Employers grab accident victims' cash

Wall Street Journal has an article, posted on MSN Money on how health plans run for major corporations are forcing employees to allow the health plans a claim on any damages they receive if injured. The practice seems to be condoned by US courts; an appeal is on the way to the Supreme Court, but that Court has proven itself to be very friendly to business, and it's doubtful that the practice will be disallowed even if the legal grounds are less than clear.

This surely doesn't help Wal Mart's image, but the article features an ex-Wal Mart employee who suffered severe brain damage on the job, and won $419,000 after legal fees in a lawsuit. The money was placed in a trust for her care, and she requires long-term care, which is rather expensive. However, the theory that employers and health plans are using here is that, in an effort to defray the rising costs of health care, they are requiring workers who sign on to the plan to allow the plan first claim on any settlements they may receive in compensation. The recovered monies do, in theory, benefit others who participate in the plan.

The American Benefits Council and America's Health Insurance Plans, a health-insurer lobby, estimate health plans recoup about $1 billion a year in medical claims from accident settlements and other third parties. A cottage industry of auditing firms, benefit-recovery specialists and subrogation lawyers help them. They estimate that 1% to 3% of health-care spending is potentially recoverable from such claims.

It's important to note that while this case features Wal Mart, and while I dislike many of Wal Mart's practices, many other employers are doing this. It's not just about the big W.

I'm sure that the companies have ensured that they are on good legal grounds. However, the practice is completely unethical. Insurance never covers all the costs of an accident or its aftermath. The monies are awarded to the victim, not to the insurer. Additionally, the insured is paying their premiums so that the insurer will cover them - why should they have to double-pay?

Regardless, it is no secret that health-care costs are on the rise. This is not something that a universal insurance plan, or universal healthcare, will address directly.