Employers take crash victims' cash

A collision with a tractor-trailer seven years ago left 52-year-old
Deborah Shank permanently brain-damaged and in a wheelchair. Her
husband, Jim, and three sons found a small source of solace: a $700,000
accident settlement from the trucking company involved.

After
legal fees and other expenses, the remaining $417,000 was put in a
special trust. It was to be used for Deborah Shank's care.

Instead, all of it is now slated to go to Deborah's former employer, Wal-Mart Stores.

Two
years ago, the retail giant's health plan sued the Shanks for the
$470,000 it had spent on her medical care. A federal judge ruled last
year in Wal-Mart's favor, backed by an appeals-court decision in
August. Now, Deborah's family has to rely on Medicaid and her Social
Security payments to keep up her round-the-clock care.

"I don't
understand why they need to do this," says Jim Shank on a recent visit
to the nursing home, between shifts as a maintenance worker and running
a tanning salon. "This girl needs the money more than they do."

Deborah,
who needs help with eating and other basic tasks, has spent more time
alone since Jim had to let her private caregiver go. At some point, he
says, she may have to be moved from a private to a semiprivate room in
the nursing home where she lives.

The reason is a clause in
Wal-Mart's health plan that Deborah Shank didn't notice when she
started stocking shelves at a nearby store eight years ago. Like most
company health plans, Wal-Mart's reserves the right to recoup the
medical expenses it paid for someone's treatment if the person also
collects damages in an injury suit.

Going after the money Until
recently, many employers didn't vigilantly enforce the provision, and
some states and federal courts didn't think the claim held water. But
as the cost of covering workers continues to escalate, employers and
health plans are getting more aggressive about going after the money. A
U.S. Supreme Court ruling last year also has given them a clearer legal
map to suing employees and winning.

In
insurance circles, the recovery practice is called "subrogation."
Employers and insurers say it's necessary to ensure that medical
expenses aren't paid twice. By recovering those costs from someone
who's been compensated elsewhere, they argue, they're saving money for
everyone on the plan.

Sharon Weber, a spokeswoman for
Wal-Mart, declined to discuss the details of the Shanks' case, but she
said the company was obliged to act in the interest of the health
benefits of its employees as a whole. "While the case involves a tragic
situation, our responsibility is to follow the provisions of the
(company health) plan which governs the health benefits of our
associates," she said.

"Employers are trying to make sure these
plans run as efficiently as possible," says Jay Kirschbaum, a senior
vice president at global insurance broker Willis Group Holdings. "They
also have a fiduciary duty to the plan and the entire group of
employees that are covered by it."

The recovery practice Already,
the recovery practice is one of the variables that plaintiffs lawyers
are considering as they decide whether it's in their clients' interests
to participate in the $5 billion offered by Merck to settle lawsuits
over its painkiller Vioxx.

Health plans recovered sizable amounts
for medical expenses from other big product-liability settlements, such
as for the "fen-phen" diet-drug combination and Sulzer Orthopedics' hip
implants. Many insurers and the employer plans they administer are
expected to pursue a piece of the Vioxx settlement.