BLUE CROSS PLANS: File Suit Against Big Tobacco
"A coalition of 37 Blue Cross and Blue Shield plans" filed three federal lawsuits against the nation's cigarette makers yesterday, "seeking billions of dollars from the companies and their allies," the Richmond Times-Dispatch reports (Hardin, 4/30). The suits were filed by the Coalition for Tobacco Responsibility, an umbrella group representing the Blues plans. "Blue Cross and Blue Shield of New Jersey Chief Medical Officer Dr. Michael McGarvey, a spokesperson for the coalition, said: "The industry has conspired to commit fraud and to manipulate its product for greater and more profitable addictive power. These addictions have added billions of dollars to the cost of health care in this country and damaged innumerable lives. ... For too long, the American people have paid for tobacco's illegal activities. It's time for tobacco to repay those costs" ("All Things Considered," NPR, 4/29). According to the Philadelphia Inquirer, the Blues plans, representing members in "more than 35 states," could "seek as much as $10 billion in damages for every year that they had to bear the costs of smoking-related illnesses, which could be decades." In addition, a "novel aspect" of the suits "is the charge that the industry violated the Racketeer Influenced and Corrupt Organizations (RICO) law, which typically is used against organized crime." The coalition's federal suits were filed in New York, Seattle and Chicago (Mishra, 4/30).
CNN's Allan Dodds Frank reported, "Tobacco companies quickly denounced the suits" (" Moneyline," 4/29). Tobacco industry spokesperson Scott Williams said, "Blue Cross/Blue Shield was certainly aware of people who choose to use tobacco products and so forth, and they were aware of the risks associated with tobacco use. So this is just an effort to try to get money out of the tobacco industry and to jump on the bandwagon and chime in with the effort in Washington to extract extraordinary new sums of new tax revenue from tobacco" ("All Things Considered," NPR, 4/29).
Added Pressure To Settle?
NPR's Debbie Elliott reported, "For an industry that spends upwards of $600 million dollars a year to defend itself, another set of lawsuits increases the pressure on tobacco firms." Salomon Smith Barney tobacco analyst Martin Feldman said, "Every additional claim means additional costs, means additional management time for the tobacco industry and also represents the potential for a possible loss in court." But, according to Elliott, "Feldman says the new Blue Cross/Blue Shield litigation does not pose an immediate threat to cigarette makers. The top concerns for tobacco companies today he says are congressional efforts to raise cigarette taxes, and the Minnesota case," Elliott reported ("All Things Considered," 4/29).
A Boon For All Insurers?
Richard Daynard, director of the Tobacco Products Liability Project at Northeastern University, "predicted that if the Blue Cross health care plans prevail in court, the tobacco companies could have to compensate other health insurers and companies that self-insure" (McMorris, Wall Street Journal, 4/30).