The Outcry Over WalMart: It's Overblown
CNN.com has posted a story about the brain damaged WalMart employee who lost her appeal to keep the $470,000 due to the WalMart benefit plan on a reimbursement claim. This case certainly plays well to the media and the anti-WalMart sentiment, but the public at large seems to miss some of the most important issues relevant to benefit plan administration.
First, the WalMart plan is self-insured, meaning that there is no insurance company being mean and there should be no debate about premium dollars paid. As a self-insured plan, ERISA and the corresponding federal rules governing plan administration dictate that a plan be administered in accordance with its terms. That means if it has a reimbursement provision in the plan, then that provision must be enforced or the plan administrator could be deemed to have breached a fiduciary duty. Imagine the outcry if the plan could not pay benefits because it ran out of money and the shortfall could have been cured by enforcing reimbursement claims? Would you forgo benefit payments for you and your children so that other employees could keep personal injury settlements in full? And of course, that is the real issue.
In the vast majority of personal injury settlements, the recovery made is more than adequate to compensate the injured party AND reimburse the health plan for medical expenses paid. Despite the fact that the law requires reimbursement, very few plans actually receive voluntary reimbursement. Personal injury attorney and participants regularly refuse to reimburse plans, meaning higher plan costs and expenses to all other participants. The courts (both the lower and appeals courts) affirmed the basic rule that if the plan is entitled to reimbursement, it must be reimbursed.
I note that the WalMart plan has not actually enforced its judgment and has not collected any money. It may never collect it. But the rule of law has been affirmed: if the plan is entitled to reimbursement because of the terms of the plan, participants are required to abide by those terms.
