Wal-Mart: Brain-damaged former employee can keep money

(CNN) -- A former Wal-Mart employee who suffered severe brain damage in a traffic accident won't have to pay back the company for the cost of her medical care, Wal-Mart told the family Tuesday.

Debbie Shank, 52, has severe brain damage after a traffic accident in May 2000.

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"Occasionally, others help us step back and look at a situation in a different way. This is one of those times," Wal-Mart Executive Vice President Pat Curran said in a letter. "We have all been moved by Ms. Shank's extraordinary situation."

Eight years ago, Debbie Shank was stocking shelves for the retail giant and signed up for Wal-Mart's health and benefits plan.

After a tractor-trailer slammed into her minivan, the 52-year-old mother of three lost much of her short-term memory and was confined to a wheelchair. She now lives in a nursing home.

She also lost her 18-year-old son, Jeremy, who was killed shortly after arriving in Iraq. When Debbie Shank asks family members how her son is doing and they remind her that he's dead, she weeps as if hearing the news for the first time.

Wal-Mart's health care plan lets the retail giant recoup the cost of its expenses if an employee collects damages in a lawsuit. And Wal-Mart set out to do just that after Shank and her husband, Jim, won $1 million after suing the trucking company involved in the wreck. After legal fees, the couple received $417,000.

Wal-Mart sued the Shanks to recoup $470,000 it paid for her medical care. However, a court ruled that the company could only recoup about $275,000 -- the amount that was left in a trust fund for her care.

The Shanks appealed to the U.S. Supreme Court, but the court declined in March to hear the case. CNN told the couple's story last week, prompting thousands of angry blog responses and at least two online petitions to boycott the company.

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On Tuesday, Wal-Mart said in a letter to Jim Shank that it is modifying its health care plan to allow "more discretion" in individual cases. Watch Wal-Mart reverse its decision »

"We wanted you to know that Wal-Mart will not seek any reimbursement for the money already spent on Ms. Shank's care, and we will work with you to ensure the remaining amounts in the trust can be used for her ongoing care," Curran said.

"We are sorry for any additional stress this uncertainty has placed on you and your family."

Wal-Mart's reversal came as shock to Shank.

"I thought it was an April Fool's joke," he told CNN.

"I (would) just like to let them know that they did the right thing. I just wish it hadn't taken so long," Shank said. "But I thank them and I hope they come through with all that they said they're going to do.

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