Wal-Mart Drops Health Costs Reimbursement Effort

April 2, 2008 (PLANSPONSOR.com) - Giant retailer Wal-Mart Stores has reversed course on its effort to collect more than $450,000 in health care cost reimbursement from a now-brain damaged former employee injured in a car accident.

The Associated Press reported that Wal-Mart has notified the family of Deborah Shank in a letter that it is dropping its effort – under a common health care insurance provision called subrogation – to reclaim money won in an injury lawsuit to pay back the retailer for health care payments made in Shank’s case (See Family of Ex-Wal-Mart Employee Loses Health Benefits Repayment Fight ) .Wal-Mart Human Resources chief Pat Curran indicated in the letter to the Shanks that the unusual circumstances in Deborah Shank’s situation prompted the firm to re-evaluate its subrogation policy.

Curran said the retailer was required by the rules of its plan to seek reimbursement from the Shank’s settlement, but that 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.

Deborah’s husband Jim Shank welcomed the news. “It’s a good day for the Shank family,” Jim Shank said in a statement, according to the AP news report.

According to news reports, Shank, 52, lost much of her memory and ability to communicate or walk due to 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.

Shank has been confined to a southeast Missouri nursing home after suffering the brain damage.

After the Shanks won their lawsuit, Wal-Mart sued the Shank family to recover medical costs totaling about $470,000.