Wal-Mart Changes Its Mind

The retailer drops its efforts to recover Debbie Shank's medical costs. Good move?

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Yesterday I asked readers to judge the fairness of Wal-Mart's reimbursement claim against former employee Debbie Shank, who had been injured in a car accident. Wal-Mart, through which Shank was insured, had paid out $470,000 in medical expenses. Shank later collected damages in a lawsuit related to the accident—about $700,000, or $417,000 after attorney's fees and other expenses—and Wal-Mart sought to recover its costs.

That's not uncommon. Many companies now attempt to recoup medical expenses they have paid out before someone wins damages in a lawsuit. The efforts are part of a recovery practice called subrogation. Wal-Mart told CNN that the money would be returned to the employee-subsidized health plan, not to the company itself.

Yesterday evening, however, Wal-Mart announced it had changed its mind. The company dropped its efforts to recover the money and said it would even redress its plan. From the AP:

Wal-Mart's Ms. Curran said the retailer was required by the rules of its plan to seek reimbursement from the Shank settlement. But she said 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," Ms. Curran wrote in the letter.

In yesterday's post, I intentionally left out two widely reported facts about Shank: namely, that she suffered brain damage in the accident and that her son was later killed in Iraq.

These facts made her case compelling, but if the law doesn't consider these factors, should we?

Perhaps I was wrong. Wal-Mart is the country's largest private employer and has obvious, ongoing recruitment needs. Couldn't bad press cause a slowdown in job applications to Wal-Mart or make shoppers less willing to spend money at its stores?

Wal-Mart is a public company, with a fiduciary responsibility to shareholders. But if I'm a Wal-Mart shareholder, is it in my best interest to see Wal-Mart recoup its costs or let the case go?


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