LISSA’S: Rights, Wrongs and Fairness of Subrogation in Serious Injury Cases

Rights, Wrongs and Fairness ofSubrogation in Serious Injury CasesNovember 29, 2007; Page A17

I read with great sadness your front-page article "Accident Victims Face Grab for Legal Winnings" (Nov. 20) about Wal-Mart's mistreatment of a critically injured employee. Although Deborah Shank paid her premiums when healthy and would not have been individually liable for medical expenses in a general sense, Wal-Mart maintains that it has a right to seek repayment from third parties. While this reasoning makes sense from an accounting and legalistic point of view, in practice it is an incendiary and unjust policy.

Wal-Mart has the legal high ground in this matter as it has successfully pursued its claim to a federal appellate court. In so doing, however, it has also claimed the moral low ground. Wal-Mart argues that it has a fiduciary responsibility to its medical plan and shareholders, but this is mere obfuscation. Companies rarely resort to recovery from such tragedies, precisely because it is unseemly. The fact that Wal-Mart feels unrestrained and unrepentant in its pursuit for company justice is a shocking indictment of our culture and of this company.

Andrew Griffin
Wilmette, Ill.


The rationale for judicial enforcement of subrogation rights is clear. Otherwise, the ultimately responsible person or company evades such responsibility simply because the victim of his or her misconduct had insurance coverage. Pursuit of subrogation claims advances the broadest societal interests by ensuring that all actors within a society -- ranging from the largest corporations to mom-and-pop shops -- behave responsibly and conduct their businesses so as to avoid harming others by exercising "reasonable care." However, most subrogation claims aren't perfected for a variety of reasons, including lack of or inadequate liability insurance coverage or insubstantial assets on the part of the responsible third-party tortfeasor. Under these circumstances, the insureds, of course, retain the insurance proceeds paid to them, and the insurer obtains no reimbursement at all for its payment of policy proceeds to its insureds.

While it is easy to point a finger at the insurer, or a self-insurer like Wal-Mart, for rightfully exercising its subrogation rights under circumstances when there are insufficient assets to compensate both the insurer and its insured for their respective damages, the true responsibility for this extremely unfortunate result rests with the responsible third party that exacerbated its negligence in having caused injuries by also exercising financial irresponsibility by failing to secure ample liability insurance coverage.

Elliott R. Feldman
President
National Association of Subrogation Professionals
Edina, Minn.


Employers have a fiduciary duty to recover these expenses since allowing an employee to recover "twice" for the same injury shortchanges fellow employees in the health plan and ultimately increases the cost of health care for all. As sad as the facts concerning Ms. Shank may sound, there is a winner amid all of this: her personal injury lawyer who promptly received approximately 40% of Ms. Shank's medical settlement.

Randel Johnson
Vice President, Labor, Immigration & Employee Benefits
U.S. Chamber of Commerce
Washington


Wal-Mart is within its legal rights and the company has a responsibility to its stakeholders to lower health insurance costs. However, as Wal-Mart donates millions to charity each year I hope that management will consider making a donation to Ms. Shank. As the old saying goes, "charity begins at home."

Klugmann
Brooklyn, N.Y.


The Journal is to be commended for pointing out that when a catastrophically injured woman isn't fully compensated in a settlement for the lifetime cost of her care it's an unimaginable economic hardship. It is made doubly worse when years later the employer's health plan sues her for the full share of medical costs it paid. Under these circumstances, a better way would be to limit the health plan's recovery to no more than a pro rata share of the entire amount recovered from the wrongdoer. Thus, when recovery from the wrongdoer is inadequate to provide restitution to the injured person and to reimburse the employer's health plan, each party would receive a share of the recovery proportional to their loss. This would serve as a standard of fairness to ease the burden of a lifetime of care and ensure that the injured person wouldn't be injured a second time by her insurance company.

Kathleen Flynn Peterson
President
American Association for Justice
Washington