New York Wal-Mart Stores Inc. is dropping its efforts to collect more than $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, according to an AP report.
In a letter to the family of Deborah Shank, the company said it will not seek to collect money the Shanks won in an injury lawsuit against a trucking company for the accident. Pat Curran, executive VP for human resources at Wal-Mart Stores U.S., wrote that Shank's extraordinary situation had made the company re-examine its stance.
Wal-Mart had come under heavy criticism in newspaper editorials and by its union foes for its claim to the funds, which it made in a lawsuit that was upheld by a federal appeals court.
Insurance experts say it has become 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 is called "subrogation." A 2006 Supreme Court ruling has made it easier for companies to seek reimbursement in such cases.
Shank, 52, received her health insurance through Wal-Mart, where she worked nights. She 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, according to the family.
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, one of the Shanks’ three sons was killed in Iraq while serving in the Army.