CITIZENS
for
Limited Taxation
Post Office Box 408     Peabody, Massachusetts   01960     (508) 384-0100
E-Mail: 
cltg@cltg.org       Web-page:  http://cltg.org


CLT Update
Saturday, January 30, 1999

Tobacco Settlement Project #1


The $7.6 Billion "Tobacco Settlement"
Facts vs. Rhetoric


"It makes sense for the state to use $9 billion of its $25 billion share of the settlement to reduce county property taxes -- not because it may be politically popular, but because this is the amount that rightly belongs to property taxpayers in the counties outside of New York City who bore much of the cost of treating tobacco illnesses. ... New York is one of only two states that ask county taxpayers to pay half of the state's portion of Medicaid. ... It is only fair to return to county taxpayers the billions that they paid."

New York Times
December 4, 1998
Letter to the Editor
U.S. Rep. (Senator-elect) Charles Schumer
Ultra-Liberal Democrat



CLT has filed a bill for the Legislature to return the "tobacco settlement" -- $7.6 billion over 25 years -- to the taxpayers, who are the damaged party.

Meanwhile, just about every politician on Beacon Hill has a bait-and-switch scheme for how to spend it on this "worthy program" or that "unmet need," forgetting the whole alleged purpose behind Attorney General Harshbarger's lawsuit against the tobacco industry.

So before going any farther, let's go back to the beginning and put everyone's memory in gear so we can all get our facts straight and the history in perspective.

For the sake of this debate, let us set aside the false premise that smokers put a financial burden on taxpayers who do not smoke. [Annual state tobacco excise and sales taxes alone total $300 million. The Commonwealth spends $200 million a year on smoking-related illnesses. That's an annual $100 million net profit from smokers alone for the state treasury.] Let us put aside for the moment that the entire $7.6 billion "settlement" is extorted profit, free and clear.

The "tobacco settlement" is the direct result of Attorney General Harshbarger's relentless insistence that taxpayers were damaged by the tobacco industry. As the attorney general himself argued in Middlesex Superior Court: "the Supreme Judicial Court has held, reimbursement is simply 'repaying or making good the amount paid out.'"

It's time for the taxpayers to receive their reimbursement!

Chip Ford --


COMMONWEALTH OF MASSACHUSETTS
Plaintiff,
v.
PHILIP MORRIS INC., R.J. REYNOLDS TOBACCO COMPANY, BROWN & WILLIAMSON TOBACCO CORPORATION, B.A.T. INDUSTRIES P.L.C., LORILLARD TOBACCO COMPANY, LIGGETT GROUP, INC., NEW ENGLAND WHOLESALE TOBACCO CO., INC. ALBERT H. NOTINI & SONS, INC., THE COUNCIL FOR TOBACCO RESEARCH - U.S.A., INC., and THE TOBACCO INSTITUTE, INC.,
Defendants.

Civil Action Number 95-7378

December 19, 1995

COMPLAINT

The Commonwealth of Massachusetts, by Attorney General Scott Harshbarger, for its Complaint alleges as follows:

[ . . . ]

6. The Attorney General, Scott Harshbarger, brings this action on behalf of the Commonwealth of Massachusetts and its Division of Medical Assistance (collectively, the "Commonwealth") pursuant to his authority under, inter alia, Massachusetts common law, G.L c. 12, 3, 5 and 10, G.L. c. 118E, 22 and St. 1994, c. 60, 276. The Attorney General brings this action to obtain declaratory and equitable relief, damages and restitution. The Attorney General seeks to recover the smoking-related costs to the Commonwealth, including, but not limited to, increased expenditures for:

a. Medical assistance provided under Massachusetts' Medicaid program pursuant to G.L. c. 118E. Under the medical assistance program, the Commonwealth pays for medical services provided to program recipients. The Commonwealth pays a substantial share of these costs, with the federal government bearing the remaining costs. In fulfilling its statutory duties, the Commonwealth has expended and will expend substantial sums of money due to the increased costs of providing health care services for smoking-related diseases.

b. Medical assistance provided under the CommonHealth Program pursuant to G.L. c. 118E, 16, 16A. Under this program, the Commonwealth pays for medical services for disabled adults and children who are not eligible for Medicaid. In fulfilling its statutory duties, the Commonwealth has expended and will expend substantial sums of money due to the increased costs of providing health care services for smoking-related diseases.

[ . . . ]

207. Defendants assumed and owe a duty to pay for the harm caused by their wrongful conduct, yet have repeatedly refused to do so. Instead, defendants have engaged in a conspiracy of suppression, concealment, and deceit in order to deny responsibility and avoid paying for the consequences of the harm they have caused the Commonwealth of Massachusetts and its citizens.

208. Plaintiff has been and is required by statute and contractual obligations to expend substantial sums of money to pay for the harm caused by the wrongful conduct of defendants. Plaintiff intends to charge and recoup from defendants these sums of money Plaintiff's expenditures are immediately necessary to protect the public health and safety.

209. As a result of defendants' wrongful activities, plaintiff has borne a duty that, in law, equity and fairness, ought to have been borne by defendants.

210. As a direct and proximate result of defendants' conduct, the Commonwealth has suffered and will continue to suffer substantial injuries and damages for which the Commonwealth is entitled to recovery.

[ . . . ]

213. Without justification, defendants have refused and failed to pay for the consequences of their unlawful conduct. The Commonwealth's expenditure of substantial sums to pay for the costs of medical care for indigent smokers has unjustly enriched the defendants.

214. As a result, plaintiff has been required to pay for the medical costs resulting from defendants' unlawful conduct. Plaintiff has borne a duty that, in law, equity and fairness, ought to have been borne by defendants.

215. In equity and good conscience, it would be unjust for defendants to enrich themselves at the expense of plaintiff.

216. As a direct and proximate result of defendants' conduct, the Commonwealth has suffered and will continue to suffer substantial injuries and damages for which the Commonwealth is entitled to recovery.

[ . . . ]

RELIEF REQUESTED

WHEREFORE, the Commonwealth requests that this Honorable Court issue an order and judgment against the defendants, jointly and severally, as follows:

[ . . . ]

E. Ordering defendants to pay restitution;

F. Awarding damages and compensation to the Commonwealth for past and future damages, including but not limited to health care expenditures, caused by the defendants' actions in violation of the laws of the Commonwealth, together with interests and costs;

G. Awarding the Commonwealth reasonable attorney's fees and costs pursuant to St. 1994, c. 60, 276;


UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

COMMONWEALTH OF MASSACHUSETTS
Plaintiff,
v.
PHILIP MORRIS INC., et. al,
Defendants.

Case No. 96-10014 (GAO)
January 2, 1996

[ . . . ]

(b) Plaintiff seeks in this action to recover from defendants payments made pursuant to the federal Medicaid program. ... in obtaining reimbursement for those Medicaid payments originally made by the United States via the Commonwealth of Massachusetts.


Case No. 96-10014 (GAO)
February 1, 1996

MEMORANDUM OF LAW IN SUPPORT OF COMMONWEALTH OF MASSACHUSETTS' MOTION TO REMAND

INTRODUCTION

This is an action brought exclusively under Massachusetts state law to recover health-care expenses and other costs incurred by the Commonwealth of Massachusetts as a result of the wrongful conduct of the defendants. The Commonwealth seeks monetary damages, as well as injunctive relief against certain defendants to require, inter alia, the disclosure of their long-suppressed research on smoking, health and addiction. ...


Civil Action No. 96-10014-GAO
May 20, 1996

The Complaint

Massachusetts' action is brought against six cigarette manufacturers, two trade associations in the tobacco industry, and two Massachusetts wholesalers of tobacco products. The complaint alleges that "[e]ach year, the Commonwealth must spend millions of dollars to purchase or provide medical and related services for Massachusetts citizens suffering from diseases caused by cigarette smoking." ... The "smoking-related costs to the Commonwealth" are said to include, but not be limited to, "[m]edical assistance provided under Massachusetts' Medicaid program pursuant to [Mass. Gen. L. ch.] 118E'' and "[m]edical assistance provided under the CommonHealth Program pursuant to [Mass. Gen. L. ch.] 118E, 16, 16A." Id., 6, at 3-4. The complaint seeks "both monetary damages and injunctive relief."


COMMONWEALTH OF MASSACHUSETTS
MIDDLESEX, ss. SUPERIOR COURT
DEPARTMENT OF THE TRIAL COURT
Civil Action No. 95-7378-J

SUR-REPLY MEMORANDUM OF COMMONWEALTH OF MASSACHUSETTS IN FURTHER OPPOSITION TO DEFENDANTS' MOTION TO DISMISS

[ . . . ]

As the Supreme Judicial Court has held, reimbursement is simply "repaying or making good the amount paid out." Oliveira, 414 Mass. at 73 (quoting Boston v. Commonwealth, 322 Mass. 177, 179 (1947)). The essential nature of the remedy afforded under Sections 276 and 22 is determined not by the Legislature's failure to invoke the word "reimbursement," but by its express provision of an independent right of action to require liable third parties to repay or make good the amount of Medicaid expenditures paid out as a result of their unlawful conduct. Nevertheless, the "magic" word appears in the federal Medicaid statute, which obligates the Commonwealth to "seek reimbursement" for Medicaid expenditures from liable third parties.


NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml


Return to CLT Updates page

Return to CLT "Tobacco Settlement" Project page