Clinton Promises Federal Tobacco Suit to Recover Medicare Costs

WASHINGTON—Just when the tobacco companies thought they had put major litigation woes behind them, they now face the threat of a potentially far more devastating legal action than the state-initiated lawsuits that they settled last year. President Clinton announced during his State of the Union address that the Justice Department is preparing “a litigation plan to take the tobacco companies to court” to recover money the federal government has spent to treat tobacco-related illnesses.

“The states were right about this,” the President said. “Taxpayers shouldn’t pay for the cost of treating lung cancer, emphysema, and other smoking-related illnesses—the tobacco companies should.”

Antismoking advocates cheered word of the impending lawsuit, which many had urged after the collapse in the Senate last year of comprehensive tobacco legislation. “This lawsuit would present a very significant threat to the tobacco industry,” said Matthew L. Myers, of the Campaign for Tobacco-Free Kids. “The cost to the tobacco industry for a Medicare lawsuit would exceed the cost of all the state Medicaid suits combined.”

After the collapse of legislation intended to enable a $368.5 billion settlement reached in 1997 between Big Tobacco and the attorneys general of 40 states, the companies worked out a less-encompassing $206 billion agreement with 46 states, the District of Columbia, and four US territories. Four other states had previously reached individual settlements with the companies. The industry and antitobacco groups alike expected that the agreement would greatly reduce the likelihood of any Justice Department suit.

The four major US tobacco companies pledged to battle any federal action. “The industry will vigorously defend itself against this entirely political lawsuit,” they said.

The President’s announcement, however, left unanswered when the government will file its tobacco suit. A Justice Department task force is currently developing the details of the government’s case.

The Medical Care Recovery Act enables the federal government to sue for its costs incurred in treating patients if a third party’s negligence accounts for the patients’ diseases. The Justice Department suit would seek to recover money spent by a number of federal programs, including Medicare, federal-employee health insurance plans, and the Departments of Defense and Veterans Affairs. Medicare pays out about $10 billion a year to treat its beneficiaries who have tobacco-related illnesses. The suit would not involve Medicaid payments, which were covered in the states’ settlement.

The President also plans to push Congress once again to hike the federal tax on cigarettes another 55 cents a pack. The White House earlier had said the request will go to Capital Hill as part of the President’s budget request for fiscal year 2000. Legislation to increase tobacco taxes failed last year and will likely face strong opposition again in the current Congress.