Photo by Shaun Heasley

Chastened in the court of public opinion, Wal-Mart recently dropped its bid to take more than $400,000 from Debbie Shank, a brain-damaged, wheelchair-bound former employee.

Wal-Mart’s health plan disbursed $470,000 in medical expenses for Shank, 52, of Jackson, Mo., after a car crash eight years ago. However, when Shank and her husband, James, won a $1 million settlement from a trucking firm involved in the accident, Wal-Mart went after $417,000 set aside for Debbie Shank’s long-term care.

Shank’s ordeal was precipitated by a clause in Wal-Mart’s health plan that allows the company to retrieve damages won by employees in lawsuits. Such a provision is a lot more prevalent than most people think, says University of South Dakota law professor Roger Baron.

“ Nobody knows what this is until it actually hits them,” he says.

After a ton of negative press, Wal-Mart backed off. “Occasionally others help us step back and look at a situation in a different way,” according to a Wal-Mart statement. “This is one of those times.”

James Shank views Wal-Mart with ambivalence.  “I’m relieved they did the right thing,” says Shank, who lost a son serving in the Army in Iraq last year. “But I still have some problems with them.”