Family of Ex-Wal-Mart Employee Loses Health Benefits Repayment Fight

March 19, 2008 ( - The U.S. Supreme Court has turned away an appeal from the family of a former Wal-Mart employee injured in a car crash in its legal battle to keep the giant retailer from recouping hundreds of thousands of dollars in medical expenses from an accident settlement.

The high court’s decision not to take the case involving Deborah Shank of Jackson, Missouri, left standing an August 2007 ruling by the 8 th  U.S. Circuit Court of Appeals, which upheld an earlier decision by U.S. Magistrate Judge Lewis M. Blanton of the U.S. District Court for the Eastern District of Missouri.Blanton ruled that Wal-Mart was within its rights to recoup money Shank’s family won in its personal injury lawsuit to help compensate for medical expenses for the injured woman who suffered permanent brain damage from the May 2000 crash.    

Wal-Mart sued to recoup the $470,000 spent on Shank’s medical care as part of her health coverage when she worked for the company. The firm’s health policy includes a commonly used clause allowing the employer to seek repayment if a covered employee gets benefits and then receives additional funds from an injury suit.

“ERISA’s (Employee Retirement Income Security Act) purposes of upholding the integrity of written plans and protecting the interest and expectations of all participants and beneficiaries are best served by enforcing (Wal-Mart’s) contractual right to reimbursement,” wrote Circuit Judge Steven M. Colloton in the 8 th  Circuit decision.

Daphne Moore, a Wal-Mart spokeswoman, told the Wall Street Journal: “It’s a very sad case, and we understand that people have a very emotional and sympathetic reaction.”

Moore said the health plan is obligated to act in the interest of the health benefits of its employees as a whole. The benefits are designed so that when an employee does have an accident, “the plan steps in and covers those medical expenses so our associates don’t have to worry about them being covered,” and then later to reimburse the plan if they receive funds for the accident from a third party, Moore contended.

The 8th Circuit’s Shank ruling is  here .