Impressions

Wal-Mart: Retail’s Evil Empire - Impressions

By Tim Holland

A few weeks ago there was a story in the Wall Street Journal about a Wal–Mart employee who was severely injured in an automobile collision with a truck. The good news is that she survived the accident and had insurance coverage; the bad news is that her medical insurance was with Wal-Mart.

As the story goes, there was a settlement of $700,000 after the accident, of which more than $250,000 covered legal expenses and uninsured medical expenses with the balance of about $450,000 being placed in a trust fund for the benefit of the injured party, for the purpose of paying nursing home expenses, as the woman is now confined to a wheel chair and is in need of constant nursing care. The story probably should have ended there with the woman being confined to the nursing home, or at least assisted care for the rest of her life, and her family knowing that the funds were available to support her. Not so fast.

It seems that the insurance policy payments for her care came to over $400,000 and the policy contains a right of set-off clause, which states that the company has the right to claim settlement funds as reimbursement for medical payments made under the insurance policy. Attorneys representing Wal-Mart, of course, sued the woman for the remainder of the funds that had not been spent on her hospital care, i. e., the funds placed in a trust for her nursing/assisted care.

The court’s hands were tied based on the wording of the insurance contract and decided in favor of Wal-Mart. The reported result has been the dissolution of the trust established for the woman’s care and the remittance of its proceeds to Wal-Mart.

While the right of set-off is not unusual in insurance policies, they most often relate to secondary insurance policy proceeds where total reimbursement exceeds medical costs. Where long term care issues are involved, suing to recover expenses related to immediate care, at the expense of long term care, is a judgment call on the part of the company. Wal-Mart has continually shown itself to be the ultimate corporate entity with one single, primary goal: the maximization of corporate earnings at the expense of everything else.

The initial reaction to the story would be to say that Wal-Mart is wrong in what it did but I don’t think that’s the right approach.

One should always keep in mind that corporations are not human beings, even though they are granted such status in a court of law. A corporate entity is not a living thing: it does not breathe or talk, have a mind or a conscience. It has one primary objective and that is to provide income for its owners within a carefully structured environment. To say that Wal-Mart did this or did that is a major problem in the way we deal with corporations in the 21^st Century.

At Wal-Mart, as with all other corporations, decisions are made by people; policies and procedures are created and implemented by people. Most large companies, in an effort to control costs do everything they can to eliminate human intervention so that if “A” occurs then “B” is automatically implemented. As a rule, people costs are the largest line item on an expense statement and “people” activities dominate how Wal-Mart operates.

The way in which the management at Wal-Mart handled the case mentioned above says a good deal about the people running the company. To put some human faces on the problem rather than just continuing to refer to “the Company,” there are three people who, if they were not involved at the beginning they certainly should be now: M. Susan Chambers, EVP, People Division, Linda M Dillman, EVP, Risk Management, Benefits and Sustainability, and Patricia A. Curran, EVP, People, Wal-Mart Stores. Do these three executives really believe what the policies and procedures they administer are fair? Do they have any second thoughts about the heavy handed way in which the entire matter was handled?

Wal-Mart, like many other companies, likes to tout their charitable giving, but has anyone in management at the company given any thought to helping the woman’s family make application for a grant to the charitable arm of the company, as a way of having all or a portion of the $400,000 returned to a trust for her care? It’s not difficult to imagine the figure of a small lawyer in a red tie, complete with little horns and a tail, sitting on the shoulder of one of the three executives mentioned above and whispering in her ear: “Be careful now. You don’t want to set a precedent. You don’t want to impede the right of settlement clause. Think of all the funds that have been returned to the company because of that provision. Think of the earnings impact. No, this is a slippery slope you don’t want to start down.”

Corporations do not have hearts or consciences but people do. One can only hope that the people who sit on the board of directors of the company will begin to realize that their cost cutting, bottom line focus has gone overboard and that, while there are times when blinders on a horse are necessary, it’s not good to keep them on all the time. Sometimes fairness needs to trump precedent.

Note:

This opinion/essay is the property of the author. It is offered for use by individuals who are also free to copy and make it available to other individuals as they wish. Anyone wishing to make use of the material for commercial purposes must seek permission of the author, who can be reached at Impressions@Tim-Holland.com . Such permission will not be unreasonably refused.