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Ed Normand
Ed Normand
Attorney • (866) 735-1102 Ext 336

Insurance Companies Taking Settlement Funds

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In a trend that is steadily getting worse, employers and insurance companies are attacking settlements and taking all of the funds that injured parties get in a settlement or verdict. Many times the victims are then left on welfare or medicaid with, yes us, the taxpayers footing the bill for future care. Sadly, many Courts are upholding these greedy practices.

Take the case of Deborah Shank who is disabled with permanent brain damage from a trucking accident. Her family was able to secure a settlement of $700,000.00 which netted them $417,000.00 after payment of fees and expenses. They then set up a trust that was required to be used to pay for her future care. That is until her employer, Wal-Mart Stores, decided they wanted the money instead of a trust for her future care. The Wal-Mart health plan sued the Shanks for reimbursement of the $470,000 accident related medical expenses it paid. Incredibly, U.S. Federal Courts backed Wal-Mart allowing them to take all of the money in trust set up for her care. They got the money even though it left the Shank’s with nothing and even though she is severely, permanently injured and even though they took all the time, risk and effort to get the settlement. Sadly the family is left to the mercy of taxpayers to fund her expensive medical needs with Medicaid and her Social Security.

How did this happen? In the past most States had laws set up that allowed health insurers to get repaid a fair share of the settlement funds in proportion to what percentage the total settlement represented past medical bills. A Federal law called ERISA has been interpreted to overrule the fair state laws and has been exploited by many insurers and health plans to allow the plans to lay in wait until a family gets a settlement. Then they jump in and sieze all of funds up to the amount of medical expenses even where it leaves the family with little or notihing from the settlement. This is true even though the insurers do not even bother to share in any of the time, risk or expense of the lawsuit. They get all the money with none of the risk and none of the lifelong suffering that the funds are intended to compensate. Some Federal Courts are condoning these practices essentially giving the insurers the right to take everything recovered until they are paid in full 100%.