And by "your money", I mean "my money"
November 21, 2007 11:14 AM   Subscribe

What do you call it when your insurance company takes your accident settlement to repay the medical costs you have incurred? If you said subrogation, you were close.
posted by butterstick (97 comments total)
 
What the heck kind of post is this?

Some sort of commentary on the fact of subrogation?
posted by dios at 11:22 AM on November 21, 2007


What if I didn't say that?
posted by DU at 11:25 AM on November 21, 2007


From a legal standpoint it makes perfect sense to me; the insurance company shelled out for her medical care as a result of the accident. They then got a bunch of money as a result of a injury lawsuit, for the same accident. Of course the insurance company is going to come after the money first, they're the ones who are out-of-pocket for the medical expenses at that point.

From the article, it sounds like they won $700k and the insurance company had $470k or so already spent; that would have left them $230k or so for expenses going forwards.

If that's not enough for her continued care, it's more a commentary on the crappy award they got than anything else.
posted by Kadin2048 at 11:30 AM on November 21, 2007


Wal-mart is evil..... Poor lady has to be put in a nursing home for the rest of her life and they find it fitting to take the settlement money away from the family that was using it to support her. What a bunch of assholes. Fuck Wal-mart. I'm never shopping there again.
posted by Mastercheddaar at 11:30 AM on November 21, 2007


butterstick, too clever by half, I'm afraid.

If this becomes common for insurers/employers to pursue, I imagine the market will adjust and lawsuit compensation will rise accordingly.

I thought insurers were commonly a party to these lawsuits, but I must have had the wrong impression. Probably only as defendants, not plaintiffs.
posted by dhartung at 11:30 AM on November 21, 2007


dios writes "What the heck kind of post is this?"

One that pertains to current events?
posted by mullingitover at 11:31 AM on November 21, 2007


If this becomes common for insurers/employers to pursue

If? This occurs every single day in civil litigation.

One that pertains to current events?

Subrogation is a current event?

If that's not enough for her continued care, it's more a commentary on the crappy award they got than anything else.

The people they should be pissed at are her attorneys who apparently aren't worth a damn.
posted by dios at 11:34 AM on November 21, 2007 [1 favorite]


All that and more at 6:00!
posted by erpava at 11:35 AM on November 21, 2007 [1 favorite]


It does seem pretty wack that the insurance company got to avoid the risk by having someone else pursue the lawsuit, and then come along later and demand the award. Shouldn't the insurance company have filed the lawsuit themselves if they were entitled to the damages?
posted by mullingitover at 11:36 AM on November 21, 2007 [1 favorite]


I always thought subrogation was that the insurance company sued the party who incurred damages. The definitions I could find for it bear that out.

I have a hard time squaring this concept with the Shanks' situation as outlined in the WSJ article.
posted by butterstick at 11:36 AM on November 21, 2007


dios writes "Subrogation is a current event?"

Please read the post before you comment.
posted by mullingitover at 11:37 AM on November 21, 2007 [2 favorites]


It sounds Sucky, but it also sounds like Wal-Mart did pay for some of her medical care, for which they were never recouped. When they settled, they didn't look into re-reimbursing Wal-Mart. It sucks, and it seems incredibly cold-hearted for walmart to go after this woman.

Anyway, this is a perfect example of why we need universal medical coverage. With universal medical coverage, these problems just disappear.
posted by delmoi at 11:37 AM on November 21, 2007 [2 favorites]


It does seem pretty wack that the insurance company got to avoid the risk by having someone else pursue the lawsuit, and then come along later and demand the award.

Why? That's what everyone agreed to beforehand. The insurance company still bore the economic risk that there would be no pay out (either the plaintiff would lose or the the defendant wouldn't be able to pay the judgment).
posted by Mr. President Dr. Steve Elvis America at 11:39 AM on November 21, 2007


I wonder, there is a concept of legal malpractice, do lawyers ever get sued over their sucking? It seems to me, as a layman, that their lawyers really fucked up here.
posted by delmoi at 11:40 AM on November 21, 2007


What the heck kind of post is this?

Some sort of commentary on the fact of subrogation?

No, dios, this the kind of post that shows that heartless and anti-social litigation by a major corporation can lead to victory in front of a judge, followed by an enormous loss in the court of public opinion.

Not too surprising you're uncomfortable with it.
posted by jamjam at 11:40 AM on November 21, 2007


No, dios, this the kind of post that shows that heartless and anti-social litigation by a major corporation can lead to victory in front of a judge, followed by an enormous loss in the court of public opinion.

Those of you who feel so bad for this woman, why don't you give her some of your paycheck? Oh, that's right, she's not entitled to it, just as she's not entitled to the full accident settlement.

Why are you so comfortable criticizing others for not giving her some of their money when you won't give her some of yours?
posted by Mr. President Dr. Steve Elvis America at 11:43 AM on November 21, 2007


Look, this is pretty simple. The tort law model compensates those who are injured so that they are "whole." So, something happens to me, and I sue. I get the following damages:

Past lost income (amount of money I have lost for not working since the accident)
Future lost income (amount of money I will lose because I can't work)

Past medical bills (the amount spent on my medical bill since the accident)
Future medical bills (amount of money expected to pay for future medical treatment)

Past pain & suffering (soft damage)
Future pain & suffering (soft damage)

etc...

The point of those damages are to make me "whole." That is, put in the position I would have been in had the injury not occurred.

Now if I paid all of my medical bills myself, then I should get the money to be made whole. But if someone else paid the medical bills, then I have no claim for past medical bills. In fact, if I recover for past medical bills that I didn't pay, then it is a "windfall" recovery. That is, I am made more than "whole" because I got money for something I didn't pay. The money for the past medical bills goes to the party who pays them. In this case, its the employer.

It's a pretty simple concept and something that occurs all the time. Other than the fact these people got into the newspaper for their plight, this incredibly un-exceptional.
posted by dios at 11:44 AM on November 21, 2007 [9 favorites]


The husband won a separate suit for 200k or so, and the article states that the trucking firm was insured up to 1 million bucks. So basically, the lawyers got together and settled for just below the coverage amount. The injured party is happy, cause they think they're getting a million bucks, the trucking co is happy, b/c they're not going bankrupt. However, the lawyers didn't consider Walmart's claim (which asked to be contacted before they settled, not after).

I don't see why walmart should get shafted here. The injured lawyers should have gone after a larger settlement if the damages warranted it.
posted by ShadowCrash at 11:48 AM on November 21, 2007


The more I look at it the more I think the blame is on the lawyers for not getting more. If they knew that past med bills were 400k and their fees were around 300k they should have got more for the family in the suffering and future lost wages areas. The settlement should have been 1 mill then. If of course you figure in future lost wages and a ton of pain and suffering due to the fact that this family has been torn apart. So in short the lawyers, and the family dropped the ball. Also Walmart can still go fawk itself. I am never going to shop there again. Greedy assholes. That' just feels good to say it.
posted by Mastercheddaar at 11:49 AM on November 21, 2007


Mr. President Dr. Steve Elvis America writes "Why? That's what everyone agreed to beforehand. "

That's great. I'm sure she had a wide variety of employment options, and she went with Wal-Mart because they had the best offer in terms of salary and benefits. Or, you know, they sucked up all the economic oxygen from the town and working for them was the only job option she had.

The bottom line is that for Wal-Mart to come out of this not looking like assholes, they should've filed the lawsuit themselves to recover the money they spent. The current state of affairs reveals them to be opportunistic cowards.
posted by mullingitover at 11:52 AM on November 21, 2007


Dios, what you say makes perfect sense, but this concept was a surprise to me, and in fact the WSJ article describes it as a comparatively new phenomenon in this set of circumstances. Is this statement

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.

completely off base? If not, the novelty of the situation is the basis for the article and the post.
posted by Horace Rumpole at 11:56 AM on November 21, 2007


I started reading and thought "Wal-Mart is bastards" then I continued reading and realized that Wal-Marts position makes sense.

So it follows that I must be a bastard too.
posted by Hicksu at 11:56 AM on November 21, 2007


The bottom line is that for Wal-Mart to come out of this not looking like assholes, they should've filed the lawsuit themselves to recover the money they spent. The current state of affairs reveals them to be opportunistic cowards.
posted by mullingitover at 1:52 PM on November 21


Eh? A person more interested in rational thinking than opportunistic grandstanding might come to the realization that the family would be no different position had Wal-Mart joined as a party to the suit because, either way, the family was not going to get the money for past medical bills having not paid them herself. The only difference is that the settlement would have been structured as such as the money never went to trust first.

But at least I am beginning to see that the point of this post was another Wal-mart rant than a discussion of the validity of the concept of subrogation.
posted by dios at 11:57 AM on November 21, 2007


The bottom line is that for Wal-Mart to come out of this not looking like assholes, they should've filed the lawsuit themselves to recover the money they spent. The current state of affairs reveals them to be opportunistic cowards.

You're not thinking about this clearly.

Why doesn't Exxon come out of this looking like assholes? They have tons of money, too. They could've paid for all of this easily, but they didn't. What pricks!

Obviously because Exxon has no conceivable obligation to, but your claim is that somehow Wal-Mart does. Where does the obligation come from? Wal-Mart never said they would pay for it, and neither the employer-employee relationship or the insurer-insured relationships are typically conceived as giving rise to a moral obligation to give large donations to a needy person.

All I can see is that you somehow think that because she got her hands on the money, Wal-Mart should've let her keep it. That's a bizarre principle, that if a needy person somehow gets their hands on something you're entitled to, you're obligated to let them keep it. Apparently, though, if you manage to keep your money and possessions out of the hands of needy people, you're in the clear.
posted by Mr. President Dr. Steve Elvis America at 11:59 AM on November 21, 2007


I'm sure we can all agree that the world would be a better place without Wal*Mart. But the assholes here are the under-insured trucking firm. Had her settlement been a more realistic $5m then none this would be problem.

Arguably her lawyers should have sued the trucking firm or the driver above and being their inadequate insurance.
posted by rhymer at 11:59 AM on November 21, 2007


I'd also like to call attention to this caveat:

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.

So the court decided this money was NOT to repay medical costs. My problem with this whole situation is it encourages a health plan to sue their own customer instead of the damaging party, since their liability insurace was all but paid out.
posted by butterstick at 11:59 AM on November 21, 2007


This is totally normal. Some whacked out circumstances occured, but this is what you are contracting for when you get insurance. It lowers the cost of insurance as well.
posted by Ironmouth at 12:00 PM on November 21, 2007


dios writes "But at least I am beginning to see that the point of this post was another Wal-mart rant than a discussion of the validity of the concept of subrogation."

You're being pedantic. It's the gestalt we're talking about.
posted by mullingitover at 12:00 PM on November 21, 2007


sorry - " should read above and beyond"
posted by rhymer at 12:00 PM on November 21, 2007


and in fact the WSJ article describes it as a comparatively new phenomenon in this set of circumstances.

Yeah. Well, maybe the journalist found it new and interesting and colored her treatment of the issue. But subrogation has been a long-standing fact of civil litigation and insurance. It certainly is not "new" or a "phenomenon."

Is this statement completely off base?

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.


Well, let's see. "Until recently" is wrong. "Many employers didn't vigilantly enforce the provision" is correct to the extent the vigilantly is used. Sometimes the dollar amounts don't make it worthwhile so it isn't enforced. "and some stats and federal didn't think the claim held water" is vague and misleading. I'm not sure what claim she is referring to with that language. There have certainly been disagreements in courts about the procedural methods of pursuing claims and the methods by which they should be calculated and paid out, but I would dispute the claim that there is a widespread disagreement about the right of contractual subrogation. Finally, the last sentence could be correct. I have not seen any data on it, but since the an insurance company may only seek subrogation when the dollars are significant, it would make sense that a rising cost of health care would make past medicals more significant.

And as an aside: federalized health care won't change this woman's plight because she still wouldn't collect money for her past medical bills since she did not incur them if insurance or the federal government picked up the tab.
posted by dios at 12:08 PM on November 21, 2007


FIRST WE KILL ALL THE LAWYERS AMIRITE
posted by everichon at 12:12 PM on November 21, 2007 [2 favorites]


I feel like the bigger outrage should be that someone got a settlement for 700k dollars, and out of that, almost 300k went to cover "legal expenses and attorney fees".
posted by Joakim Ziegler at 12:18 PM on November 21, 2007 [6 favorites]


delmoi: Anyway, this is a perfect example of why we need universal medical coverage. With universal medical coverage, these problems just disappear.

Indeed, I think the lack of universal medical coverage in the US is mostly responsible for our litigious culture. I don't know whether it's too late to put the genie back in the bottle -- i.e., whether instituting universal health care would in any way curtail future personal injury lawsuits, or whether it even should. I suppose the "past & future medical costs" part of the damages would go away, but the if a company's negligence leads to personal injury, shouldn't that individual be compensated?

I don't think "tort reform" in the form of judgement caps is a fair solution, either. Personally, I wouldn't be happy with $10k, $100k, $1M, $100M or really any amount of money in compensation for, say, a wrongly amputated leg or a lethal cancer -- but I would certainly be less unhappy with $100M than a capped $10k.
posted by LordSludge at 12:19 PM on November 21, 2007 [1 favorite]


butterstick writes "So the court decided this money was NOT to repay medical costs."

This is a great point. Given that the judgement awarded her no money and instead set up a trust to pay her future medical costs, she really has no money to give Wal-Mart. Though the poor Waltons are probably having a hard time making ends meet, it sounds like they won't accomplish anything with this lawsuit against her other than to force her family to declare bankruptcy. Maybe if they're lucky they'll get to take her house away.
posted by mullingitover at 12:29 PM on November 21, 2007


Eh? A person more interested in rational thinking than opportunistic grandstanding might come to the realization that the family would be no different position had Wal-Mart joined as a party to the suit because, either way, the family was not going to get the money for past medical bills having not paid them herself. The only difference is that the settlement would have been structured as such as the money never went to trust first.

The difference is, Wal-Mart's insurer would have had lawyers in court acting on the woman's behalf. As the matter stands, it seems the insurer has not contributed to the legal costs of gaining the settlement.
posted by aeschenkarnos at 12:31 PM on November 21, 2007


This is a great point.

Uh, no it's not. Hell, it's not even a point; it's a misinformed assumption. Of course, reading the rest of your comment, it's obvious you don't give a damn about logic or reality behind the situation and would prefer to use this as a time to make hyperbolic rants against teh eeevil corporation.
posted by dios at 12:34 PM on November 21, 2007


but I would certainly be less unhappy with $100M than a capped $10k.

I think you would in fact be quite unhappy with the state of health care in a world where wrongly amputated leg=$100 million. (Not that I think $10K is appropriate either.)
posted by Horace Rumpole at 12:35 PM on November 21, 2007


If she was a Wal-Mart employee, at work, when this happened, isn't Wal-mart's insurance supposed to pay for medical expenses? What the hell is medical insurance for? This shouldn't be sold to employees as an employment benefit if, after it's all done, you get to spend the rest of your life in a wheelchair - For Free!
posted by Balisong at 12:47 PM on November 21, 2007


Been me? That settlement, if in my control, would've been converted to actual money, less the cost of video camera if needed , and set on fire in view of the camera.

Wal-Mart could have the video, I guess.

Sue me.
posted by Freedomboy at 12:53 PM on November 21, 2007


So Wal-Mart (a lifeless fictional entity, let's bear in mind) contributes $200 million a year to the disadvantaged in its community yet is now choosing to sue a unemployable woman into poverty? That's two-faced corporate behavior if I ever saw it.
posted by chips ahoy at 12:55 PM on November 21, 2007


So...

Wal-mart - Even (or close)
Trucking Co. - Higher rates.
Old Lady - Wheelchair for life.
Lawyers - PROFIT!
posted by Balisong at 12:57 PM on November 21, 2007


Yes indeed, we need universal health care. That'd solve a lot of these issues. And it seems kind of inevitable that we will either have universal health care, or there will be a revolt and all the poor schmucks will kill off everyone else and start over.

I read that medical care is rising at an average rate of 10 percent a year. This outstrips pretty much any interest rate you can get for your money, and mostly outstrips any investment portfolios except for a fortunate few. It way outstrips the average salary increases that people get. So the number of uninsured can only grow and grow and grow. Eventually, the only ones who can afford health care will be the wealthy. That's not so far away either. That's the point where a revolt will likely occur, and the hundreds of millions of poor folks will kill off the ten thousand wealthy people and try something different.

I hear Repugnicans always preaching on about the horrors of socialized health care. Yet I rarely hear any of them complain about socialized education, roads, military forces, police/firemen, etc. ALL of those things are socialized. I'm not sure why the word 'socialized' is so horrifying. All it means is that we, as a society, have decided that these things benefit society as a whole and therefor will be paid for by society as a whole. So why is it that society as a whole benefits from having an educated populace (socialized education), but society as a whole doesn't benefit from having a *healthy* population? That's just idiocy, combined with the greed of the wealthy and the special interests (read: pharmaceutical companies).
posted by jamstigator at 1:02 PM on November 21, 2007 [1 favorite]


"FIRST WE KILL ALL THE LAWYERS AMIRITE"

And have the country overrun by zombie lawyers?

What are you, insane?
posted by mr_crash_davis at 1:03 PM on November 21, 2007 [3 favorites]


I had a motorcycle accident a few years back. Fortunately, I had excellent health insurance that covered most of the costs.

About a year later, I had a letter from the health insurance company wanting to know if I'd received any "settlements, awards, award for damages, compensation, or any payments as a result of the accident." Gee, I wonder why they were interested?
posted by PhiBetaKappa at 1:05 PM on November 21, 2007


Yet I rarely hear any of them complain about socialized education, roads, military forces, police/firemen, etc. ALL of those things are socialized.

Ron Paul complains about those things.
posted by GuyZero at 1:05 PM on November 21, 2007


I like the idea that the lawyers are to blame for not getting a larger settlement. The insurance company would have obviously given them more money had the lawyers only thought to ask.

"Wait -- why don't we try to get a million or two out of this case? After all, the more we recover, the more we get."
"No, no. Let's just settle for the 700,000. I don't really want anymore money."

Pretty sure the lawyers settled for as much as they thought they could.
posted by flarbuse at 1:13 PM on November 21, 2007 [1 favorite]


flarbuse, towards the end of the piece it says that the firm only had liability insurance for $1m, so yeah, that's correct.

Very arguable that the firm was ridiculously underinsured though.
posted by rhymer at 1:24 PM on November 21, 2007


I gotta go with Balisong, that does seem to be the upshot here. Whether it’s a typical situation or brand new form of thievery, something went awry somewhere.
posted by Smedleyman at 1:26 PM on November 21, 2007


I like the idea that the lawyers are to blame for not getting a larger settlement. The insurance company would have obviously given them more money had the lawyers only thought to ask.

No, the lawyers were probably told that the defendant wouldn't settle for more than the amount they were insured for. The lawyers, realizing that they would actually pocket more (after expenses) by settling for less now than litigating the thing and getting a larger judgment, jumped on it.

Think about it this way. Would you rather spend $15 to get 30% of $100, or spend $50 to get 30% of $200 (or nothing)?

That's often the difference, from the lawyer's view, of settling versus going to trial.
posted by Mr. President Dr. Steve Elvis America at 1:29 PM on November 21, 2007


If she was a Wal-Mart employee, at work, when this happened, isn't Wal-mart's insurance supposed to pay for medical expenses? What the hell is medical insurance for?

Geeze, without medical insurance, where do you think she would've gotten the money to pay for medical expenses while waiting for her claim against the trucking company to pay? Hint: litigation can take years. Dying can take minutes.
posted by Mr. President Dr. Steve Elvis America at 1:30 PM on November 21, 2007


jamstigator writes "That's the point where a revolt will likely occur, and the hundreds of millions of poor folks will kill off the ten thousand wealthy people and try something different."

Not while there's a just god military they won't! And remember, those poor people are poor because of their laziness and lack of moral fiber, and the wealthy are wealthy because they worked hard and got what they deserve.
posted by mullingitover at 1:35 PM on November 21, 2007


Well I'm a lawyer and I think the lawyers probably are to blame. As ShadowCrash pointed out, the total settlement for the husband and wife came to just below $1 million, which just happened to be the upper limit of the trucking company's insurance cover.

It would have been waaay easier to settle the case at that level with the insurers than to do what would be necessary to get more - i.e. go after the assets of the trucking company directly. The sad fact is, not every case is settled at the best possible money. Of course that's a happy fact, if you are a defendant or an insurance company. If the sum recovered is in fact inadequate to cover her past and future treament (leaving aside general damages for pain and suffering) that would appear, prima facie, to be a very poor settlement indeed.

And in response to delmoi's question upthread - lawyers can indeed be sued for professional malpractice if they do a sucky job.
posted by tiny crocodile at 1:38 PM on November 21, 2007


Mr. President Dr. Steve Elvis America writes "Geeze, without medical insurance, where do you think she would've gotten the money to pay for medical expenses while waiting for her claim against the trucking company to pay? Hint: litigation can take years. Dying can take minutes."

How exactly would that work, anyway?

Doctor:"Sorry, ma'am. We're going to have to take you out of the hospital to die now. The accounting department has informed me that you're uninsured."

Lady in coma: "..."

Doctor:"Listen, I know I have a Hippocratic Oath to uphold, but the newer version we're taking after med school has a clause for those without insurance. The Doc gotta get paid, son."
posted by mullingitover at 1:39 PM on November 21, 2007


I'm convinced. I'm canceling my medical insurance on Monday. It's useless.
posted by Mr. President Dr. Steve Elvis America at 1:44 PM on November 21, 2007 [1 favorite]


If she was a Wal-Mart employee, at work, when this happened, isn't Wal-mart's insurance supposed to pay for medical expenses? What the hell is medical insurance for? This shouldn't be sold to employees as an employment benefit if, after it's all done, you get to spend the rest of your life in a wheelchair - For Free!

What point are you making, exactly? Her injuries were from an auto accident. They didn't happen on Wal-Mart property. But...even if she had been injured there, it would be in the hands of their Workers Compensation insurer. Her health insurance from Wal-Mart wouldn't have paid those claims, either.
posted by brain cloud at 1:57 PM on November 21, 2007


She got hit by a truck, she didn't win the lottery.

Walmart paid her medical bills, since she won an award to pay for medical bills, then that money should go to repay the entity that paid her medical bills initially.
posted by empath at 1:58 PM on November 21, 2007


Lets put aside the letter of the law for a moment. Let us put aside the fact that one of the parties in this mess is Walmart. Lets overlook the poor old lady aspect. Lets just look at the logic (of sorts).

a) She was awarded the sum based in part on medical costs incurred. Since the insurer has already covered these costs, then they should get that portion of the settlement, since they are the ones who actually incurred the cost, not the lady. There is no way to argue the old lady should get it, even if she did initiate the suit. Otherwise she is basically getting a double payout. However, I would argue the insurer should bear a portion of the legal costs.

b) She was awarded the sum without medical costs considered; it was punitive or regarded other costs (loss of income, other care expenses). Clearly, since the insurance company has not incurred those expenses (well, assume they haven't), they have no right to any of the claim.

Of course, some blend of (a) and (b) is possible, with the portion going to the insurer as appropriate.

This simple straightforward logic should be reasonably obvious. It has nothing to do with lawyers being a PITA, Walmart being scum, or poor old ladies.

Now once you accept the logic, you have to ask how do we determine what the payout was about, and did her lawyers behave correctly in terms of the quantity of the money. Surely when they set out their terms, they gave a justification. It usually lays out each item and the amount. Once things are negotiated, is all that information lost?
posted by Bovine Love at 2:03 PM on November 21, 2007


Walmart paid her medical bills, since she won an award to pay for medical bills, then that money should go to repay the entity that paid her medical bills initially.

More to the point, Walmart wasn't liable to cover those claims from the beginning, but they did, and explicitly stated that they expected to be reimbursed if there was a judgment & award. If anything, the insurance from Walmart probably saved that family's ass because otherwise the woman would have been on the hook for all the expenses until the settlement money came in. That would have been horrible.

I'm far from Walmart's biggest fan, but let's acknowledge that while they suck in many many ways, this isn't one of them.
posted by brain cloud at 2:05 PM on November 21, 2007


I pay a company for insurance with the understanding that they will cover medical expenses, for which they charge me a rate based on my age, health, and other factors that they have weighed such that they can, on average, make a profit insuring people like me. For them to take a settlement after the fact, to say "yes, you paid premiums, but since you have money now, we don't want to pay for the care" is like me telling the insurance company I want my premiums refunded because I did not get sick. If lawsuit awards are specifically for medical expenses, based on bills, then sure. Otherwise it is wrong.
posted by Nothing at 2:20 PM on November 21, 2007


Nothing: I am willing to bet that if you read all the fine print of your health insurer's benefits contract, there are pages and pages of "exclusions" -- medical claims arising from auto accidents being near the top, if not THE top, of the list.
posted by brain cloud at 2:23 PM on November 21, 2007


I pay a company for insurance with the understanding that they will cover medical expenses, for which they charge me a rate based on my age, health, and other factors that they have weighed such that they can, on average, make a profit insuring people like me.

Maybe you should, you know, actually read your life insurance contract. Any understanding should be based on what that says.
posted by Mr. President Dr. Steve Elvis America at 2:23 PM on November 21, 2007


At the end of the day, I completely agree with Dios that Deborah is not entitled to the money. Judges who know more about the law than either of us have already decided this.

Wal-Mart is completely within their rights to take every penny from her that they are legally entitled to. I'm sure they will.

Meanwhile she's sitting in a nursing home, probably until she dies. Her son died in Iraq. Her husband and family will go bankrupt keeping her in a near-vegetable state.

This issue is a great litmus test for determining someone's level of humanity. She racked up an insanely huge medical bill in the process of becoming a vegetable, but Wal-Mart made that much operating income in eight minutes. So yes, I agree that Wal-Mart is within it's rights to financially destroy her family, but should they? And should anyone do business with people like this?
posted by mullingitover at 2:24 PM on November 21, 2007 [3 favorites]


I don't even see how she could sue for medical expenses. She did not incur them.
posted by Nothing at 2:26 PM on November 21, 2007


I asked earlier in this thread for you to articulate some generally applicable moral principle that would obligate Wal-Mart to let this woman keep the money.

You declined. I suppose you find it easier to hand wave about "humanity" than actually flesh out what you're trying to say.
posted by Mr. President Dr. Steve Elvis America at 2:29 PM on November 21, 2007


Yes, I understand that my insurance contract says the very same things. Not only that, they won't cover anything that happens to me right now, because I am out of the country. But I have to keep paying them, along with a policy that covers me here, because if I don't, and something does happen, I won't be eligible to apply when I return. But what makes me mad is not that it is fucked up, but all the people here who seem to believe that this is okay.

Insurance contracts exclude everything they can and the law is usually on their side. All that means is that insurance companies can dictate terms due to their position, and have the money to lobby for laws that favor them. If a company does not want to cover medical expenses, it should not take premiums. If a company pays medical expenses for which it feels a third party is responsible, they can sue that third party. Otherwise they are just stealing. Not legally, of course, but they are.
posted by Nothing at 2:39 PM on November 21, 2007


Here, Mr. President Elvis: She paid them premiums, they assumed the responsibility to pay the bills. They are only entitled to settlement money they pursue and collect. Any money she pursues and collects must be for future care and loss of ability, because, since the health plan has assumed responsibility for medical bills, the woman does not have the right to sue for those damages. Morally, not legally, but that is what you asked for.
posted by Nothing at 2:44 PM on November 21, 2007


Nothing: I don't exactly get where you're coming from with your first point; the fact of the matter is that if subrogation hadn't happened in the woman's case, she would have effectively gotten twice the "coverage" for her accident -- once when Wal Mart paid her medical bills, and a second time when the truck company reimbursed her (instead of reimbursing the entity that paid them in the first place - namely, Wal Mart). These aren't any kind of legal or insurance industry shenanigans. She didn't deserve that cash. End of story. Her bills still got paid, though. What's the problem?

As far as your second point goes, that's simply an argument for universal health care. It won't make subrogation go away. Insurance companies of all kinds will still continue to exist, and will still insist on not double-paying claims.
posted by brain cloud at 2:51 PM on November 21, 2007


No, she would not have gotten twice the coverage. She would have gotten her medical expenses covered by the entity she paid to cover her medical expenses, and she would have received a settlement to cover ongoing care, loss of ability, and other damages from the entity paid to cover liability for the party at fault.

2 companies were paid for insurance and they both were responsible for paying up when this accident occurred. Once the woman's current bills have been paid AND future care has been assured, if there is any extra coverage in either policy the companies can fight out who pays what.
posted by Nothing at 3:08 PM on November 21, 2007 [1 favorite]


Is this reactionary easy target day on MeFi, or what? People don't get free money (even that belonging to a big ugly corp) just because tragedy befalls. Legal dictionaries quoted for outrage.
posted by dreamsign at 3:16 PM on November 21, 2007


some generally applicable moral principle that would obligate Wal-Mart to let this woman keep the money.

Here you go. It's in the first paragraph of the Wikipedia article: "Subrogation is the legal technique under the common law by which one party, commonly an insurer (I-X) of another party (X), steps into X's shoes, so as to have the benefit of X's rights and remedies against a third party such as a defendant (D).

1. D drives a car negligently and damages X's car as a result.
2. X, the insured party, has Collision insurance, and claims (i.e., asks for payment) under his policy against I-X, his insurer.
3. I-X pays in full to have X's car repaired.
4. I-X then sues D for negligence to recoup some or all of the sums paid out to X.
5. I-X receives the full amount of any amounts recovered in the action against D up to the amount to which I-X indemnified X. X retains none of the proceeds of the action against D except to the extent that they exceed the amount that I-X paid to X."

The important part here is Step 4.

X (Deborah Shank) was required to notify I-X (MEBA) of any legal action. She had three opportunities to do so, all of which she took: (1) when first claiming from MEBA; (2) when first suing D (the trucking company); (3) when the suit against D was settled. At each of these opportunities, MEBA did nothing about it. MEBA did not even contribute to Shank's legal expenses, let alone "step in" as per Step 4 above. Three years went by. Now they decide they want money.

Generally speaking, the idea of subrogation is fine and fair enough. But it comes at a cost: being in the driver's seat of the legal action. The generally applicable moral principle is this: MEBA failed three times to exercize its right to subrogate, and did not contribute to the legal action. Therefore its entitlement to subrogation ought to be withheld, as an example to others. If this stands, insurers will be encouraged to sit by and watch plaintiffs litigate, and if they are successful, swoop in for a "share" of the money without having done the work to get it.
posted by aeschenkarnos at 3:20 PM on November 21, 2007 [1 favorite]


How is it free money? She was a functioning adult, now she requires care for the rest of her life. Why should the state pay for her continued care when two insurance companies had been paid to cover this accident?
posted by Nothing at 3:22 PM on November 21, 2007


I will post once more and then shut up, I promise. I just don't see why this is not easy:

Liability insurance for trucking company is capped at one million. Settlement is for near that. Settlement (I assume) is meat to cover all liability. (No more suing after this.). That means that it must cover loss of ability, lost wages, long term care, etc, in addition to initial medical expenses. Obviously it is inadequate to do this, but the full amount should be apportioned (so if long term care is estimated to be 50% of the total cost, 50% of the settlement is marked for long term care), and the health insurance should only have a right to the portion for the initial hospitalization for which they paid.

Look at it this way: If the settlement had been for 100k, could the insurance company have taken that and then refused to pay claims over that amount? Of course not, because they are liable for the medical costs separately from the accident liability.
posted by Nothing at 3:33 PM on November 21, 2007


Why should the state pay for her continued care when two insurance companies had been paid to cover this accident?

? It shouldn't. Neither should Walmart.
posted by dreamsign at 3:40 PM on November 21, 2007


It will be paid for, and when her family is broke it will be the state. It should be paid for by the liability insurance of the person at fault. Instead, Walmart took that money. Walmart should not pay for long term care, they should pay for medical bills incurred while they insured the woman. What is so complicated about this?
posted by Nothing at 3:49 PM on November 21, 2007


Nothing: what it all boils down to is that more than likely (in fact, given that it's Wal Mart, a corporation not known for its largesse towards its employees, almost certain) the injuries from the accident were not a covered item on her employee health insurance (whether they should or should not have been is a debate for another time, but it's out of place here). Her being covered by insurance at the time of the accident has no bearing on whether or not the insurer was liable to settle those claims. Now, if she got a cold while in the middle of all this, or needed her appendix out, or broke her leg falling out of her wheelchair, that would be a matter for her employee health coverage. The fact that they paid her hospitalization and other care was most likely always predicated on the fact that they would take any financial award given by the insurer who settled the driver's claim.

It is sad and tragic that this happened to this lady, but how exactly is Wal Mart on the hook for it? Quite clearly they are not.
posted by brain cloud at 4:13 PM on November 21, 2007


Nothing get it right.
posted by washburn at 4:23 PM on November 21, 2007


Whoops. "Gets," I mean!
posted by washburn at 4:23 PM on November 21, 2007


brain cloud writes "It is sad and tragic that this happened to this lady, but how exactly is Wal Mart on the hook for it? Quite clearly they are not."

They won in the court of law, but they haven't won in the court of public opinon, and the judgement against them there could be far more costly than the subjectively tiny amount they're getting from their lawsuit.

It's stories like this that taint Wal-Mart's already bad reputation to the point that people actively lobby to prevent them from opening stores in their towns. This could be the deciding factor in some debates that keep them from opening stores in some cities, or it could influence a large number of people who have been on the fence about them to say, "That's the last straw, I'm not shopping there anymore." That's how this could end up costing the company far more than the eight minutes of operating income it's getting out of this woman.

It's amazing how a company can be so incredibly skilled in one area of business, that of systematically destroying competitors, and yet so feeble-minded in unifying its strategies with PR in order to prevent significant demographic segments from loathing them.
posted by mullingitover at 4:38 PM on November 21, 2007


Uninformed but curious.
If her attorney had stipulated that all proceeds in the law suit were to pay for her ongoing medical (future?) expenses would Walmart still be entitled legally to take from those resources their medical costs?
posted by notreally at 4:38 PM on November 21, 2007


washburn: No, only one company was paid to cover the accident, with shitty insurance to boot. In most cases $1m is minimum coverage for liability. The shit deal is that her legal team took it and closed the case when those damages were hardly in line with her lifetime costs.

It makes me sad that here, on MetaFilter, where more often than not people understand many matters and can discuss them (somewhat) intelligently and rationally, this even needs to be explained 100 times* in the same thread.

*hyperbole for effect only.
posted by brain cloud at 4:40 PM on November 21, 2007


mullingitover: those are nice sentiments but public opinion isn't worth a hill of beans when it comes to paying hospital bills. Like I said above, I could give a crap about Wal Mart -- I despise their business practices, I think the way they treat ALL their employees, not just one, is abhorrent, and on the whole they deserve every word of bad PR that they receive -- but on this matter, I can't find them at fault. True, it's a bad PR move but it is not a bad legal move (in fact it is a completely correct one) and a massively smart business move. Think about it -- any employee who has health insurance through Wal Mart, when they get in a car accident, it's Wal Mart's claim now? No. But that's exactly what the expectation would be if they set a precedent like a lot of people are suggesting here.

Would your employer do what you're asking? Think about it. If your answer is 'yes' I exhort you to read every line of your insurance coverage and come back and tell me you're 100% sure. Insurance Companies have whole departments...no, armies of people to make sure there is no overlap in coverage like this. People whose entire job it is to interpret the fine print of the coverage they provide and make sure not one one-hundredth of a cent is doled out over and above their contractual obligation. Yeah, it sucks. Yeah, when you hear stories like this one wonders "how can this be so?!?" but it is, for each and every one of us who is American and who has this to deal with as a daily fact of life whether or not it's ever in the forefront of our minds.

In the court of public opinion this is a crappy deal, absolutely. But think about this the next time you wonder why your insurance premiums are so insanely high while you're barely covered for anything: Would you want your insurance company to cover pity claims just for good PR? You'd be paying for it if they did.
posted by brain cloud at 4:51 PM on November 21, 2007


The fact that they paid her hospitalization and other care was most likely always predicated on the fact that they would take any financial award given by the insurer who settled the driver's claim.

Yeah, I'm having trouble here seeing how it would have been better had they not covered her interim medical expenses and thus avoided having to recoup later. Is that not worse? Obviously, making a gift of those funds on the other hand would be super duper nice, but I fail to see how it's become some kind of obligation. And had the loaned money become a gift, you'd all be sitting here calling it a cynical exercise in PR. They're not losing anything here they've already got.
posted by dreamsign at 5:07 PM on November 21, 2007


brain cloud writes "True, it's a bad PR move but it is not a bad legal move (in fact it is a completely correct one) and a massively smart business move."

I'm already on record as being on dios' side on this one (!?): Wal-Mart is the winnah, legally. I don't think we have the same idea of how costly a PR move it is, and how smart of a business move it is given the long-term damage it will do to PR. If 100,000 people read this story in the LA Times editorial and spend $10 elsewhere because of it, Wal-Mart just lost twice what they made from the judgement. If 100,000 people stop shopping at Wal-Mart for life because of it, it's even worse.
posted by mullingitover at 5:08 PM on November 21, 2007


Her lawyers are at fault here. Knowing that she had already had a half million worth of medical bills SUNK who settles for $1 million with a debilitating injury like this?

I find the point made above about the lawyer's motivation to settle very provocative. I think of contingency as aligning the lawyer's and the client's interests. But of course it doesn't even come close.

There's no way 100,000 people aren't shopping at Wal-Mart because of this.
posted by Wood at 5:50 PM on November 21, 2007


Nobody is going to stop shopping at Walmart because of this judgment.

I know people who loathe Walmart but still go because of the prices. This while they fully know it's fucking their town up the ass. They're certainly not going to stop shopping there because it's collected debt on an accident victim they've never met.
posted by dreamsign at 5:52 PM on November 21, 2007


I'm a work-at-home designer who never has clients visit my office, and even I have $1M in liability coverage. What the fuck is a trucking company doing with such a petty amount of coverage? That company should be sued out of the business and leave it to actual professional firms.

I'm curious, as well, as to whether the disbursements from a suit like this can be apportioned by the court to past and future expenses and whether then some of the money could have been protected? I have no problem with the insurer being reimbursed whatever their expenses were, I guess (though it does raise the question as to what insurance is for), out of the money received if it's use wasn't decided by the court, or from whatever sum the court says is to be dedicated to past expenses. But the article gives the strong impression that the court dictated that a trust be set up for this woman's future care, and that was the money that was taken.
posted by maxwelton at 6:09 PM on November 21, 2007


Right there with maxwelton about the purpose of insurance.

Always seemed to me that insurance premiums were what you paid to get an insurer to gamble nothing bad would happen to you. I never apparently realized that those same premiums were interest on loan payments.
posted by Samizdata at 6:16 PM on November 21, 2007


Generally speaking, the idea of subrogation is fine and fair enough. But it comes at a cost: being in the driver's seat of the legal action.

I don't know where you're getting this.

The insurer, as a practical matter, often does end up bringing the action to recover from D because the insured has already been paid and often has little motive to do so himself.

What you have to remember, though, is that the subrogee and subrogor may have very different incentives. If X's claim is subrogated $500k, due to X-I's out-of-pocket costs, and X-I brings the suit, X-I has no incentive to settle for more than $500k, since any additional recovery will have to be turned over to X.

If X has substantial additional injuries that X-I hasn't paid for, this could be a very bad deal for X. This was actually the situation in the linked story. Is your suggestion that MEBA sue the trucking company, recover their out-of-pocket expenses, and then the injured woman would sue as well?

I don't see how roughly duplicate lawsuits helps anything.
posted by Mr. President Dr. Steve Elvis America at 6:25 PM on November 21, 2007


Wow that LA Times editorial is scary. Have congress step in? as if more government ever helped anybody. As for 100,000 people deciding to never shop at Walmart because of this? That's just not likely. We'll see how many people saddle up that $499.00 32" LCD tomorrow and then we'll know.
posted by HappyHippo at 6:35 PM on November 21, 2007


I have no problem with the insurer being reimbursed whatever their expenses were, I guess (though it does raise the question as to what insurance is for), out of the money received if it's use wasn't decided by the court, or from whatever sum the court says is to be dedicated to past expenses.

I'm almost sure that the subrogation clause in the insurance contract provided that the insurer would be reimbursed first up to its full expenses out of any judgment or settlement relating to any injury it paid for.

Insurance is still useful here, because the injured party doesn't have to pursue the lawsuit at all. In fact, if actual recovery after paying legal fees and the insurer is nothing, it doesn't make a great deal of sense to pursue the suit.

The real problem here is that the trucking company either just didn't have the money to make the woman whole or her lawyers did a poor job. Several of us have already suggested that the lawyers may have had incentives to settle for substantially less than what what she could've been awarded at trial.

Of course, trials are risky, and a $3 million verdict just isn't very useful if the defendant simply doesn't have $3 million in assets and never will.

As a matter of public policy, I haven't given it a great deal of thought, but mandating proportional subrogation in the medical insurance context might not be a bad idea. The idea is that the insurer's share of any recovery would bear the same relation to the recovery as the insurer's costs bear to the total costs.

The giant problem with this, of course, is that there isn't any way (short of a second lawsuit) to determine what the total costs are if the initial suit settles. The insured will want to overstate this number, and the insurer will want to understate it, and there will be a battle about.

The more I think about it, the less workable this seems, since in the initial trial against D, the insured and insurer would want to go opposite ways with the total amount of damages (down to a cap, for the insurer). Their interests would be too divergent to possibly take the same side.
posted by Mr. President Dr. Steve Elvis America at 6:39 PM on November 21, 2007


What you have to remember, though, is that the subrogee and subrogor may have very different incentives. If X's claim is subrogated $500k, due to X-I's out-of-pocket costs, and X-I brings the suit, X-I has no incentive to settle for more than $500k, since any additional recovery will have to be turned over to X.

A good point, but: (1) in most cases the insurer's costs should be exactly equal to the insured's medical bills (perhaps minus some deductible), or if not, there's something distinctly wrong with the insurance policy; (2) the insurer may well be unable to accept any settlement without the injured party (ie, the insured)'s permission; (3) the insurer's settlement is only for costs the insurer can recover, ie that the insurer has paid, and ought not reduce any costs the insured can separately recover; (4) recovery for the insurer sends a very clear signal to the defendant that, on the same facts, the insured ought also be able to recover; and (5) the sensible way to approach this kind of thing would be to have a plaintiff's lawyer, a plaintiff's insurer's lawyer, a defendant's lawyer, and a defendant's insurer's lawyer all litigating the case together before the judge, who in the end decides the amount of the award and its division.

None of this changes the fact that in the case at hand MEBA had three chances to get involved fairly, and took none of them. Effectively, they were asked "Do you want to help with this court case? You could have a share of the winnings." and answered "Nah, we're good." and a significant length of time after the case was won, said "Well, actually, yeah, we do want a share of it." That is the problem with MEBA's conduct, and that is why I hope the decision gets overturned.
posted by aeschenkarnos at 7:55 PM on November 21, 2007


I suppose I just fundamentally disagree that there was anything "unfair" about what MEBA did.

The injured person was at all times obligated to reimburse MEBA out of any recovery she might have, and MEBA at no point waived this obligation. MEBA wasn't hiding. It reminded her that it was entitled to reimbursement.

I just don't see why MEBA should be forced to litigate on her schedule, or litigate at all, in order to preserve its rights. That was never agreed to, and it was never anyone's reasonable expectation.

The injured person just inexplicably ignored MEBA's right of reimbursement and got burned. This isn't unfairness. It's was just exceptionally poor litigation strategy that had a predictably awful result.
posted by Mr. President Dr. Steve Elvis America at 8:07 PM on November 21, 2007


Talking point: After universal healthcare comes, an entirely new IRS office building will be erected just to house the new department of subrogation. The new department will have the power to sieze assets. Discuss.
posted by bugmuncher at 11:02 PM on November 21, 2007


I'm a lawyer and I think -- we definitely don't know enough to know whether this is a good or a crap settlement. It may be that the theory of liability was questionable, or that the company would declare bankruptcy beyond its insurance. So that this was the best result. Or it may be a crappy result. We can't know without more.
posted by ClaudiaCenter at 12:49 AM on November 22, 2007 [1 favorite]


Those of you who feel so bad for this woman, why don't you give her some of your paycheck?

i did - so, for that matter, did you - think about that for a minute - much of the cost of her care that the insurers aren't going to cover now are going to be paid for by OUR taxes

i guess the only real observation i have to make here is that the law is set up in such a way that conflicts are inevitable between the various parties - and in the course of settling those conflicts, hundreds of thousands of dollars are paid to lawyers instead of hospitals, doctors, nursing homes, etc

and many members of congress just happen to be lawyers

kind of funny how that all works, isn't it? this is why we don't have universal health care - too many people are making money off of the mess we have

Talking point: After universal healthcare comes, an entirely new IRS office building will be erected just to house the new department of subrogation.

there would be no need for private parties to sue for medical expenses as those would be covered by the government - whether the government might want to sue people for causing careless injuries is another question

It's was just exceptionally poor litigation strategy that had a predictably awful result.

i get the feeling that her lawyers are idiots - they have made a hash out of this woman's situation

some generally applicable moral principle that would obligate Wal-Mart to let this woman keep the money

noblesse oblige - the general concept that when you are getting the best of what a society has to offer you, that it is unseemly to insist that the most desperate defendants be pursued to the utmost you can pursue them with

who breaks a butterfly on a wheel?
posted by pyramid termite at 4:39 AM on November 22, 2007 [1 favorite]


Happens all the time and will continue to be prevalent in the future.

Film at 11.
posted by triv at 6:38 AM on November 22, 2007


This is stupid. I was rear-ended by a big rig a month ago and my car was crushed between it and the car in front of me. I've had ongoing medical treatments since then, although due to pending legal blah blah blah

Point is, every doctor, lawyer, insurance etc form I filled out had a clause saying if I got some award or settlement, they would recoup their costs from that and even that if they got a check made out to me in their mail they would deposit it. This (the first part of that, at least) is common sense and thanks to the FPP I now know the technical term for that. I'm happy because I have not had any sort of collections nonsense and the costs will get taken care of eventually. But you can bet I read those forms carefully and double-checked the scope of their claim.

This woman should have gotten a bigger settlement. Either she drastically underestimated how much the medical care would cost or she got greedy at the thought of money now. In the first case, she should have done her research. In the second, sucks to be her.

Oh wait, she's permanently brain-damaged now and therefore dependent on others to evaluate her situation. So her husband should be ashamed of himself and her lawyers should be disbarred. Maybe executed.
posted by vsync at 11:31 AM on November 22, 2007


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