Former employee recounts alleged Zynex fraud, one executive out on bond: "They lied to us"

Two executives of a Colorado-based medical device company are still awaiting their day in court.

Former Zynex CEO 67-year-old Thomas Sandgaard of Castle Rock and former COO 39-year-old Anna Lucsok of Denver have been indicted with multiple counts of fraud in an alleged scheme to collect more than $873 million.

A former Zynex employee shared her story with CBS Colorado. She asked that her identity be hidden for fear of retaliation. The woman spent years working with Thomas Sandgaard and Anna Lucsok.

"When Thomas is slighted, he goes for blood; he goes after and tries to ruin that person," the former employee said.

As a Zynex territory rep, she sold NexWave pain management devices to doctors and patients.

"At first, it was the best thing that ever happened to me," the woman said. "They basically told us to say you won't pay more than $250 so that these people would fill these orders."

But soon patients began complaining of high bills and receiving supplies they never asked for.

"Eight hundred dollars, $1,200, $2,000," the woman said. "It was overbilling insurance and sending egregious amounts of supplies, and also, when insurance didn't pay, intimidating patients to get them to pay."

The woman says she brought her concerns to her superiors.

"At first, they told me, it's a fluke, we'll take care of it. And then I heard from other reps that it was happening to them too," the woman said. "I had doctors saying you lied to me. I'm like, no, I didn't. They lied to me... like they lied to us."

She says after Lucsok told her to stop talking to patients or other reps about the issue, she decided to leave Zynex.

"I just said to Anna, I said, 'You've got to fix this issue with patients and being billed like this has to stop. I can't stay if this doesn't stop,'" the woman said. "I left, and I took a huge, huge hit to my financial security, but I just felt like I had to."

Sandgaard and Lucsok now face multiple fraud charges. A federal indictment alleges they orchestrated a scheme to ship excessive, unnecessary medical supplies to patients and fraudulently bill patients and insurers millions of dollars.

"It was like vindication, like I wasn't crazy, I wasn't crazy, I knew," the woman said.

Zynex has reached a non-prosecution agreement with the DOJ, where they will admit to fraud and pay between $5 million and $12.5 million.

The company says under new management, they've already done an overhaul of business practices and put new controls in place.

A spokesperson for Zynex shared the following statement with CBS Colorado:

"The US Department of Justice has specifically recognized the company's substantial turnaround and our recent remediation of the business practices that caused problems for patients, payors, and regulatory bodies. 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. We have completely broken from the past and look forward to closing this chapter and making an important contribution to the healthcare needs of Americans living with chronic pain."

The former employee told CBS Colorado she believes the device has the potential to save lives, but the way the former Zynex executives went about selling it was wrong.

"That's the sad part, like the vision, I still to this day believe in it," the woman said. "The device works. It does. They could have done this above board and just made less money."

Sandgaard is still in federal custody, but Lucsok is out on bond. Her attorney says she will be pleading not guilty and looks forward to her day in court.

CBS Colorado was not able to reach Sandgaard's attorney for comment.

"It was very hard for me to leave. I make significantly less money now, but I sleep at night," the former employee said. "Now I just want accountability."

The arraignment for both defendants is on March 30.