By Ron E. Peck, Esq. and Adam V. Russo, Esq.

As many of you have no doubt seen, The Wall Street Journal published the story of Deborah Shank and her employer, Wal-Mart, some months ago.  In a nutshell, Ms. Shank was severely injured in a car wreck.  Her substantial medical expenses were paid for by the Wal-Mart self-funded benefit plan.  In the meantime, Ms. Shank’s family sued the insurance carrier of the truck that collided with her.  They settled their claim for $700K of the $1 million policy limit.  Part of their claim was for medical expenses; (expenses they sought to collect, but were paid for by the Wal-Mart plan).  Wal-Mart heard about the settlement, which included monies for the medical expenses, they – not the Shanks – had paid, and sought to enforce their Plan Document’s subrogation / reimbursement provision.  

The purpose of such a provision is to make sure the proper party pays for the medical expenses, and no party “double dips” (having bills paid by one fund, and then collecting money for those bills from another source).  Both the district and circuit courts enforced Wal-Mart’s right to recovery, and the Supreme Court refused to hear an appeal by the Shanks (implying their concurrence to the prior decisions).

The Wall Street Journal published their article in a distinctly anti-Wal-Mart tone.  People allowed their emotions to influence their logic, and failed to understand that (1) the Plan is substantially funded by the employees of Wal-Mart, not Wal-Mart itself, such that by allowing the Shanks to keep the money would amount to stealing other employees’ money, and (2) the money recovered is returned to the benefits plan (not Wal-Mart) so that it can be used later on claims for which there is no other responsible party or available funds.

CNN and Anderson Cooper recently picked the story up.  Please visit the related sites at: http://www.cnn.com/2008/US/03/25/walmart.insurance.battle/, and http://ac360.blogs.cnn.com/category/wal-mart/

As you can see, CNN has taken an anti-Wal-Mart approach.  Unfortunately, they fail to address the facts.  First, while this is a sad story and it is proper to feel bad for Ms. Shank, if the benefit plan were to ignore the terms of the plan every time the patient had a “sad story” there would be no money left in the plan!  How often will there be serious medical expenses and the story is a happy one?  Next, CNN utterly ignores the substantial attorney’s fees (the attorney took more of the settlement proceeds than Wal-Mart seeks to recoup) and the substantial money that Mr. Shank received for lost consortium.  Finally, the media outlets also ignore the fact that although Wal-Mart has had a right to over $400K in funds (presently held in a trust), they have allowed the money to be used on Ms. Shank’s expenses, to the point that the trust has already dwindled to below $300K.

While it is clear that Wal-Mart could have enforced its rights in a more politically correct manner, the media has certainly cast subrogation in an unnecessarily negative light.

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This entry was posted by Adam V. Russo on Tuesday, April 1st, 2008 at 2:05 pm and is filed under News, Subrogation. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.