I never thought that I’d see Walmart as the victim of anything — indeed I see them as the root of most things retail and evil — but this story gave me a moment of pause:

Deborah Shank, a Walmart employee was tragically injured in a car accident. Her medical expenses were covered by the Walmart health plan.

The woman’s family arrived at a settlement with the trucking company (the defendant) to the tune of $417,000. Her medical expenses were some $470,000.

Walmart exercised its ‘equitable subrogation’ clause of her policy to collect the funds they had paid out for her health care. This clause is a common feature of most group benefit plans and the practice of collecting on the insured’s settlements is likewise common. The family refused to reimburse the Walmart plan. Walmart sued them and won. They appealed and lost. They took Walmart to the supreme court and were refused an hearing.

Finally Keith Olbermann took up her cause and broadcast her case every night on TV. After what amounted to a crusade against the evil empire, Walmart backed down and agrees to review its subrogation clause. I have plenty of justifications for calling Walmart and evil empire, however, I’m having trouble finding justification for calling them such in this particular case.

This is clearly a tragic case but group policies have the right, moreover the obligation, to protect the contributions and viability of the group plan. If this case sets a (social) precedent and it’s likely that it will, then insurance plans will be forced to pass the cost of this precedent on to all group plan subscribers in the form of higher premiums.

There is a great temptation to look at the coffers of corporations or insurance companies as a deep bottomless pits. This following exchange from ‘Seinfeld’ is emblematic of the general attitude towards large public companies or entities. In this case, Kramer tells Jerry how it is ‘ok’ to defraud the post office:
Jerry : So we’re going to make the Post Office pay for my new stereo ?
Kramer : It’s just a write off for them.
Jerry : How is it a write off ?
Kramer : They just write it off .
Jerry : Write it off what ?
Kramer : Jerry all these big companies they write off everything
Jerry : You don’t even know what a write off is.
Kramer : Do you ?
Jerry : No . I don’t .
Kramer : But they do and they are the ones writing it off .
Jerry : I wish I just had the last twenty seconds of my life back .

Money however, is a finite resource and doesn’t come out of thin air. The only entity capable of manufacturing money out of thin air is the Federal Reserve, but that is the topic of another conversation. In the final estimation, Sachs was paid for her medical expenses twice and that cost will be passed on by the insurance companies to the rest of us in the form of higher premiums.

Being sure to be clear here, we’re not discussing denying Sachs any care. If the settlement was for ongoing health care, then the insurance company should collect her $417,000 but continue to pay her as necessary for ongoing care. If the settlement was for previous health care and she has no further need, while her case is tragic, Walmart is owed the money.

It’s ironic that no one discusses the ‘evil’ of the lawyers who collected their legal fees. The lawyers, instead, are correctly perceived as having performed their duties and have been duly compensated. While I detest the general avarice of Walmart, in this case they’ve met their obligation of caring for, and if necessary providing ongoing care for, their injured employee and were simply trying to avoid paying twice.

Perhaps the true tragedy of this case, beyond the obvious tragedy of Sachs’ story, is that the media is capable of misdirecting the court of public opinion to overrule the Supreme Court.