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 IVNORD wrote:

 The Doctor wrote:

 Slartibartfast wrote:

Two years after the accident, Shank and her husband, Jim, were awarded about $1 million in a lawsuit against the trucking company involved in the crash. After legal fees were paid, $417,000 was placed in a trust to pay for Debbie Shank's long-term care.
Wal-Mart had paid out about $470,000 for Shank's medical expenses and later sued for the same amount. However, the court ruled it can only recoup what is left in the family's trust.
The Shanks didn't notice in the fine print of Wal-Mart's health plan policy that the company has the right to recoup medical expenses if an employee collects damages in a lawsuit." 

Unfortunately, those types of clauses (subrogation clauses) are typical in almost all insurance policies.  Generally, if someone collects money from his or her insurance company and also wins damages against the person who caused the harm, the insurance company has a right to collect the damages won, up to the amount of the insurance payout.  Sadly, there is nothing uncommon about that.  And while I'm no fan of Walmart, this case has more to do with the fact that insurance companies are evil than with Walmart being evil.  
 That comes from the notion that one can't collect twice on the same claim. It's not unfortunate, just logical, otherwise the court system would be flooded with repeatitive claims. I'm not saying the insurance companies are nice guys being the thieves and usurers they are, but they are absolutely right in this case. 

It is unfortunate in many circumstances because it leaves the injured person undercompensated.  Let's say for example, someone has an insurance policy which covers them for up to $200,000.  They are injured in an accident and suffer $600,000 worth of damage.  The insurance company pays them the 200 grand, and they sue the person who caused the injury.  Let's assume that the court fully compensates the victim, awarding the injured party 600 grand.  You might think that the injured party has now been overcompensated.  However, the injured party must also pay an attorney, and in these types of cases that usually 1/3 of the award.  So the injured party get 200 from the insurance company, 600 from the person who caused the injury, less 200 which he must pay to an attorney.  This leaves the injured party with 600, the amount of his injury.  However, when the insurance company then takes 200, this leaves the injured party with only 400, undercompensating the victim for his injuries.  I simplified the numbers of course, but this often happens in these cases.

Further, if the court undercompensates the victim, or the defendant is unable to pay all of the injured party's damages, the first 200 goes to the insurance company.  So let's say the court awards 600, but the injured party only has assets/insurance enough to pay 200.  That 200 (minus the attorney fees of course) goes to the insurance company, leaving the injured party with only 200 for an injury that costs 600.  

Edited by The Doctor - August 02 2008 at 17:01