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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

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COMMENTS

Thank God for public pressure.

Rob in Surfside Beach, SC
Tuesday, April 01 at 05:02 PM

This is a great day for the little guy. I’m glad that Wal-Mart decided to do the right thing for this family.

Asiyah Kurtz in Southaven, MS
Tuesday, April 01 at 07:43 PM

I just read the letter from the Shank’s son about the constant high costs of keeping Deborah in a nursing home.  Is there a website or would walmartwatch.com set up one for people who’d like to help with a donation?

Ferallike in Falls Church, VA
Tuesday, April 01 at 08:54 PM

I knew Walmart couldn’t take the pressure.  All of the people including myself who were refusing to spend one dime in their business because of their greed are the real heroes in this story. Without your comments, letters, phone calls and public outrage Walmart would still be beating up the
“little guy”. 

I am soooooooooooooooooo happy for the Shank family.  To not have this financial pressure must be overwelming.  Please everyone keep donating money to the Shank family.  That money will not last long.  Let’s start to help this country one family at a time.

Great Job Everyone!!!!!  I am so proud of everyone who helped.

God bless everyone.

Brenda in Buellton, California
Wednesday, April 02 at 12:43 AM

I am a former Wal-Mart distribution employee who has had a similar experience. In 1998 my wife was hit head on by a man who had passes out for medical reasons and crossed center line on a two lane road. My wife still is slightly disabled from this accident, enough to qualify for lifetime SSDI without even trying. We got a lawyer and sued the other drivers car insurance and family for well in excess of $50,000 dollars in medical costs, lost wages etc.. In 2001 after almost 4 years of dispositions, abritration etc. the car insurance of the other driver settled for about $5000 dollars after attorney fees.
Within a month or two Wal-Mart started calling me about reimbursment of monies paid out in subrogation by Blue Cross/Blue shield and demanded the entire amount of this meager settlement. Wal-Mart then pulled back insurance payments and leins were put on my house, took me 5 years to pay back the debts once paid by my medical insurance plan.
I left Wal-Mart in 2007 after 15 years of service. The only good thing I can say about them is they maximize profits at the expense of their associates, benefitting most of the upper echelon executives.

Matt Whelan
Greeneville, Tn

Matthew Whelan in Greeneville, TN
Wednesday, April 02 at 07:46 AM

Matthew,

“I left Wal-Mart in 2007 after 15 years of service. The only good thing I can say about them is they maximize profits at the expense of their associates, benefitting most of the upper echelon executives.”

Gee, and it only took you ‘15 YEARS’ to figure that out, right?

RDS in
Wednesday, April 02 at 09:06 PM

RDS:You have repeatedly slammed unions for some time now. Yet,you were a union truck driver for 11 years.Just what took YOU so long to figure out you didn’t like unions?

ddrb in
Friday, April 04 at 04:55 PM

ddrb,

“You have repeatedly slammed unions for some time now. Yet,you were a union truck driver for 11 years.Just what took YOU so long to figure out you didn’t like unions?”

First, I don’t slam ALL unions, there are many smaller unions who take care of their members, it’s the ‘big unions’ that cause the problems!!  As to why it took me 11 years to figure it out, it was mainly because I started at age 18, so I was still young and stupid and bought into what they were trying to sell me!!

Part of what woke me up, was when the UAW put American Motors Corp. out of business, with their high demands, much the same as they have been doing to GM and Ford!!

You people might figure it out, when a cheeseburger costs you $10.00!!  ALL pay raises eventually come back as inflation and require more raises to catch up with constantly rising prices caused by the inflation!!  Raises affect the entire economy, not just the people getting the raise (there’s a domino effect that ripples throughout the economy)!!

RDS in
Saturday, April 05 at 01:18 AM

RDS: You mean like the exorbitant raises and benefit packages received by CEOs of major corporations,rewards for a job NOT well done?

ddrb in
Saturday, April 05 at 10:46 AM

ddrb,

CEO pay is just a pin prick to the economy, as there aren’t that many of them!!  Workers pay is a shotgun blast to the economy, because there are so many of them!!

You tend to react to the amount of the pay, instead of the impact on the economy, like I said before, if Lee Scott were to get paid $1.00 per year and the rest of his salary were divided between all the other employees, each employee would recieve $3.33 each for the year, hardly enough to make any significant difference to their lives or the economy!!  As for a “job well done”, if the company is still standing at the end of the year, the CEO did his job, it is not possible to reap ‘great rewards’ every year!!  In Lee Scott’s case, sales and profit have increased every year since he took over!!

RDS in
Saturday, April 05 at 01:48 PM

Lee Scott’s case, sales and profit have increased every year since he took over!! RDS----------------------------------------------Just out of sheer curiosity,could you post that list of sales and profit since Lee Scott became CEO? I can’t find it on the net. Thanks.

ddrb in
Sunday, April 06 at 09:33 PM

ddrb,

Check the WMW archives, Nick used to post these quite often!!  What I do know, is Wal-Mart has increased sales and profits every year for the past 45 years!!

RDS in
Monday, April 07 at 12:54 AM

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