Wal-Mart insurance company sues employee for having legitimate claim

[TechBear_Seattle]

As if we need yet another reason to hate Wal-Mart. This information comes from today's Wall Street Journal. It requires a subscription, so allow me to summarize.

Seven years ago, Deborah Shank was in a collision with a semi-trailer truck. The accident left her permanently brain-damaged and confined to a wheelchair. The family sued the trucking company and was awarded a $700,000 settlement. After legal fees and other costs were deducted, the remaining $417,000 was put into a trust fund to cover Shank's on-going medical care.

Now, her former employer Wal-Mart is suing her to reclaim the nearly $470,000 in medical costs their insurance company paid her before the settlement. This last August, an Eighth District Court ruled in favor of Wal-Mart (see ruling.) The matter is being appealed to the US Supreme Court, but based on the 2006 ruling in http://en.wikipedia.org/wiki/Sereboff_v._Mid_Atlantic_Medical_Services%2C_Inc.">Sereboff v. Mid Atlantic Medical Services, Inc., which allows insurance companies to recoup costs in these kinds of situations, it is very unlikely that the appeal will be heard.

This is apparently allowed by the fine print of the company's insurance contract with the employees. The WSJ article describes a clause called "subrogation," which allows insurance companies to recoup the medical expenses it paid for someone's treatment if the person also collects damages in an injury suit. That recovering these expenses will leave the person destitute and without necessary medical care is apparently irrelevant. Such clauses have been around for years, but the Sereboff decision has finally allowed them to be enforced. Not surprisingly, Wal-Mart is one of the first companies to step up and claim this tort bonus.

[hlthe2b]

1. Then it seems Walmart's insurerer would owe the approx

$300K in legal expenses required to gain that settlement. :shrug:

I hope something happens to make this a just situation for this person...

[annabanana]

4. Yup - (those damn "trial lawyers")

"trial lawyers" are the only friends an ordinary person has....

[hlthe2b]

8. I'm not criticizing the lawyers that helped her win the settlement.

Only saying if Walmart is going to capitalize on her lawsuit, they absolutely need to pay her the legal fees..:shrug:

[underpants]

2. Scum

I know I know it is legal but seriously is there no penny that they don't need? From the brain damaged?

[meegbear]

3. Did Ms. Shank or her family actually sign this document?

It was reported a bit back that Wal-Mart was taking out life insurance policies on employees with Wal-Mart as the beneficiary.

If this is the case, I would think, well, like to think anyways, that it would be voided.

[eFriendly]

5. Every Wal-Mart in this country should be burned to the ground.

But that is just my two cents.

[CrispyQ]

6. "We want it all."

That is the prevailing attitude of the corporations & the rich in this country. They won't be happy until they have squeezed every last dime out of the working class & have it all for themselves.

[mainegreen]

7. Subrogation is common to all insurance. This is not wal-mart specific.

Not defending wal-mart here, but lets be clear: this is *not* a wal-mart thing. This is an insurance thing. A very, very common insurance thing.

[TechBear_Seattle]

10. As the article I read made clear

However, I am not at all surprised that Wal-Mart should be the first company to go after a disabled employee after the Supreme Court ruled that subrogation is legal and enforceable. Particularly in the case cited, I think it is despicable.

[iamahaingttta]

9. Whew!!! I almost bought something at Walmart...

...the other day. That was close!

I was visiting America (from New York City) and it was pouring rain all day. I'd been meaning to buy a raincoat, and hadn't gotten around to it. I decided I was going to buy one that day, and Walmart was the only place for miles. I held my nose and went in and looked around in the men's clothing and sporting goods sections. Luckily, there was nothing even remotely appropriate, and I quickly left the store. Yes, I got pretty wet later that day, but it was a cleansing rain!

It was actually kinda interesting and more than a bit sad going into a Walmart. It's something I've only done maybe a dozen times in the past, and it's been a while. Walmart customers ARE the American peasantry. And they don't even know it. These are what peasants look like in a 21st century post-industrial nation. They're not a bad sort, but they look very unhealthy. Everybody I saw in that store looked overweight and pasty, pale and slow moving. The few little bits of conversation that I overheard were inane or just plain ridiculous. I noticed one lady with a crazed look in her eye while looking at batteries. It was just all so weird! That's alright, I'm sure those "Murikans" would think something similar if they were to see me and my friends in our natural habitat.

I'm glad I didn't actually give Wally any of my money. This article shows one more layer of their evil. Too bad their customers (and employees) are such a huge bunch of suckers. Sorry to any fellow DUer's who work or shop there. It's not your fault they are such an evil corporation. Just please - stop enabling them!!!

[RamboLiberal]

11. With the Thanks of a Grateful Wal-Mart nation

:sarcasm: I say this because the Shank's son was killed in Iraq. BTW, the article is available online.

The ruling came six days before the Shanks' 18-year-old son, Jeremy, was killed in September last year in Iraq shortly after he arrived in the U.S. Army's 25th Infantry Division.

-----

The reason is a clause in Wal-Mart's health plan that Mrs. Shank didn't notice when she started stocking shelves at a nearby store eight years ago. Like most company health plans, Wal-Mart's reserves the right to recoup the medical expenses it paid for someone's treatment if the person also collects damages in an injury suit.

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.

Sharon Weber, a spokeswoman for Wal-Mart, declined to discuss the details of the Shanks' case, but said the company was obliged to act in the interest of the health benefits of its employees as a whole. "While the case involves a tragic situation, our responsibility is to follow the provisions of the plan which governs the health benefits of our associates," she said.

http://online.wsj.com/article/SB119551952474798582.html?mod=hpp_us_pageone

[TechBear_Seattle]

12. Thanks. I looked, but only found the "by subscription" version. n/t

[Kingshakabobo]

13. My first question is why didn't the employee's attorney address this?

The judgment or settlement stunk. Someone disabled for life and their settlement doesn't even cover actual costs and medical bills. Her attorney didn't read the insurance policy?

This poor person got it from all ends.

Mr. Shank says that he obtained a divorce from Mrs. Shank this year, partly because of advice from a health-care administrator that she might be more eligible for public aid as a single woman. Mrs. Shank, who has been declared incompetent by a court, hasn't been informed of the divorce by her family.

:cry:

[Didereaux]

14. BINGO! the lawyer erred!

Since subrogation is common, the lawyer erred in not including it in the suit brought against the trucking company. Another route would have been to invite the Wal-Mart insurer in.

From any standpoint though, the error was completely on the Shanks attorneys' head.

[RamboLiberal]

15. Look's like the lawyer was aware and up against liability cap

It also sent Mr. Shank several notices that he was to inform Wal-Mart's health plan before he settled any suit. In 2002, the Shanks did sue and won a settlement from G.E.M. Transportation Inc., owner of the truck. The firm had only $1 million in liability coverage, though. For his own losses, Mr. Shank received $200,000, of which $119,000 remained after legal expenses. He says he spent most of it toward a one-story house fitted with ramps and wider doors, which is more accessible than the family's previous three-level home.

Mrs. Shank's own settlement was $700,000. After legal expenses and attorney fees, the remaining $417,477 was placed in a court-created special trust designed specifically for Mrs. Shank's future care. The Shanks' lawyer, Maurice Graham, wrote the Wal-Mart health plan informing them. Mrs. Shank had received no funds directly, he said, and therefore had nothing to pay Wal-Mart back.

Nearly three years went by, Mr. Shank says, before they heard again from Wal-Mart.

http://online.wsj.com/article/SB119551952474798582.html?mod=hpp_us_pageone

Now are the courts erring by allowing Wal-Mart to collect the settlement the court put in a trust-fund?

[Kingshakabobo]

16. I saw that......but......

That doesn't absolve the attorney. In my mind, it tends to implicate him even more. The insurance liability cap only has relevance as it is often what attorneys shoot for as a PATH OF LEAST RESISTANCE for quick settlement. The attorney should have aimed higher even if it meant going after assets.

The fact that there was notification from the insurer of their intent to go after the settlement shocks the conscience even further. How did the attorney allow a settlement that would leave the plaintiffs with exactly NOTHING after costs?

[Vinca]

17. Somehow, I think the Walton family could afford to let this one go.

If only someone would run a commercial on television to counter that touchy-feely, hometown pile of crap Walmart runs bragging about how wonderfully they treat their employees by giving them health care for "a dollar a day." (But don't get sick or we want it all back.)

[RamboLiberal]

19. Exactly - if for nothing else in the spirit of patriotism

After all this family also lost their son in the "service of our country"!

How about supporting the troops in this case by supporting the mother and father of a dead soldier!

[Didereaux]

18. I am forever amazed how many attys graduate at the bottom of their class! n/t

[madmom]

20. this is not new and not exclusive to walmart ..my SO was in a

motorcycle accident a very long time ago same thing happened, we lost our house and a car because of it, we almost divorced for the same reason had a 3 month old plus another and not enough money to support ourselves, SO was on sick leave for 10 months couldn't get even temporary ssi or any other help from the gov't. (only real help we got was from his union) because he had ONE good hand that he could work with.He worked for one of the big 3 auto manufacturers!