Pension Protection Act Blog

Roy F. Harmon III of the Health Plan Law blog is reporting that a Petition for Certiorari has been filed in Administrative Committee of Wal-Mart Stores Inc. v. Shank, and has a copy of the petition for cert. posted on his website. He is also reporting that the Court has sent a letter to Wal-Mart’s attorney asking for a response to the petition.

In the petition for cert., the question presented is:

Whether it is both “equitable” and “appropriate” to require a catastrophically injured individual to reimburse an ERISA plan when the reimbursement leaves the individual penniless, gives absolute priority to the reimbursement claim without regard to the full extent of injuries and damages sustained, and must be made out of a recovery obtained for damages other than medical expenses.

Administrative Committee of the Wal-Mart Stores, Inc. Associates’ Health and Welfare Plan v. Shank, No. 06-3531 (8thCir. 2007) was the opinion from the 8th Circuit Court of Appeals last summer where the district court granted summary judgment in favor of the plan, and the 8th Circuit affirmed.

Deborah Shank was a Wal-Mart employee and a participant in Wal-Mart’s health and welfare plan when she was severely injured in a car accident and was eventually adjudicated as incompetent. The plan paid $469,216 for her medical expenses related to the accident. Shank filed a lawsuit against the parties responsible for her injuries and obtained a settlement of $700,000. After deducting attorney’s fees and costs, the district court placed the remaining $417,477 from the settlement into a special needs trust with Shank as the beneficiary and her husband as the trustee.

The plan, pursuant to the subrogation and reimbursement clause in the plan, sought to recover the full amount of the expenses it paid on Shank’s behalf and brought a lawsuit against Shank under ERISA section 502(a)(3). The district court granted summary judgment to the plan, and the 8th Circuit affirmed.

At this point, it is not clear whether the U.S. Supreme Court will actually decide to hear this case. One topic around the office this week has been how much the Administrative Committee of the Wal-Mart Stores, Inc. Associates Health and Welfare Plan has litigated these claims in such a variety of jurisdictions that these opinions will probably have a lasting effect on jurisprudence in this area.

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