Wal-Mart insurance company sues employee for having legitimate claim [View All]

[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.