Wal-Mart changes tune, drops $400K claim

April 2, 2008 12:44:10 PM PDT
Wal-Mart took Jim Shank all the way to the Supreme Court to be reimbursed more than $400,000 in medical expenses for a car accident that left Shank's wife severely brain damaged. But when the case moved into the court of public opinion, Wal-Mart changed its mind and said it would drop its claim on the money, a claim that had threatened to push Shank into poverty and despair.

The world's largest retailer decided Tuesday that it was "moved by Ms. Shank's extraordinary situation," and apologized to the Shank family.

"Occasionally others help us step back and look at a situation in a different way. This is one of those times," Wal-Mart said in a statement.

"Our current plan doesn't give us much flexibility, so we began reviewing the guidelines for the trust that pays medical costs for our associates and their family members," Wal-Mart said.

Just last week, Wal-Mart was unapologetic for its demand that the Shanks, of Jackson, Mo., repay $470,000 in medical expenses after the Shanks won a settlement against the trucking company whose vehicle collided with Deborah Shank.

David Tovar, the senior director of media relations for Wal-Mart, told ABCNews.com last week, "After the associate or family member receives payment from the party responsible for causing the injury or accident, then our health plan becomes entitled to reimbursement."

Deborah Shank, 52, was employed by Wal-Mart to stock shelves when the 2000 accident occurred. Wal-Mart's medical plan paid her expenses, but wanted its money back after the Shanks got a $1 million settlement from the trucking company.

After lawyer fees, Jim Shank was left with $417,000, and Wal-Mart wanted all of it despite his pleas that his wife, who is now confined to a wheelchair in a nursing home, still needs millions of dollars in medical care.

Wal-Mart says it will no longer try to collect the money and will try to help the Shanks.

"Wal-Mart will not seek any reimbursement for the money already spent on Ms. Shank's care, and we will work with the family to ensure the remaining amounts in the trust can be used for her ongoing care. We are sorry for any additional stress this has put on the Shank family," the company said.

A relieved Jim Shank told ABCNEWS.com, "I'm just glad [Wal-Mart] did it, it's a huge relief."

"The money will help a lot right now, but there's still a long way to go with her care," Shank added.

Just last week, Shank was contemplating what then seemed impossible ? that Wal-Mart would give the money back.

"If Wal-Mart gave the money back, it would help my life and it would help with Debbie's care," Shank said.

"But it may help just the idea that this country is not as bad as it's made to seem," said Shank. "That really American people are still out there loving and caring for people," he said.

For eight years Shank watched as his family's world tragically unraveled ? first with a devastating car crash that left his wife with a traumatic brain injury, and then with the death of his eldest son, a soldier in Iraq. In an interview last week with ABCNews.com, Shank said he had become desperate over Wal-Mart's demands to be paid, and had lost court battles that went all the way to the Supreme Court.

"From the beginning I couldn't believe that [Wal-Mart] would come after it with all the money they make," Shank told ABCNews.com. "This is a pittance to them, but they keep saying the same corporate story that they have to protect the assets of the insurance plan."

Debbie suffers from short-term memory loss so severe that her husband must constantly remind her of her son's death.

"To this day, she asks about him every time we see her," said Shank. "She'll ask, 'What happened to Jeremy? Is Jeremy dead? Why?' She'll start crying and carrying on."

Shank said that the $30,000 income he makes as a maintenance worker at the local university in Jackson, Mo., is "just not enough" to cover the estimated $10 million in medical care that Debbie will accumulate in her lifetime, and that taxpayers will end up footing the costs of his wife's bills through Medicare and Medicaid.

If Wal-Mart had taken the money, paying for college for his other two sons would be impossible, Shank said, who is also struggling to pay his own medical bills ? including psychiatric help.

"I suffer from depression. My life is terrible," said Shank, who told ABCNews.com that he's contemplated suicide. "I don't have anyone to live with, I don't have a wife. I need a companion and when things are bad I can't roll over in the middle of the night and talk to someone. It's just a pillow there."

Is Wal-Mart's Fine Print Typical for Big Corps?

The repayment system employed by Wal-Mart's health care plan ? also commonly referred to as a cost-recovery plan ? is fairly common for big corporations, said Daniel O'Meara, a senior fellow at the University of Pennsylvania's Wharton School of Business.

"These cost recovery systems can have logic and fairness to them," said O'Meara. "They're seen as a tool for employers to control employee benefit costs and allow them to secure them in the future."

"Then coverage is available for the next person who needs it," added O'Meara.

But one key element of these cost-recovery systems is that they are supposed to go into effect only when the victim of the accident is "made whole," according to O'Meara.

"Let's say, hypothetically, a victim suffers $40,000 in medical fees and lost income and the company pays," said O'Meara. "Then the woman sues the other party and collects $100,000. In that situation the company has some interest in asking for their $40,000 back."

"The victim of the accident is then still made whole, they just don't get double recovery," said O'Meara.

But in Debbie's case, the $1 million settlement is just one-tenth of what her family will eventually pay in medical bills.

An Exception

O'Meara told ABCNews.com that there was no reason why Wal-Mart couldn't make an exception for the Shanks and that each employer has the right to "draw a line in the right place."

"I've seen employers set up provisions within [health care plans] so they have the right to recover, but can pursue recovery on a selective basis," said O'Meara. "They won't just look at the factor but also look to the size of what they can recover."