder boasting concerning the firm’s success, Maloney realized that Sandgaard and his agency had accrued vital debt and had exhausted traces of credit score, she alleged in a 2025 lawsuit towards him and the corporate.
Desperate, Sandgaard requested Maloney to assist save Zynex, she stated. The psychologist began attending high-level conferences as an unpaid advisor.
Without the flexibility to acquire financing, Sandgaard recurrently requested Maloney for loans for himself and the corporate, she alleged. Maloney put up greater than $1.1 million in private belongings as money or collateral all through 2023 so Sandgaard and Zynex may keep away from chapter, the criticism alleges.
Sandgaard ultimately purchased a home for Maloney and her daughters. She stop her non-public observe to hitch Zynex full-time, serving as the top of customer support, billing and elements of human sources, Maloney alleged.
In 2020, Sandgaard purchased the British soccer crew, Charlton Athletic, and requested Maloney to assist flip that group round as effectively, she stated.
Eventually, Sandgaard began to tug away from Maloney, she stated within the lawsuit. He started looking for sexual experiences with their mutual buddies, colleagues and former Zynex staff, she alleged. He sexually harassed his workers, Maloney stated, and even put her accountable for dealing with a number of Equal Employment Opportunity Commission sexual harassment complaints made by staff.
“I guess you’re not going to have your fairytale ending,” Maloney stated Sandgaard instructed her.
Maloney didn’t reply to messages looking for remark. Her lawsuit stays open.
Sandgaard, in courtroom filings, referred to as the criticism a “vengeful recounting of events regarding her romantic breakup.” The lawsuit, his legal professionals wrote, “is nothing but a punitive attempt to punish her ex-partner and seek financial relief for the benefits she can no longer reap from their relationship.”
Zynex begins to crumble
The facade ultimately began to crumble when insurance coverage suppliers started to catch on to the scheme.
In December 2024, TRICARE, the well being insurer for service members, suspended funds to Zynex “based upon credible allegations of fraud and its audit of Zynex’s billing,” in response to Sandgaard and Lucsok’s indictment. That transfer represented an enormous blow to the corporate’s enterprise, as TRICARE accounted for 1 / 4 of its income.
Other payors additionally stopped reimbursing Zynex.
Allstate, in September 2025, stated it had paid out greater than $3 million in bodily harm claims to Zynex based mostly on “false and fraudulent records,” the insurer alleged in a federal lawsuit filed in New York.
Zynex, the insurer stated, “abused Allstate’s claimants’ insurance coverage by billing for (durable medical equipment) that” Zynex “had no legal right to collect.”
Sandgaard and Lucsok hid TRICARE’s suspension till March 2025, federal prosecutors stated. After the news got here out, Zynex’s stock dropped by 51% in someday, dipping to $3.41 per share from $7.
Two days after the disclosure, Sandgaard offered $4.8 million of his stock, regardless that the corporate couldn’t afford to purchase it again, the indictment states.
Records present Sandgaard and the corporate as a complete suffered from severe monetary woes.
Between 2015 and 2025, the Zynex founder personally racked up greater than $321,000 in unpaid taxes to the Colorado Department of Revenue, courtroom data present.
In December, Zynex filed for Chapter 11 chapter safety, itemizing belongings of greater than $45 million and money owed exceeding $86 million. Among the collectors: U.S. Bank (owed $61.75 million), TRICARE (owed $2.77 million) and the Polsinelli legislation agency (owed $1.14 million). Maloney can be listed with an “undetermined” declare.
On Jan. 14, a federal grand jury in Rhode Island indicted Sandgaard and Lucsok on expenses of conspiracy to commit mail, well being care and securities fraud, amongst different counts.
Federal prosecutors alleged what sufferers, Zynex staff and insurance coverage suppliers had been saying for years: The firm was billing for and sending individuals units and provides that they didn’t request and didn’t want.
The firm collected greater than $873 million for its merchandise, together with greater than $600 million for provides, “the vast majority of which were the result of fraud,” the federal government alleged.
Between them, Sandgaard and Lucsok used their sizable earnings to pay for a personal jet, a Lamborghini, the McLaren sports activities automobile, beauty procedures, actual property and the British soccer membership, investigators stated.
“This case represents a troubling abuse of patients seeking care, as well as the federal health care benefit system,” U.S. Attorney Charles C. Calenda stated in a press release saying the fees.
On Feb. 17, the Justice Department introduced Zynex had signed an settlement to keep away from prosecution, admitting to the long-running scheme. Zynex additionally agreed to pay as much as $12.5 million in fines and forfeit all unpaid claims.
Sandgaard and Zynex additionally face quite a few lawsuits from insurers, sufferers and shareholders, who say they had been duped by the Colorado firm.
For sufferers who used Zynex units and staff who labored for the Englewood firm, the indictment represented an unsurprising flip of occasions, whereas additionally serving as validation that their suspicions weren’t mistaken in spite of everything.
“What they were doing was shoveling as much money into their own coffers as possible,” stated Houk, the affected person who stored getting billed. “It was utterly relentless. A lot of people got hurt by this.”
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