Wal-Mart Does Right by the Shanks

I want to briefly interrupt our torture memo coverage to laud Wal-Mart for finally coming to its senses in the matter of Deborah Shank . The case started back in 2000 when Ms. Shank, a Wal-Mart employee, was seriously injured in a minivan-vs.-18-wheeler traffic accident. Shank’s family sued the trucking company and won. Wal-Mart then sued the Shanks under the legal theory of “subrogation” to recover the medical costs it paid. Wal-Mart won in court, and on appeal, and the Shanks’ petition to the Supreme Court was denied . (And to add more tragedy to the story, the Shanks’ son Jeremy was killed in Iraq in September 2006 while this matter was pending.)

As you might expect, the retailer’s actions ignited a firestorm of media and public outrage. Wal-Mart defended its actions, saying “Wal-Mart’s plan is bound by very specific rules. … We wish it could be more flexible in Mrs. Shank’s case since her circumstances are clearly extraordinary, but this is done out of fairness to all associates who contribute to, and benefit from, the plan.” Wal-Mart’s position prevailed in court. But in the end, Wal-Mart decided that the public relations costs of this suit were too much to bear. In announcing its decision to settle, Wal-Mart issued this contrite statement :

Occasionally others help us step back and look at a situation in a different way. This is one of those times. We have all been moved by Ms. Shank’s extraordinary situation. Our current plan doesn’t give us much flexibility, so we began reviewing the guidelines for the trust that pays medical costs for our associates and their family members.

We wanted to understand the ongoing impact of any potential changes to the trust, and ensure that any action we take is in the best interests of our associates and their family members who participate in and contribute to our plan. We have decided to modify our plan to allow us more discretion for individual cases, and are in the final stages of working out the details.

Wal-Mart will not seek any reimbursement for the money already spent on Ms. Shank’s care, and we will work with the family to ensure the remaining amounts in the trust can be used for her ongoing care.

We are sorry for any additional stress this has put on the Shank family.

It’s tragic that one of America’s leading corporations needed such public outrage to teach it a lesson about good corporate citizenship. Just because it’s legal doesn’t mean it’s right.