Medical device manufacturer to pay up to $12.5 million in fraud settlement

In a recent development, medical devicemaker Zynex has agreed to a nonprosecution agreement with the U.S. attorney’s office for the District of Rhode Island. The company has admitted to participating in a conspiracy involving healthcare fraud, securities fraud, mail fraud, and other violations.

As part of the agreement, which is pending approval by the bankruptcy court in Zynex’s ongoing Chapter 11 proceedings, the company will pay between $5 million and $12.5 million. The actual amount will depend on its earnings and profit during the agreement period, as outlined in a news release by the Justice Department on Feb. 17. Zynex will also forfeit all unpaid claims submitted before Sept. 1, 2025, including those from the period when Tricare payments were suspended.

The forfeited claims include over $85 million charged to Tricare during the suspension period and more than $13 million billed to other payers and patients. Zynex garnered more than $873 million for its products during the relevant period, with over $600 million in revenue coming from supplies—most of which resulted from fraudulent activities, according to the facts presented in the agreement.

The company has acknowledged that it shipped and billed for excessive quantities of medically unnecessary supplies, such as 32, 64, or even 128 electrode pairs per patient each month. Additionally, the company misled investors by withholding information that its revenue was primarily generated through fraudulent billing practices.

This resolution underscores the importance of maintaining ethical standards and adhering to legal requirements in the medical device industry. It serves as a reminder of the severe consequences that can arise from engaging in fraudulent activities, not only for the companies involved but also for the patients, payers, and investors impacted by such behaviors.

Moving forward, Zynex will need to comply with the terms of the nonprosecution agreement and work towards rebuilding trust with stakeholders. This case also highlights the critical role of regulatory oversight and enforcement in ensuring the integrity and credibility of the healthcare system. By holding companies accountable for fraudulent practices, authorities can help protect patients and uphold the ethical standards expected in the industry.