> http://online.wsj.com/article/SB119551952474798582.html?mod=hpp_us_pa...
>
> Accident Victims Face
> Grab for Legal Winnings
> Wal-Mart Paid Bills
>
> For Mrs. Shank, Then
> Sued for Money Back
> By VANESSA FUHRMANS
> November 20, 2007; Page A1
>
> JACKSON, Mo. -- A collision with a semi-trailer truck 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 Mrs. Shank's care.
>
> Instead, all of it is now slated to go to Mrs. Shank's former
> employer, Wal-Mart Stores Inc.
>
> 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, her family has to rely on Medicaid and Mrs. Shank's
> social-security payments to keep up her round-the-clock care.
>
> "I don't understand why they need to do this," says Mr. 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." Mrs. Shank, who needs help with eating and other basic
> tasks, spends more time alone since Mr. Shank had to let her private
> caregiver go. At some point, he says, she may have to be moved from a
> private to a semi-private room in the nursing home where she lives.
>
> The reason is a clause in Wal-Mart's health plan that Mrs. 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.
>
> 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 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 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 & Co. 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.
>
> In cases like the Shanks', where injuries and medical costs are
> catastrophic, accident victims sometimes can be left with little or
> none of the money they fought for in court. Health plans are
> increasingly adopting language such as Wal-Mart's, which dictates that
> it is to be paid first out of any settlement, regardless of what
> remains for the injured person. Moreover, the victim is responsible
> for all legal costs in pursuing the suit.
>
> "It's especially in the catastrophic cases that people are almost
> never fully compensated," says Roger Baron, a professor of law at the
> University of South Dakota and a specialist in health-plan law. "And
> then their health plan, that's been collecting premiums from them all
> this time, wants to take it away?"
>
> Tempting Savings
>
> Such recoveries represent a tempting savings for insurers, employers
> and union-administered plans. The American Benefits Council and
> America's Health Insurance Plans, the health-insurer lobby, estimate
> health plans recoup some $1 billion a year in medical claims from
> accident settlements and other third parties. A cottage industry of
> auditing firms, benefit-recovery specialists and subrogation lawyers
> help them. They estimate that between 1%% and 3%% of health-care
> spending is potentially recoverable from such claims.
>
> "In the past, employers used to think of this as an afterthought,"
> says Tom Lawrence, chief executive of Memphis-based Benefit Recovery
> Inc., whose clients include Southwest Airlines Co. and hospital chain
> HCA Inc. HCA says it saw annual savings from recouped claims rise to
> $1.8 million in 2006 from just under $800,000 in 2000 after hiring the
> firm.
>
> Benefit Recovery contracts directly with employers. It says it's able
> to recover between $12 and $15 per health-plan member a year -- up to
> $1.5 million for a big plan with 100,000 members -- by recovering
> medical expenses from injury-suit settlements.
>
> Until recently, employers and insurers generally didn't go after small
> claims. But more-sophisticated claims tracking has made it easier.
> Recovery companies systematically search claims for certain medical
> codes -- say, a sprained ankle or head trauma -- that flag a potential
> accident. Claims examiners then mail a questionnaire and often follow
> up with calls. If the injured person confirms it was an accident, the
> firm tracks whether the patient files an injury suit.
>
> If there is a lawsuit settlement, employers may seek to recoup money
> they paid for medical expenses. In many cases, it's relatively cut and
> dried: Often medical expenses are just a portion of the overall
> damages award, or the accident victim's attorney reaches a compromise
> with the health plan ahead of any settlement.
>
> Some plans are taking a further step, refusing to pay claims in the
> first place, unless the person filing the claim signs an additional
> form promising to reimburse the plan from settlement proceeds.
>
> Don Burgett, an engineer on an offshore oil-drilling ship, from Texas,
> has been waiting for his health plan to pay $89,000 in medical claims
> since his daughter's accident two years ago. Magan Burgett, then 18,
> was thrown from the back of an all-terrain vehicle in October 2005,
> tearing her liver, breaking her jaw and fracturing her back.
>
> Soon after Magan's parents submitted the bills for her two-week stay
> in an intensive-care unit, her father's health plan -- the
> Maryland-based MEBA Medical and Benefits Plan -- mailed him a
> reimbursement agreement that restated the plan's rights to a potential
> settlement.
>
> "To consider claims related to your accident," it said, Mr. Burgett
> had to sign it first. When he didn't, MEBA stopped paying claims after
> reimbursing several hundred dollars in Magan's medical expenses.
>
> Neal Korval, MEBA's outside counsel, says that asking a plan member to
> sign a reimbursement agreement in such cases is standard procedure and
> a policy outlined in its health plan rules. It helps prevent accident
> victims and their attorneys from trying to "freeze out" the plan from
> a potential settlement, he says, and also reminds or advises the plan
> member of his or her obligations.
>
> In September, the U.S. District Court for the Eastern District of
> Texas sided with the Burgetts, ruling that MEBA's health plan summary,
> which it considered the prevailing document, didn't stipulate such
> conditions to pay a claim. The Burgetts' attorney says they secured a
> $75,000 accident settlement -- a net of $50,000 after legal expenses
> -- though that isn't enough to cover Magan's medical expenses. Mr.
> Korval says MEBA has recently reached a settlement with the family
> over the unpaid medical claims, but declined to disclose terms.
>
> How much power health plans have to enforce subrogation is based on a
> hodgepodge of federal and state law still being tackled in the courts.
> A pivotal Supreme Court ruling last year gave health plans a leg up.
> In that case, a Maryland couple, Joel and Marlene Sereboff, were
> injured in an accident while returning a rental car to an airport in
> 2000; they required $75,000 in medical care. The couple later received
> a settlement of $750,000, from various parties, related to the
> accident.
>
> Mid Atlantic Medical Services, now owned by UnitedHealth Group Inc.,
> administered the health plan of Mrs. Sereboff's employer and sued the
> couple when they refused to pay the company out of their settlement.
>
> Money Set Aside
>
> In a unanimous decision, the court upheld that Mid Atlantic had the
> right to enforce its claim, in large part because it could point to
> the settlement money set aside in an easily identifiable fund. The
> couple had placed the money in a separate account when the issue went
> to court. The decision has made it easier for plans to go after
> settlements, legal experts say.
>
> Few such cases have attracted as much attention in legal circles as
> the Shanks'. Mrs. Shank took a job in 1999 stocking shelves at a
> Wal-Mart store in Cape Girardieu, Mo. She jumped at the shift from 11
> p.m. to 6 a.m. so that she could spend days at home with her three
> sons, Mr. Shank says. After a probation period, she qualified for
> benefits under the Wal-Mart health plan in February 2000.
>
> One day about three months later, as she and a girlfriend were touring
> local yard sales, a semi-trailer truck plowed into the driver's side
> of her minivan. Her friend's injuries were minor, but Mrs. Shank
> suffered major brain trauma and spent the next several weeks in
> intensive care. She drifted in and out of a coma, and the hospital,
> for months.
>
> "One doctor didn't give her any chance," says Mr. Shank, a maintenance
> worker at Southeast Missouri State University. Her medical bills
> climbed past $460,000. The health plan paid them promptly. "They were
> terrific in that respect," he says.
>
> It also sent Mr. Shank several notices that he was to inform
> Wal-Mart's health plan before he settled any suit. In 2002, the Shanks
> did sue and won a settlement from G.E.M. Transportation Inc., owner of
> the truck. The firm had only $1 million in liability coverage, though.
> For his own losses, Mr. Shank received $200,000, of which $119,000
> remained after legal expenses. He says he spent most of it toward a
> one-story house fitted with ramps and wider doors, which is more
> accessible than the family's previous three-level home.
>
> Mrs. Shank's own settlement was $700,000. After legal expenses and
> attorney fees, the remaining $417,477 was placed in a court-created
> special trust designed specifically for Mrs. Shank's future care. The
> Shanks' lawyer, Maurice Graham, wrote the Wal-Mart health plan
> informing them. Mrs. Shank had received no funds directly, he said,
> and therefore had nothing to pay Wal-Mart back.
>
> Nearly three years went by, Mr. Shank says, before they heard again
> from Wal-Mart. Mrs. Shank struggled a year rotating in and out of the
> hospital and rehabilitation programs. She could no longer use her
> right arm or three fingers on her left hand because of neurological
> damage. She couldn't feed or dress herself and conversations with her
> family were limited to all but simple questions. Eventually, her
> husband moved her to a nursing home for around-the-clock care.
> Medicare and Medicaid pay for the nursing home. Mr. Shank used some of
> the trust's proceeds to continue paying a private aide to care for her
> there.
>
> 'A Decent Quality of Life'
>
> "We wanted her to have a decent quality of life, and we still had the
> money," he says. He hoped he could also use it to pay the roughly
> $130,000 in bills for Mrs. Shank's rehabilitation and a return
> hospital visit after her coverage expired.
>
> But in August 2005, Wal-Mart re-emerged with a lawsuit against the
> Shanks demanding repayment for $469,216 in medical costs out of their
> settlement. It charged that the Shanks had violated the terms of the
> health plan by not reimbursing it. The company also demanded payment
> of legal fees and interest for the cost of suing the Shanks for the
> money.
>
> Mr. Graham, the Shanks' attorney, says he approached Wal-Mart's
> attorneys about negotiating a compromise, but was told the health plan
> wanted to proceed with the lawsuit. "We're not contending that
> Wal-Mart isn't entitled to a payment. We're saying they're entitled to
> one based on equity," he says. Since Mrs. Shank wasn't fully
> compensated for her damages in the first place, he argues, Wal-Mart
> should also expect only partial reimbursement.
>
> Administrators of employer-financed health plans "have an obligation
> to participants to be impartial," the Wal-Mart spokeswoman says.
> "Virtually all health plans include subrogation provisions as a way to
> control health plan costs."
>
> In August last year, U.S. district judge Lewis Blanton sided with
> Wal-Mart, ruling that when Mrs. Shank signed on to Wal-Mart's health
> plan she was obligated to abide by its terms.
>
> The ruling came six days before the Shanks' 18-year-old son, Jeremy,
> was killed in September last year in Iraq shortly after he arrived in
> the U.S. Army's 25th Infantry Division.
>
> "I wanted to give up at that point, tell Wal-Mart they won," Mr. Shank
> says, but his lawyer, Mr. Graham, said he'd continue with appeals.
>
> Mrs. Shank went to Jeremy's funeral. But because of memory problems
> due to her injuries, she gets confused about what happened. On a
> recent morning, she cried several times and asked what had happened to
> her middle son. Mr. Shank says that he obtained a divorce from Mrs.
> Shank this year, partly because of advice from a health-care
> administrator that she might be more eligible for public aid as a
> single woman. Mrs. Shank, who has been declared incompetent by a
> court, hasn't been informed of the divorce by her family.
>
> The Shanks lost an appeal before a three-judge panel in the 8th
> Circuit Court of Appeals in August and last month were denied a
> request for a hearing before the entire court. They plan to appeal to
> the U.S. Supreme Court, though only a small percentage of cases are
> chosen to be heard.
>
> "Sometimes I want to tell Wal-Mart, 'Ok, you won on the principle. But
> just let us keep the money," Mr. Shank says.
>
> Write to Vanessa Fuhrmans at vanessa.fuhrm...@wsj.com