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Wal-Mart changes its rules on recovering money for medical expenses
Wal-Mart has changed the health insurance rules that almost cost permanently disabled former employee Debbie Shank her trust fund.
When the world's largest retailer announced in April it would not pursue the money despite a U.S. Supreme Court ruling that it could, the company also announced it was reviewing the rules that prompted it to pursue the court case.
On Wednesday, Wal-Mart Watch, the Washington, D.C.-based group that keeps a critical eye on the company, announced it had learned the details of those rule changes and declared the changes a victory for workers.
A spokesman for Wal-Mart, Greg Rossiter, said the policies were put in place in April.
"Everyone was moved by Mrs. Shank's extraordinary situation," Rossiter said. "The plan did not give us much flexibility. We reviewed the guidelines of the trust that pays benefits for our associates and family members and modified the plan to allow us more discretion."
Jim Shank, Debbie Shank's former husband, said he is grateful that national publicity surrounding the case helped push Wal-Mart to change its policy. "I wish it wouldn't have taken national outrage to push Wal-Mart to do the right thing, but I'm glad the company listened to everyone who spoke up on our behalf."
Debbie Shank was a night stock clerk at the Cape Girardeau Wal-Mart in 2000 when she was in a severe car crash. The company's health insurance paid $469,000 for her care, covering expenses until she won a $1 million settlement from the accident. Attorneys fees and a $100,000 share for Jim Shank to care for their three sons left a trust fund of $417,000.
The Wal-Mart insurance plan trustees launched a lawsuit to recover the money remaining from the settlement. Using a legal theory known as subrogation, the company said it had a right to be reimbursed for medical expenses that were the responsibility of another party when that third party had met its obligation.
While the giant company won the legal battle, it lost the public relations war. An article about Shank's situation that appeared in the Wall Street Journal prompted a wave of publicity that included stories on CNN, NBC, Fox News and other national outlets.
While the case was pending, Debbie and Jim Shank's son, Cpl. Jeremy Shank, was killed while serving in Iraq.
Now, Wal-Mart Watch said, the company has included new rules in its health plan documents for the plan year beginning Jan. 1 that specifically exempt a worker left in Shank's condition from being hit with a similar lawsuit. Shank has lived in a nursing home since the accident. She has brain damage, can't walk or use her arms and has a limited short-term memory.
"We applaud Wal-Mart for making this positive change to its subrogation policy," David Nassur, executive director of Wal-Mart Watch, said in a news release. "While we believe Wal-Mart could have done the right thing much sooner, we are very pleased with the end result. Wal-Mart still has a long way to go to improve the quality and affordability of its employee health-care plans, but this is a specific step in the right direction and a victory for Wal-Mart workers."
The new rules, set out in the explanation of worker benefits for the coming year, say the insurance plan will not pursue recovery when the injury or illness involved results in paraplegia or quadriplegia, severe burns, total permanent mental or physical disability or death.
And in other cases, the rules say, the recovery will be limited to no more than half of the amount recovered from a third party. Rossiter declined to discuss the specific changes. To do so could undercut Wal-Mart's competitive advantage, he said.
"Our focus is on providing the best possible coverage that we can for our associates and their families," he said.
As the corporation sought to portray the changes as old news, Wal-Mart Watch spokeswoman Stacie Temple said the company had not announced the specifics until it appeared in the employee handbook. "Our whole point is that this particular change is a very small step in making progress on their health-care plan and it is a good step."
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