Reposted from Wal-mart Watch:
WAL-MART DROPS SHANK FAMILY’S DEBT
Wal-Mart Drops Injured Worker Claim [Associated Press via CNN Money]
Wal-Mart Stores Inc. is dropping a controversial effort to collect over $400,000 in health care reimbursement from a former employee who is confined to a southeast Missouri nursing home since she suffered brain damage in a traffic accident.
The world’s largest retailer said Tuesday in a letter to the family of Deborah Shank it will not seek to collect money the Shanks won in an injury lawsuit against a trucking company for the accident.
Wal-Mart’s top executive for human resources, Pat Curran, wrote that Shank’s extraordinary situation had made the company re-examine its stance.
Deborah’s husband Jim Shank welcomed the news. Family lawyer Maurice Graham of St. Louis said Wal-Mart deserves credit for doing the right thing.
“It’s a good day for the Shank family,” Jim Shank said in a statement.
Wal-Mart has been roundly criticized in newspaper editorials, on cable news shows and by its union foes for its claim to the funds, which it made in a lawsuit upheld by a federal appeals court.
Insurance experts say it is increasingly common for health plans to seek reimbursement for the medical expenses they paid for someone’s treatment if the person also collects damages in an injury suit.
The practice, called “subrogation,” has increased since a 2006 Supreme Court ruling that eased it.
Wal-Mart’s Curran said the retailer was required by the rules of its plan to seek reimbursement from the Shank’s settlement. But she said the case has made Wal-Mart revise those rules to allow for flexibility in individual cases.
“Occasionally others help us step back and look at a situation in a different way. This is one of those times,” Curran wrote in the letter.
Shank, 52, lost much of her memory and ability to communicate or walk in a crash between her minivan and a tractor trailer in May 2000. Her family sued the trucking company and won $700,000. Court records show that after attorney’s fees and costs, the remaining $417,477 from the settlement went into a trust to care for Shank.
The fund now has about $270,000, the family said.
Shanks’ health insurance was through Wal-Mart, where she worked nights stocking shelves. After the Shanks won their lawsuit, Wal-Mart sued the Shank family to recover medical costs totaling about $470,000.
Wal-Mart won its case and subsequent appeals by the Shanks that went as far as the Supreme Court, which closed legal avenues this month by declining to hear the case.
During the case, the Shanks also lost one of their three sons when Jeremy, 18, was killed in Iraq last year while serving in the Army.
The case put a spotlight on the growing use of reimbursement claims by health plans, experts say.
Roger Baron, professor of law at the University of South Dakota and a specialist in health-plan law, said health plans have become “very aggressive” about subrogation since the 2006 Supreme Court decision.
“It’s free money. They want the free money,” Baron said.
Lynn Dudley, vice president for policy at the American Benefits Council in Washington D.C., said the negative publicity around the case was beginning to draw the attention of lawmakers who might want legislation to stop or limit subrogation.
“Capitol Hill is paying attention,” Dudley said.
Baron said Wal-Mart’s size _ it is the nation’s largest nongovernment employer, with over 1.3 million workers _ means that its willingness to compromise in an individual case may have a wider impact on reimbursement practices by other health plans.
“I’m so pleased to see an element of reason because so much of this subrogation has been about just blindly going after the money,” Baron said.
Posted by Alex Goldschmidt on Tuesday, April 01, 2008
4 comments:
I think Wal-Mart made a good gesture by dropping the case against the Shank family, but I also feel that the coverage of this story was extremely biased and did not accurately portray why Wal-Mart was trying to recoup this money. First of all, I don't particularly care for Wal-Mart and I never shop at their stores, but I'm one of those people who like to get both sides of the argument.
I used to work for a Health Insurance company and we would recoup money we paid previously if the patient won a suit. Usually the judge orders the liable party to pay for the medical expenses, and if the insurance company already paid, they have the right to get the money back (they usually take it back from the Hospital though, not the patient directly). This might seem unfair, but if the insurance companies did not recoup this money, they would eventually have to raise the premium prices of all their members even more to make up for the money they paid that another party was obliged to pay by law. Now $400,000 is not so much for Wal-Mart, but if they were not allowed to recoup any money after a lawsuit, the premiums for Wal-Mart employees would rise even more.
In this instance where Mrs. Shank needs to have constant and expensive medical care (which is usually not covered under normal health plans), the money that would have been recouped is probably going to go to her medical treatment. However most of these cases involve injuries that are less complicated, like broken bones, which have an end to the medical treatment. In these instances I feel that the Insurance Company or Employer should be reimbursed for a charge they are not liable for, which in the long run helps keep the cost of premiums as low as they can be (I know they are rising everywhere). After all, the judge said that part of the money needs to go to paying the medical bills, not for a new car or house for the plaintiff.
Hello Greg,
I can understand the argument about wanting to re-coup the medical expenses to keep premiums from going up.
My biggest concern, however, is with the purpose of health insurance. Perhaps I don't understand it correctly, but I have always thought that the reason for paying premiums is to be able to not have to pay for the medical treatment myself, should I eventually need it.
If I understand you correctly, I think that we are essentially on the same page. I think that it is fair for the insurance company to recoup money from a third party, but only if it is money above and beyond what will be needed for the treatment of the victim / insured person. The victim should not be forced to carry the burden of the court costs and still have to give up all of the money to the insurance company if that means being stuck with additional medical costs to pay privately.
Bottom line: the victim should not be financially worse off as a result of actions of the insurance company than he or she was before the injury.
Hi Karen,
Yeah, it does seem we're on the same page about this issue, but I wanted to clarify one other thing. You said that the insurance company should not leave the victim should not be burdened with any costs that might occur if the amount won was less than total costs, and they usually don't. Once all the money from the suit has been spent, the Insurance company must start to pay for the medical expenses again by law, but only the ones that are covered under the policy. Like I said, Mrs. Shank needs long term care for the rest of her life, and most policies don't cover this type of care. I'm glad that they decided to drop the case against the family because they're going to go through the remainder of the money pretty quickly. Although, if Wal-Mart really wanted to be nice and try to improve their image a little more, they would have offered to pay for her long term care as well.
Greg,
The way I look at is, any money that is meant to re-imburse for medical costs can go to the insurance company, but money paid for pain and suffering, loss of wages, direct compensation for physical injury (basically, paying her for her damaged brain) should have been off limits.
The fact that they can just take it all and it is legal...and it is only because they were given a PR black eye that they backed off...is rediculous.
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