Greedy Insurance Provider Thwarted in Attempt to Grab Chaplain's Settlement

Three years ago, a woman named Pamela Scroggins took a nasty fall in a parking lot owned by a Missouri Red Lobster franchise. Scroggins' attorney, Roger Johnson of Joplin, tells Daily RFT that his client fractured her neck -- and, to this date, is still unable to return to work.

​Naturally, Scroggins sued the local Red Lobster franchisee. And, naturally enough, they agreed to a settlement to help her out and compensate her for her suffering.

All well and good, right?

Wrong.
Scroggins' insurance plan subsequently contacted the Red Lobster franchisee's insurer -- and announced that they'd spent $151,323 on Scroggins' medical bills. That much of the settlement money, the insurance company believed, belonged to them.

Say what?

Johnson, the attorney representing Scroggins, says that Missouri courts have long held that insurance companies can't just go swiping settlement payments from people enrolled in their plans. And that's something the insurance provider in this case, the Sisters of Mercy Health System, knew -- or should have known: Its name is on one of the key precedents in this state, an appellate ruling known as Schweiss v. Sisters of Mercy.

Yet even after being rebuffed by the trial court judge, court records show that the Sisters of Mercy appealed the decision to the Missouri  Court of Appeals, Southern District.

Last week, a three-judge panel unanimously concurred with the trial court -- telling the Sisters of Mercy to take a hike in a sharply worded opinion.

"They continue to try to be creative to see if there's a new approach to getting [settlement money]," Johnson tells the Daily RFT. "Fortunately, the Southern District didn't go along with it."

Indeed. "Missouri courts have never allowed a provider to be reimbursed for medical expenses that the insured recovers in a settlement from a liable third party," the opinion says, "and we decline to do so now."

But that doesn't necessarily mean Scroggins is out of the danger zone: "They may be gearing up for an appeal to the state supreme court, though I would hope they wouldn't." (Alarmingly, an Arkansas court has ruled in favor of the insurance provider in a similar case, Johnson says -- so the insurance companies may be feeling hopeful.)

The worst part of this particular case, Johnson notes, is that the Sisters of Mercy is a self-funded plan for employees at St. John's Hospital in Springfield, Missouri. Until her injury, Scroggins actually worked there as a -- seriously, folks! -- chaplain.

"She was helping people within same Sisters of Mercy system, and now she's permanently disabled from being able to work," Johnson says. "But rather than saying, 'This is an employee we're going to take care of,' they decided, 'We want our money back.'"

And you wondered how insurance providers got such a bad reputation ....