The True Intent and Purpose
for The "Tobacco Settlement" Funds
Excerpts from: Statement on the Tobacco Settlement
by Charles M. Condon, Attorney General of South Carolina
November 20, 1998
As Attorney General, my legal role largely ends with that
acceptance. It is now up to the Governor and to the General Assembly to decide whether to
trigger the legislative mechanisms required and what to do with the funds received.
However, as counsel to the State of South Carolina, I feel a
responsibility to make a recommendation of principle in the strongest terms possible.
These funds - the $2.2 billion dollars designated for South Carolina
- are reimbursements - reimbursements to the taxpayers of our state for dollars already
It would be a terrible injustice if those funds were used to pay for
more government programs and more bureaucracy or to grow the government in any way.
Therefore, in making this announcement, I would also like to issue a
direct challenge to Governor-elect Jim Hodges. My challenge is this: Will you join me in
supporting the use of these funds only for the purpose of giving tax relief to the people
of South Carolina and not for more government spending?
Let's give this money back to the taxpayers. That could take the
form of car tax relief, income tax relief for seniors or simply a scheduled rebate to all
taxpayers. The point is we should pledge this money to tax relief only.
* * *
COMMONWEALTH OF MASSACHUSETTS, Plaintiff,
v. PHILIP MORRIS INC., et. al.
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 "each 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, "medical
assistance provided under Massachusetts' Medicaid program" and "medical
assistance provided under the CommonHealth Program." The complaint
seeks "both monetary damages and injunctive relief."
* * *
Excerpts from: 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
The plain, express purpose of the Massachusetts enactments is to enable the
Commonwealth to recover from liable third parties the "full amount" of Medicaid
expenditures provided by the Commonwealth. ...
Under the statutes, the Commonwealth's loss (or "injury") is the legally
mandated expenditure of funds to provide medical services to Medicaid recipients harmed by
defendants' conduct. ...
The statutes expressly authorize the Commonwealth to sue liable third parties
directly for reimbursement of its Medicaid expenses...
For the reasons stated in the Commonwealth's Opposition, the Commonwealth's statutory claims
for reimbursement of Medicaid expenditures accrue each time the Commonwealth makes
Medicaid payments for which reimbursement is sought. ...
[T]he "magic" word appears in the federal Medicaid statute, which obligates
the Commonwealth to "seek reimbursement" for Medicaid expenditures from liable
third parties. ...
As the Supreme Judicial Court has held, reimbursement is simply "repaying or
making good the amount paid out."
* * *
Excerpts from: STATE OF NEW YORK, Plaintiffs,
v. PHILIP MORRIS INCORPORATED, et. al.
STATEMENT OF FACTS
In 1994, a number of states took the unprecedented step of commencing
legal actions against manufacturers of tobacco products and other related entities seeking,
inter alia, money damages for the substantial public health costs incurred through
Medicaid and other programs associated with the treatment and care of persons suffering
from tobacco-related illnesses such as cancer, emphysema, and heart disease.
By 1997, several additional states, including the State of New York, commenced
separate lawsuits against tobacco manufacturers also seeking to recover public health
costs associated with tobacco-related illness. As more and more states joined in the
effort to recover these enormous costs through litigation, settlement discussions on a
national level between the various states and tobacco manufacturers were pursued.
* * *
Excerpts from: Forty-Six States Agree to Accept $206 Billion
By Milo Geyelin
The Wall Street Journal
November 23, 1998
Forty-six states agreed to accept a $206 billion settlement with the tobacco
industry over public-health costs connected to smoking, setting off a scramble within
the states over how to spend the money.
The deal, which ends lawsuits brought by the states against the industry, is the
largest civil settlement in U.S. history. It is to be signed by state attorneys general
and officials of the nation's five largest tobacco companies today. ...
The 46 states and five U.S. territories that agreed to the settlement will receive
their money over 25 years. The amounts will depend on the numbers of Medicaid
recipients on each state's rolls, the cost of medical services and the amount each state
contributed to Medicaid coverage historically, said Colorado Attorney Gale Norton, one
of eight attorneys general who forged the agreement.
* * *
Excerpts from: Commentary; Lining Up for the Tobacco Money
By Katherine Kersten
Minneapolis Star Tribune
December 16, 1998
Minnesota's $6 billion tobacco free-for-all is about to begin. Folks, get ready to
witness the boondoggle of the century.
Forget the fact that the tobacco lawsuit was waged in the name
of the taxpayers, ostensibly to compensate them for the smoking-related costs they have
borne. At this moment, organizations ranging from HMOs to ad agencies to schools are
lined up 12 deep to grab a piece of the mind-boggling tobacco windfall for themselves.
* * *
Excerpts from: Hospitals Want Tobacco Money
December 17, 1998
Seventy Michigan hospitals will ask an Ingham County judge next week for a share of the
state's $8.2-billion tobacco settlement.
The settlement, announced last month, is intended to
compensate states for Medicaid coverage of smoking-related illnesses. Hospitals say
they deserve some of the money since the amount the state pays for Medicaid patients
doesn't cover the patients' total costs.
* * *
Excerpts from: Illinois Hospitals File Seeking Share of Tobacco Settlement
December 7, 1998
Sixteen Illinois hospitals filed a motion in Cook County Circuit Court in Chicago last
week seeking a share of the state's $9.1 billion settlement with tobacco companies,
according to Crain's Chicago Business. The hospitals requested in the filing the right to
sue the tobacco industry independently if they can't get a piece of the settlement. The
hospitals seek to recover the cost of treating Medicaid patients with illnesses related to
smoking, Crain's said.
* * *
Excerpts from: Smokescreen; The Ifs and Buts of the Tobacco Settlement
by Sylvia Nasar
New York Times
November 29, 1998
Last week's $206 billion settlement between the tobacco industry and 46 states is
supposed to put Big Tobacco on the run. The agreement requires cigarette makers to
compensate states for the medical costs of treating smoking-related diseases.
* * *
Excerpts from: Lawyer Who Took On Tobacco is a Fighter
by Wendy Koch
November 24, 1998
Under the deal signed Monday, the nation's four largest tobacco
companies will pay 46 states $206 billion over 25 years for them to drop their lawsuits
to recover the health-care costs of treating smokers.
* * *
Excerpt from: A New Tobacco Deal
Editorial, Washington Post
November 17, 1998
A new agreement has been reached between the major tobacco companies and the states
that have sued them to recover past tobacco-related health care costs. The agreement
is more modest than the one that became the basis for the tobacco bill that failed in the
last Congress. It would settle the state lawsuits, mainly for money -- perhaps a fifth of
a trillion dollars over the next 25 years.
* * *
Editorial, New York Times
November 17, 1998
The deal negotiated by eight state attorneys general and the tobacco industry would do
far too little to combat teen-age smoking, the primary goal that any legal settlement
should advance. Instead, this proposal is mostly a financial agreement in which the
companies would pay off state lawsuits for Medicaid costs incurred for smoking-related
* * *
Excerpts from: $206B Tobacco Deal Would Limit Ads, Repay States for Health Costs
by Harry Berkowitz
November 16, 1998
Negotiators yesterday completed a $206-billion deal, including $24 billion to New York
State, for tobacco companies to reimburse states for smoking-related health costs
and to restrict marketing and advertising of cigarettes.
* * *
Excerpts from: Feds May "Rip Off" Tobacco Money
by Randy Ludlow
November 18, 1998
Sixty percent of Ohio's $9.9 billion share of a potential settlement with the tobacco
industry could disappear if the federal government seeks to "rip off" the states
by claiming Medicaid reimbursement, warns Ohio Senate President Richard
* * *
Excerpts from: Clinton sets own agenda for tobacco settlement
By Laura Meckler
December 5, 1998
The Clinton administration contends the federal government has a right to some of the
Many of the original state lawsuits were to reclaim Medicaid
spending on sick smokers. Because the federal government pays for at least half of
Medicaid in each state, the law requires Washington to recoup at least half of any
settlement, administration officials say.
* * *
Excerpts from: State's Tobacco Funds in Danger?
by Brian Ford
December 17, 1998
The attorney general says the federal agency that oversees Medicaid may get a
substantial portion of the money.
A huge part of Oklahoma's $2 billion tobacco settlement could wind up in the hands of
the federal agency that runs the Medicaid program unless Congress says otherwise, state
Attorney General Drew Edmondson warned Wednesday.
Oklahoma is to receive $2 billion over the next several years as part of a $206 billion
settlement between several states and the nation's top six cigarette producers. Oklahoma
had filed suit to recoup money paid for Medicaid for tobacco-related illnesses.
Medicaid receives most of its funding from the federal Health Care Finance Authority. The
state pays for the rest.
* * *
Excerpts From: McConnell; Give States Tobacco Money - Bill Would Block
U.S. from Gtting Any of Settlement
by Kirsten Haukebo
December 13, 1998
U.S. Sen. Mitch McConnell said yesterday that he will sponsor legislation to stop the
federal government from claiming any of the $206 billion from the national settlement
between tobacco companies and the states.
As things stand now, the federal government could claim up to 70 percent of Kentucky's
$3.45 billion share of the pact.
That's because the states, in their lawsuits against tobacco companies, are seeking
compensation for money spent under Medicaid to treat smoking-related illness, and
Medicaid is largely a federally funded program. In Kentucky, about 70 percent of the
program's cost is paid by the federal government.
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