Personal Injury Lawsuits Decrease the Cost of Health Care Insurance
A recent lawsuit between Wal-Mart and its employee, Debbie Shank, has very publically demonstrated that the myth perpetuated by some tort reformers that personal injury lawsuits raise the cost of healthcare is simply not true. As the Wal-Mart case demonstrates, personal injury lawsuits actually decrease the cost of health insurance.
The Wal-Mart lawsuit is based on the simple fact that most if not all health insurance contracts contain a clause requiring a personal injury victim to pay the health plan back out of any personal injury recovery for all health insurance proceeds paid as a result of a wrongdoer's negligence. In the Wal-Mart case, Wal-Mart administers its own health insurance plan for its employees. When Shank was injured in an auto accident, Wal-Mart paid approximately $470,000.00 worth of health care benefits on Shank's behalf. After Shank recovered about $1 million dollars in a settlement, Wal-Mart successfully sued Shank to recover from the settlement proceeds, its entire $470,000.00. The courts decision to require Shank to pay back her health insurance for the benefits she received is not unusual. In fact, what is unusual is the fact that a lawsuit was needed to resolve the conflict. In the overwhelming majority of cases in the state of Florida, and probably the United States, the personal injury lawyer and the health insurance plan negotiate the amount to pay back and the health insurance plan is reimbursed when the settlement is paid. In the absence of the personal injury claim, there would be no settlement, the health insurance would never be paid back, and health insurance rates would actually be higher to make up the difference.
The dispute in the Wal-Mart case involves the fact that Wal-Mart was unwilling to negotiate. They wanted all of the money back. As the appellate court case demonstrates, the law is on Wal-Mart's side. The question raised by the media attention from television commentators Anderson Cooper from CNN and Keith Olberman from MSNBC is whether or not the current state of the law is fair. From the perspective of plaintiffs such as Debbie Shank, the law is clearly unfair.
Under the current state of the law, Ms Shank must pay from her settlement the cost of bringing the claim and her attorney's fees. Health insurance plans such as Wal-Mart, however, get a free ride off the plaintiffs back. They pay nothing for the costs and attorneys fees and take no risk in the litigation. If there is no recovery, it does not cost them anything. If there is a recovery, they stand there with their hand out demanding full payment. The fair thing to do would be at a minimum to require the health insurance plan to reduce their claim by its fair share of the costs and attorneys fees. Many reputable health insurance plans will ultimately agree to this reduction because they know that the plaintiff has incurred these costs on their behalf.
The current state of the law often also fails to take into account whether the settlement proceeds will take care of all of the plaintiff's needs in the future. Often, the proceeds remaining after paying costs and attorneys fees do not. That is certainly the case for Mrs. Shank. The accident left her severely brain damaged and wheelchair bound. She was left with $417,000.00 after paying costs and attorney's fees, but her anticipated future needs were in the millions. Since Wal-Mart wanted its entire $470,000.00 back, she would have been left with nothing.
There are many possible reasons why Mrs. Shank's settlement did not accomplish paying for all her future needs. Sometimes the wrongdoer did not purchase enough liability insurance and or does not have enough financial assets to pay the whole claim. Sometimes, plaintiffs agree to less than full value because of the risk that a jury will decide the person or entity sued was not responsible and therefore award nothing. Regardless of the reason, accepting less than full value in a settlement is a common occurrence. If health plans are not willing to compromise and take less than full value in such situations, plaintiffs will not find it worthwhile to bring claims. For example, I am sure Mrs. Shank did not bring her claim for the sole purpose of paying her lawyers and Wal-mart. Simply put, if health plans insist on full value, many claims will not be brought and their zest to get "everything they think they deserve" will result in them getting nothing.
Recently, Wal-mart gave in to the political pressure generated by television commentators like Anderson Cooper and Kieth Olberman by dropping its lawsuit against Mrs. Shank. Unfortunately, most plaintiffs in this situation do not get help from such heavy hitters. The result is they are simply out of luck.
Of course, not everyone thinks Wal-mart made the right decision. Radio and television personality Glenn Beck for example has equated Mrs. Shank and the media that helped her as "terrorists" engaged in "economic blackmail". It appears from his comments that Mr. Beck has blindly jumped into the controversy head first without doing enough research to thoroughly understand the issues. He does make a good point regarding the fact that Wal-mart was more than generous after getting caught overreaching when it finally decided to waive its right to any payment instead of simply reducing the amount it was demanding. However, his arguments fall apart when measured by his own claimed conservative values. For example, he claims she agreed to the terms of the health plan when she accepted the health benefits. The truth is an employee has absolutely no bargaining power regarding the terms of the health insurance selected by their employer. In fact the employee generally has no way of knowing what is in the fine print of the contract because they are not given the actual contract at the time of signing up. Of course, even if the contract were given to the employee; the employee could find the small clause berried in the many pages of fine print; and the employee had the education to understand the arcane legalese within the document; the employee would still have no choice. If the employee wanted the insurance, the employee would have to accept the clause. Health insurance plans know this and take advantage of the situation. They do not put fair terms in their contracts such as agreeing to an amount reduced by attorney's fees and costs. Instead, they overreach and try to get more than their fair share simply because they can. If Mr. Beck were truly concerned with the conservative value of personal accountability, he would be praising Wal-mart for reassessing its previous policy of taking more than its fair share just because it can, instead of calling catastrophically injured personal injury plaintiffs and those that advocate for them "terrorists".
Scott Distasio
Tampa Personal Injury Lawyer
DISTASIO LAW FIRM
HELPING INJURED PEOPLE
OFFICES: TAMPA
1-888-595-0022
