Wal-Mart goes after disabled ex-worker's settlement

[ikojo]

This lady's husband works three jobs and greedy ole Wal-Mart is going after what must be pocket change to theh Walton family. Working in insurance I know all about the pay and pursue policy (the insurance company will pay the medical bills generated as a result of an accident and then pursue the auto insurance for any payments they made). Insurance companies also have what is called reinsurance wherein they are reimbursed for really high bills such as those arising from catastrophic events such as an accident or illness.



http://www.stltoday.com/stltoday/news/stories.nsf/stlouiscitycounty/story/C2286642D5D8A4AD862570FD0019778A?OpenDocument

When Wal-Mart sued a disabled former employee in June to recover what it spent on her medical care, the retailing giant said it was just meeting a filing deadline and had not necessarily decided to ask a judge for the money.

snip

If the suit prevails in federal court in St. Louis, it would force Debbie Shank, of Cape Girardeau, Mo., to repay the more than $417,000 she won in a suit over a car wreck unrelated to work - plus the $51,000 her lawyer got. Her husband and lawyer said it would drain the trust fund set up for her care and burden the taxpayers with a larger share of her nursing home expenses.

snip

"Unfortunately, it's just not feasible to start making individual exceptions. Not everyone will understand this, and I'm sure that we will get a fair amount of criticism."

snip

His health insurance pays for some of his wife's care, he said, as well as Medicare and Medicaid. Jim Shank does maintenance and risk management work at Southeast Missouri State University and has part-time jobs in real estate sales and at a department store.

[Vinca]

1. And yet Walmart puts those schmaltzy ads on the tube -

the employee who got a liver transplant, the employee who bought a home while deployed in Iraq, etc., etc., etc. Greedy bastards.

[ComerPerro]

2. But, the taxpayers are supposed to take care of Wal-Mart employees

not Wal-Mart. That's one of many ways they keep their prices so low. Their employees are on government assistance.

[bluestateguy]

3. Could this couple move to another country?

Brazil maybe? Somewhere where Wal-Mart's predators won't be able to touch them?

[kurth]

4. Wal-Mart managers are evil bastards

Every goddamned one of them, from store management and above. Most people don't realize that Wal-Mart treats their management very well in terms of salary and benefits - at the expense of their employees and taxpayers.

[SPKrazy]

16. kick n/t

[Deja Q]

5. Exterminate the weak. The credo of a former power, circa 1938!

And has been said, wallyworld tries to hype up big pro-community messages. *bzzt* Their actions override their words.

"But the reality is that we are required to protect the assets of our health plan so that it can pay the future claims of other associates and their family members.

"Unfortunately, it's just not feasible to start making individual exceptions. Not everyone will understand this, and I'm sure that we will get a fair amount of criticism."

Of course we don't understand! They are paying assets right now. So their plan is to ditch "risks" so they can pay "future claims" (before ditching those new "risks"). It's as simple as that. And walmart is too cowardly to say it, hence this bullshit about not being able to understand. Seems quite the contrary; most of us know that rates go up on companies whose employees make use of it. It's little different than auto insurance; one wreck (your fault or not) and premiums jump up. Duh.

[acmejack]

6. Alice Walton, Net Worth $18 Billion

Just pointing out how she needs the money desperately.

[Poppyseedman]

7. The family got $900,000 and

Their lawyer got $51,000

This story should be about the piss poor lawyer who gave them terrible legal advice. He could have and should prevented this travesty.

Wal-Mart is just protecting themselves from future lawsuits. It still leaves a bad taste in my mouth, though

[salin]

8. So what is the point of insurance?

If the companies are going to challenge paying legitimate claims? More and more it seems that for some companies insurance has become a racket - take payments (premiums), but leave the payees (or those for whom it is paid) with only a "chance" of being covered.

[ikojo]

9. Wal-Mart like many employers is self funded

and as such they are not beholden to many regulations that arose out of ERISA. They can and do go after people who have had settlements. I've worked in insurance for many years and in most insurance companies there is a whole department whose job it is to follow up on all accident related claims to determine whether a settlement has been made. Most of the time this happens in the background, meaning the hospital or physician simply sends the health insurance company a check, but in some instances when payment was made directly to the accident victim the insurance company goes after that person. Then it gets ugly.

[Poppyseedman]

10. I hurt my knee jogging on my thread mill several months ago

and the medical insurance company called me at least 5 times and sent me 4 letters asking me if I was hurt on the job (workers comp} a car accident {auto insurance} working on my house {home owners ins}

I certainly understand that they would ask, but it got to be ridiculous. I finally told them stop calling and asking me before I sue them for harassment.

[ikojo]

11. After several attempts at finding out whether

payments have been made, claims are denied and not paid.

What irks me is that insurance companies take out insurance (reinsurance) to cover really high claims such as those related to AIDS, cancer and other catastrophic events.

[Indykatie]

12. Settlement Could Have Been Structured Differently

Walmart is entitled to what they paid (less "reasonable attorney fees") for medical care under typical subrogation clauses. Companies routinely settle for less though. I have seen a settlement where none of the payment was tied or related to medical costs. I thought that the reason for this was to escape repayment for previous payments made by a group employer plan. This is not a evil Walmart practice. I'm sure there are plenty others though.

[Coyote_Bandit]

13. Hmmmmmm

"Working in insurance I know all about the pay and pursue policy (the insurance company will pay the medical bills generated as a result of an accident and then pursue the auto insurance for any payments they made). Insurance companies also have what is called reinsurance wherein they are reimbursed for really high bills such as those arising from catastrophic events such as an accident or illness."

I too have worked in insurance. At one time I supervised claims handling and litigation in a five state area. I also have extensive experience in reinsurance treaties and reinsurance accounting. I have had an inside view as an innocent observer of more than one insurance company (not my own employer) going under (due to an embezzlement at another company) and I have been subpoenaed as a witness in some high dollar reinsurance litigation.

The "pay and pursue" policy you refer to is called subrogation. Subrogation is what makes it possible for an insured's full coverage auto carrier to proceed with claim handling on on behalf of the insured even though liability for the damages clearly rests elsewhere. Insurance companies proceed in handling these claims with the expectation that they will be able to recover funds from the party with whom liability ultimately rests. The same policy is applicable when an insured's health insurance carrier pays for care resulting from injuries arising from somebody else's automobile negligence. When an insurance company subrogates all it is doing is collecting monies that it has already paid out from another party who was in fact responsible for the loss. Without the ability to subrogate premiums would be much much much higher.

When the funds that are available for or through subrogation are less than the damages for a particular loss then they are prorated among the claimants. Assume a driver has $100,000 in liability coverage and no personal assets to satisfy his liability. He is completely at fault in causing an accident that injures three people but causes no property damage. Damages total $200,000 with person A and person B having $50,000 damages each and person C having $100,000 damages. The funds that are available will be prorated with A and B receiving $25,000 each and C will receive $50,000 - with each victim responsible to pay their own attorney fees and costs out of their portion of the settlement.

Insurers typically have standard claim handling policies - including policies on subrogation - that they follow with very little variation. Why? Because whenever a claim is litigated they are often expected to produce those policies and account for any exceptions in claim handling policy. The concern of course is that claimants and policyholders be treated equitably and comparably. Variations in policy even for the best of reasons can easily be used to impugn the motives and practices of an insurer. It is not personal.

In the present case, Wal-Mart will likely receive only a very small portion of the funds that are available and have already been paid - if they receive any funds any at all. They will claim reimbursement of all funds that were expended on behalf of the victim. But the funds that were actually recovered should be apportioned between Wal-Mart and the victim based on the damages suffered. The victims damages are ongoing and far in excess of the funds collected. The end result may be little more than the legal recognition that Wal-Mart - as the provider of health coverage for the injured party - does have a valid claim for funds it expended - even if those funds cannot presently be collected. This may be important because additional assets may be found to satisfy the liability. It is not completely inconceivable that the person who bears liability may buy a winning powerball ticket, receive an inheritance or otherwise come into assets before the statute of limitations expires for collecting damages. This of course assumes that plaintiff's counsel represented his clients interests and structured the damages in such a way that the interests of both the injured party and her health insurer were legally recognized. Which raises the question as to why Wal-Mart as her health care provider was not a party to the original litigation. They legally had a legitimate financial interest through their right of subrogation and clearly should have participated in the original case.

Now lets look at the way in which reinsurance is typically accounted. Lets assume the insurance company has a 90/10 reinsurance treaty. That means for every 100 pennies of premium that the company collects that 90 are reinsured - and 90 of those pennies are paid out to reinsurers (and that is typically a group of companies not a single reinsurer). The purpose is two fold. First it spreads the risk of a particular book of business among several companies and, second, it enables the company to write more coverage than it might otherwise be allowed to considering its individual financial strength. Claims are accounted for in the same proportions. The basic process is that a policy is written and premium is collected; premium is accounted for and appropriate payments made among the insurance companies usually on a monthly basis; when claims occur liability rests first with the company under whom the policy was written and that company then acknowledges and accounts for claims paid in is monthly reinsurance reports - offsetting claims paid against premiums collected. This is true for all claims.

Most insurance companies also have catastrophic loss reinsurance treaties. For these treaties to take effect the NAIA has to declare that there has in fact been a catastrophic loss. Catastrophic losses are declared for things like hail storms and tornadoes and other kinds of things that are widespread and affect many policyholders. While individual claims may certainly be "catastrophic" to the individuals involved that alone is typically insufficient to activate catastrophic loss reinsurance coverage. The primary exceptions to this are individual commercial liability policies that are structured with layered coverage (company A covers liability up to $x, company B covers liability above $x and up to $y, and company C covers liability above $y and up to $z with anything above $z being considered a catastrophic loss with companies A, B, C and the cat loss insurers participating in offering coverage).

I'm not defending Wally World but my experience and knowledge of the legal profession, claim litigation and the insurance industry tell me that there is more to this story than meets the eye.

I personally have observed litigation where the legal fees topped $1 million. That involved cross country travel, the payment of multiple court appointed arbitrators, rental of additional office space for the sole purpose of handling one particular case, ongoing motions and discovery over a three year period, the use of multiple expert witnesses, counsel associated to consult from multiple firms in other states, the investment of time on behalf of multiple firm attorneys and a senior paralegal devoted entirely to the handling of the case.

If you want to raise a really good question then perhaps it would be nice to know just exactly what justifies the litigation expenses involved in this case. My first impression is that the plaintiff's attorney did a remarkably poor job of managing - and trying to limit - those expenses. It would seem that those expenses represent nearly half of the sum recovered - while attorney fees represent a mere $50,000. Counsel should have had some reasonable idea of what kind of recovery could have been expected based upon available insurance coverage and the lifestyle and status of the defendant within society. Zealously representing a client should not mean winning even at the cost of depleting most of the recovery available to the client. Such behavior serves primarily the interest of counsel and those he employs - and sacrifices the interests of the client. What occurred here seems excessive to me.

I would also note that the attorney fees here represent a percentage far below what is standard in contingency fee cases (usually ranges from 25% to a high of 50% if cases are litigated and pursued through appeals processes) which causes me to suspect that the litigation expenses claimed at least partially represent expenses claimed by counsel rather than direct cost of litigation. If that is the case then there is a question whether the attorney structured the expenses in order to limit his own tax liability. In other words it seems possible that the structure of litigation costs and fees could possibly be a tax avoidance scheme. One would have to review the detail of the costs claimed to make that determination.

And there is also the question whether the attorney could have negotiated a settlement that resulted in his client receiving more funds - at the cost of his own recovery of fees and expenses. Attorneys typically charge higher contingency fees for cases that they litigate than for those they settle through negotiation.

Also, an insurance company in a case with damages such as this would typically tender their policy limits in order to reduce costs and avoid incurring any additional legal expenses of their own - assuming there was clear liability. If there wasn't clear liability then the person who was injured may well have been partly or perhaps mostly at fault for the accident. Determination of liability would be the only valid reason to litigate this claim in my opinion. And that determination and allocation of damages is dependent on the legal doctrines of contributory and comparative negligence - which vary from state to state. It would be interesting to know just exactly what occurred in this accident.

To me at least there is clearly much more involved in this situation than what is being reported.

[bluestateguy]

14. Is there a translator of corporate bureaucratese here?

Good Lord.

[SPKrazy]

15. Wal Mart Hires US Attorney (B*sh appointed) for Compliance

http://newsblaster.cs.columbia.edu/archives/2004-01-10-15-35-27/web/NBproxy.cgi?sentence=98

This guy, Tom Gean was the US Attorney in the Western District of Arkansas where Wal Mart Corporate offices are located. He is a B*sh appointee, hard core right winger, member of the First Baptist political club.

His office served the warrants on Wal Mart when they were charged with hiring illegal immigrants to work.

I heard from his father, Roy Gean Sr., that Tom, after going to Wal Mart and publicly saying he would have nothing to do with the illegal immigration case, "made the deal" with the government that cost Wal Mart $11 million, about 20 minutes of Wal Mart operating profits.

Of course, I heard this from Roy Gean Sr. in a health club sauna where he was bragging on his son.

All of this makes me wonder what kind of legal ethical problems Wal Mart has to hire the attorney serving the warrants (not the one conducting the investigation, he was out of Pennsylvania) and then have him quietly making the deals with the government after going to work for Wal Mart.

Wonder if he has anything to do with this suit.

Moral people these Wal Marters.