How Does Wal-Mart Sleep at Night?

by Chris Kenton on November 20, 2007

Let me preface this post by stating clearly that I’m a capitalist. I love business, I work hard to support myself and my family, and I’m no fan of gratuitous entitlements. At the same time, I believe fundamentally in human compassion. When it comes to the basic requirements of life and a healthy society–safety, shelter, nutrition, health–I believe we have an obligation as a society to ensure a minimum standard for everyone. And if practicality moves you more than compassion, then consider it a basic insurance policy against civil unrest and a cheap investment in social stability.

I consider this not only a human responsibility, but a corporate responsibility too. Corporations are simply a magnificaiton of the values and behaviors of individuals. So when I read about Wal-Mart suing one of its employees, a woman left brain-damaged after a serious auto accident, so that Wal-Mart could take her legal settlement to repay itself for healthcare payments made under her insurance policy, I can only say that words can’t convey the depth of my utter and abject disgust. The $417,000 that Wal-Mart just seized from a woman in a nursing home was set up in a trust to pay for her future care. Now it will go to offset the $470,000 Wal-Mart’s healthcare plan paid out for medical bills after the woman’s accident. To ensure they got the entire amount, Wal-Mart not only sued for the original payments, they sued for legal expenses and, I can’t even believe this while I’m typing it, interest

Sharon Weber, a spokeswoman for Wal-Mart, declined to discuss the details of the Shanks’ case, but said the company was obliged to act in the interest of the health benefits of its employees as a whole. "While the case involves a tragic situation, our responsibility is to follow the provisions of the [company health] plan which governs the health benefits of our associates," she said.

Keep in mind, this wasn’t some woman abusing the legal system to make some specious and ridiculously inflated claim for exagerated injuries. Not like, say, someone suing for millions of dollars because they spilled hot coffee in their lap. This is a woman who will live in a nursing home for the rest of her life. She won enough money to ensure an ability to pay future bills that would extend her care a fraction beyond the level of being a ward of the state. Wal-Mart took it all.

This is the new trend in U.S. healthcare. It’s not enough that we pay exhorbitant insurance premiums for crappy healthcare. Now many companies are starting to go after patients who receive a legal settlement to pay back medical expenses. So what is it, exactly, they are willing to pay for after collecting and banking our premiums? Of course, they couch it all in "the interests of our policy holders". Bullshit. For the $12-15 per year this represents to policy holders, out of the $10,000+ they pay in premiums, I guarantee policy holders would rather have the peace of mind that if, in the tragic event of a catastrophic injury requiring a lifetime of round-the-clock care, the company would leave them the hell alone and not seize every last penny like some mega-grinch.

I’m sorry. I love business. I do a lot of work for a lot of big companies, and I see a lot of good and bad things in the balance. But my notion of a functioning civil society does not have room for behavior like this. Wal-Mart is an abomination.

{ 10 comments… read them below or add one }

Anonymous November 21, 2007 at 6:00 pm

what does this have to do with marketing?

Chris November 21, 2007 at 9:10 pm

Everything.

How much do you think a major ad campaign costs for Wal-Mart? Or a major PR push? More than the $400,000 they seized from this woman. For a company spending millions in one department to try and burnish a reputation that is costing them millions in other departments with pitched battles against growing public and regulatory resistance to every move they make, this a stupid mistake.

In an age of ubiquitous media, Wal-Mart’s corporate behavior is a huge influence on its reputation. Reputation is one of the key components of brand equity, and is therefore one of the most critical business objectives in marketing, not to mention finance. With stories this week in the LA Times and Wall Street Journal, now burning a brushfire through social media, you can bet this impacts marketing costs, brand equity, and ultimately shareholder value.

Dave in Oh November 22, 2007 at 8:12 am

This is a public relations nightmare which has caught your personal attention – great conversation for the bar or golf course. However, it’s not what I expect to read on this site.

Also – why don’t you hold the courts in contempt for any of this? It’s been through 2 cycles with the same result.

Chris November 22, 2007 at 8:21 am

That’s the beauty of social media. I can write what captures my personal attention, and you can do the same. I write on this site about marketing, and I frequently and freely draw the deeper connections to other areas of the business that directly impact marketing and brand equity. This is clearly such a case. I understand there are those who disagree with the political implications, and that’s fine. I’m willing to stand my ground and state my case in public.

I don’t hold the courts accountable because their job is simply to uphold the law. No one is arguing that what Wal-Mart did was illegal. It was simply heartless, cruel, and enormously stupid for obvious business reasons already stated. There’s no law against heartless and cruel stupidity. Wal-Mart had a choice. They made a bad decision.

Dave in Oh November 22, 2007 at 2:08 pm

My objection has nothing to do with the political implications of the story – rather my objection has everything to do with my expectations, or instead, the expectations you have set for what I will find when I read your blog.

Maybe you could have another blog called Chris’ soap box for the grab bag stuff.

You could call it Chrisotomony.

๐Ÿ™‚

Chris November 22, 2007 at 5:07 pm

Okay, Mr. Cincinnati–is the first time we’ve debated on my blog? Seems hard to believe–you’ve read my blog long enough to know that I don’t shy away from making statements of principle, and I don’t intend to start now. I’ve made my case for why I think Wal-Mart actions were a serious business mistake, with real marketing implications. I guarantee their corporate marketing team is talking about little else this week, and probably next.

Maybe you’d like to make the case that this has nothing to do with marketing, and that Wal-Mart’s behavior has no impact on their ongoing and costly public relations dillema. But you haven’t made that case.

The only expectations I set on this blog are that I’ll speak my mind on issues I find important and which relate to business and marketing. If you think public discussion should stop at the level of the marketing campaign, I can point you to a lot of other nice blogs you won’t find objectionable.

Besides. You didn’t want me to talk about this on the 13 hole, why do you want to come here to tell me not to talk about it all over again? ๐Ÿ˜›

Mr. C November 22, 2007 at 6:56 pm

I just checked – Chrisotonomy is available.

Chris November 22, 2007 at 8:19 pm

Can you wrap a domain in a bow?

Mr. C November 23, 2007 at 7:34 am

I would, but now I’m having a tough time between Chrisotonomy and Chrisology.

Chris November 23, 2007 at 8:00 am

That’s it. You’re banned.

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