It seems to me that the injured party is in a zero-sum situation. She initially got money to pay her med bills from WalMart, then she got the same money from the lawsuit, and now WalMart, as per their policy wants the money back since the injured party has received money from a different source. She is thus no further back than after Walmart initially paid. There is therefore nothing resembling immorality here.
Actually, due to the nature of her injuries, $1M is not enough money to make her “whole.” In other words, there is not enough available money to compensate the poor lady given the amount of medical bills she sustained and will continue to sustain into the future.
Wal-Mart (or their insurer) had a contractual obligation to pay her medical bills. They had a standard subrogation clause in their boilerplate insurance contract. They have a right to be paid back the money they shelled out if a third party is found to be responsible for the injuries the woman sustained.
But, Wal Mart did nothing to assist in retrieving the money from the responsible party. They have the right to hire their own attorney and seek to be compensated from the third party themselves. They chose to let the woman’s attorney do the work, and they wanted their money back for free. This is considered ineqitable under many state subrogation laws. Under the rule entitled the “common fund doctrine” Wal Mart would be able to subrogate, but they would have to reduce the amount of money they receive (actually the reduction would be thrust upon them by the court) by what they would likely pay an attorney to retrieve the money for them,
plus a pro-rata share of the litigation expenses.
Other states have a more sensible subrogation rule. It is called the “made-whole” doctrine. Under this rule, if the injured party were not “made whole” by a settlement or jury award, then the insurance company (who, after all has a contractual obligation to pay for medical bills) gets nothing back. The key to this doctrine (and why I belive it is more sensible) is that insurance companies are better suited to shoulder the risk. The woman who is injured and needs lifetime care is unable to shoulder the risk. So, who should the money go to?
For my money we should fully compensate those who are catastrophically injured. Otherwise, you and I pay for their care through our taxes.
I don’t mind paying more in taxes to help people in need. But I’ll be darned if I’ll pay one penny extra when there is someone else out there with the wherewithal
and the obligation to pay.
Lastly, the reason Wal Mart was able to sue for reimbursement was because of a change in the federal law governing health insurance plans. It’s called ERISA, and due to recent federal court rulings, the right of states to apply their equitable subrogation rules has been virtually eliminated. The appellate court rulings favor the insurance company’s rights to subrogate over the injured party’s right to be fully compensated.
Ultimately Wal Mart did the right thing by waiving their right to subrogate, but in my view, it was not out of the goodness of their heart.
Unfortunately, people like me have no choice but to shop at Wal-Mart because of their low prices.