Medicaid recipients sue 12 states for tobacco settlement proceeds

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by Marc Kaufman
Washington Post

January 27, 2000

Class action lawsuits were filed in federal courts in six states yesterday claiming a potentially large share of the $206 billion national tobacco settlement for victims of smoking, who received nothing under the 1998 agreement.

The lawsuits argue that the umbrella settlement between 46 states and the tobacco industry is based on state claims for reimbursement of tobacco-related Medicaid expenses. If that is the case, they contend, then federal law requires states to share any proceeds in excess of their Medicaid costs with the victims harmed by the tobacco companies.

"Medicaid recipients in every state deserve to have suits brought on their behalf because the states are not following federal law in these cases," said Antonio Ponvert, an attorney with the Connecticut law firm of Koskoff, Koskoff and Bieder, which is providing national legal strategy on the issue. The suits--which will also be filed in Pennsylvania and North Carolina once snowbound federal offices are reopened today--ask that the states be stopped from spending their tobacco money in the many other ways they are deciding to spend it.

While several parallel state and federal lawsuits have been filed separately in states including California and Wisconsin over the past year, yesterday's joint filing had the effect of significantly raising the profile of the issue.

"I believe that by the end of the year, we will see as many as 40 similar lawsuits in other states," Ponvert said.

Attorneys involved in the lawsuits acknowledge that major legal hurdles remain, including the protection that states are given under the llth Amendment against federal lawsuits for monetary damages. The lawsuits also face the daunting challenge of identifying the millions of individuals harmed by tobacco smoke, and in many cases their survivors.

"These lawsuits are flawed as a matter of law, and they are flawed as a question of public policy ," said James E. Tierney, a former attorney general of Maine who served as consultant to many state officials during the tobacco settlement negotiations.

He said that while many states did argue that the tobacco companies were liable to pay their smoking-related tobacco Medicaid expenses, they also raised equally important antitrust, consumer protection and racketeering issues that were all part of the ultimate settlement.

"But even if they did prevail legally, then they would have to go back to the beginning of Medicaid and see who may have died because of tobacco-related illness," Tierney said. "They would have to track down the survivors, the grandsons and great-grandsons, and it would be a nightmare. It will never happen."

Matthew L. Myers, a lawyer with the Campaign for Tobacco-Free Kids, called the suits an unfortunate diversion.

"My concern is that these lawsuits will turn into one more excuse for the states not to be funding broad-based tobacco prevention programs," he said, "Already far too few states have used the money they're receiving from the tobacco companies to accomplish the stated goal of these cases--the prevention of tobacco use, particularly among children,"

The similar suits in California and Wisconsin have resulted in conflicting decisions, and are on appeal. Attorney John C. Cabaniss of Milwaukee, who brought the cases, said a California state court judge has issued a tentative ruling supporting the view that Medicaid patients had a legal claim on some of the tobacco settlement money.

According to Larry S. McDevitt, an attorney with the Van Winkle firm in Asheville, N.C., the idea for a more coordinated legal challenge on behalf of Medicaid patients with tobacco illnesses came from a review of how states were spending tobacco money.

"In our understanding of the law, any excess money beyond the Medicaid reimbursement was supposed to go to the injured parties, but in state after state they weren't getting any ," he said. "We talked to attorneys in other states and they agreed that something should be done to stand up for the poor people on whose backs the tobacco settlement was reached to begin with."

North Carolina is scheduled to receive $4.6 billion over the next 25 years, he said, and between $1.5 billion and $2.5 billion is "excess" above Medicaid costs.