Get in an accident, become permanently brain damaged and wheelchair bound, then have your employer sue you for the damages you won from the culprit. That’s what happened to Deborah and Jim Shank:
Collision with a semi-trailer truck seven years ago left 52-year-old Deborah Shank permanently brain-damaged and in a wheelchair. Her husband, Jim, and three sons found a small source of solace: a $700,000 accident settlement from the trucking company involved. After legal fees and other expenses, the remaining $417,000 was put in a special trust. It was to be used for Mrs. Shank’s care.
Instead, all of it is now slated to go to Mrs. Shank’s former employer, Wal-Mart Stores Inc.
Two years ago, the retail giant’s health plan sued the Shanks for the $470,000 it had spent on her medical care. A federal judge ruled last year in Wal-Mart’s favor, backed by an appeals-court decision in August. Now, her family has to rely on Medicaid and Mrs. Shank’s social-security payments to keep up her round-the-clock care.
Now it’s easy to think this is just another example of the evils of Wal-Mart, but several paragraphs down in the article it’s made clear this is becoming a standard [practise for all companies offering healtcare plans:
Until recently, many employers didn’t vigilantly enforce the provision, and some states and federal courts didn’t think the claim held water. But as the cost of covering workers continues to escalate, employers and health plans are getting more aggressive about going after the money. A Supreme Court ruling last year also has given them a clearer legal map to suing employees and winning.
In insurance circles, the recovery practice is called “subrogation.” Employers and insurers say it’s necessary to ensure that medical expenses aren’t paid twice. By recovering those costs from someone who’s been compensated elsewhere, they argue, they’re saving money for everyone on the plan.
In other words what employers give with one hand in healthcare coverage they take away with the other when they can. This is presented as being in the interests of the workers covered, because otherwise coverage charges would rise –that profits could instead drop a little is out of the question of course. Here’s what bugs meL: the money the shanks got in compensation was never meant to pay the medical bills covered by their healthcare insurance, but to pay off those parts not covered, as well as the lifelong care ms. Shank will need. Is Wal-Mart now going to cover these expense? Not likely, so why are they entitled to this money?
Do read the comments to this story as well. Very illuminating.
Palau
March 26, 2008 at 7:11 amI hate to say it because it’s produced an unjust outcome, but it is usual where there is cross coverage for what’s been spent to be clawed back from the award. The trustees or administrators of the health insurance have a fiscal duty to minimise loss to the funds. It’s a principle that goes across all insurance law, not just health insurance.
Whether the compensation awarded was meant to recompense for expenses not covered by the insurance is neither here nor there: the idea is that the claimant does not make a ‘profit’ from a cross-claim and on the face of it they did make a profit. similarly, if you totaled your car and your work paid for a replacement, you wouldn’t expect to then pocket the insurance payout and keep the free car.
Yes, I know money put into a trust for future care isn’t a profit as such, but we’re talking insurance law here, not humanity.
Martin Wisse
March 26, 2008 at 8:01 amOh yeah, I know the law was handled correctly here, it’s just that this is a “the law is an ass” situation.
Rob
March 26, 2008 at 11:16 amOkay all of you stupid sheep – why do you buy in to the media’s clear effort to take a cheap shot at Wal-mart. We obviously do not have all of the facts. Why did her lawyers settle for only $1 million? Perhaps it was Ms. Shank who caused the accident by pulling out in front of the truck and the trucking company only paid $1 million to avoid another stupid “McDonald’s hot-coffee” type of verdict. What if Ms. Shank had been drinking and crossed the center line into the path of the truck? Would you all still feel the same way then? EVERY policy of insurance has a subrogation clause. If they pay money on your behalf, and you get a settlement, their entitled to the money by contract! She wasn’t tricked into signing something, it’s in the policy. If you don’t know what’s in your insurance policy, then you’re an idiot. Losing her son in Iraq is an irrelevant issue to this matter. Sure it’s tragic and sad, but it has nothing to do with Wal-mart or their health insurance carrier going after their contractual lien. It’s simply inflammatory information trying to get you more pissed off at Wal-mart! The only persons who ever win in these situations is the lawyers. Lawyers run and rule this country. Lawyers make the laws, lawyers enforce the laws, lawyers are your senators, congressmen, and presidential candidates. Why is no one railing against these bloodsuckers who took a $500,000 fee from this gal. They didn’t represent her, they used her to pay their country club membership and buy a new Mercedes. Walmart, like most employers, probably pays in the area of $500 to $1000 per month per employee for group health insurance in addition to the $100 or $200 you have to contribute out of your paycheck. Do you think that isn’t a benefit? Have you ever gone out and bought your OWN health insurance? I am sick and tired of the naivete of whiny Americans who buy into whatever plate of crap some talking head is dishing to them. Quit being spoon-fed your opinions on the “evil” corporate america and learn to think for yourself. Is her condition tragic? Absolutely. Do we sympathize with her? Undoubtedly. Is Wal-mart entitled to the settlement proceeds? They certainly are. Maybe she should sue her stupid lawyers for malpractice – now THAT would be justice!!
Michelle
March 26, 2008 at 2:59 pmI know Wal-Mart bashing is fun, but is its really within its rights here. Since the trucking company was at fault, why should Wal-Mart foot the bill? Her attorney should have known that Wal-Mart would assert a subrogation claim and should have gone after more money. Also, does it seem right that someone could get injured, bring a lawsuit claiming medical expenses, and then eventually be compensated for those medical expenses – expenses that were paid by someone else?
Joe
March 26, 2008 at 5:54 pmPer the WSJ article, Wal-Mart had sent “Mr. Shank several notices that he was to inform Wal-Mart’s health plan BEFORE he settled any suit” (I capatalized BEFORE). The Shanks — probably under bad advise from their attorney — chose to settle without first contacting Wal-Mart thereby removing Wal-Mart’s opportunity to help fight for a larger settlement from the trucking company that caused the injury in the first place. The real bad guy here is the attorny who (a) should have been aware of the subrogation clause in the health care policy (it’s in all of them, not just Wal-Mart’s), (b) gave bad advise to his clients, (c) charged them a huge fee, (d) is now trying to blaim Wal-Mart, and (e) is not offerring to return any of his fee to his clients.
JoeBuddha
March 27, 2008 at 3:01 amIt’s more like enforcement of clearly inadequate medical coverage. Gods forbid you get a little extra to cover the fact that your insurance isn’t cutting it. Would WalMart be able to recover funds from any supplimental insurance you might have?
JoeBuddha
March 27, 2008 at 3:02 amOh, and it clearly IS another example of the “evils of WalMart” IMHO…
Palau
March 27, 2008 at 12:40 pmI think the larger issue that comes out of this is the US’ crying need for single payer health insurance – that and just how fast Walmart gets its sockpuppets on the case when a negative blogpost appears:)