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Ten years ago this week, Blue Cross and Blue Shield of Minnesota (Blue Cross) became the first private insurance company to score a legal victory against the tobacco industry. On May 8, 1998, Blue Cross and the State of Minnesota agreed to settlement terms with the tobacco industry, ending a four-month trial that had national and even international implications. The benefits of this settlement are clear today, as Minnesota enjoys a lower smoking rate than the national average.
The historic lawsuit and trial received worldwide attention for exposing the tobacco industry's long history of deceptive marketing, advertising and research, ultimately forcing the industry to change its business practices. In addition to Blue Cross' monetary award of $469 million and the State's award of $6.1 billion, the settlement required tobacco companies to stop a number of practices in Minnesota. The restrictions, which were quickly adopted by 46 other states . . . Others have said our decision to sue the industry was the greatest act of corporate courage they had ever seen. Courageous or not, it was the right thing to do," said Dr. Mark Banks, CEO, Blue Cross. "The lawsuit paved the way for significant public health achievements and will continue to have a profound impact on the health of our members and all Minnesotans for years to come."
Ten years later, the victory over the tobacco industry is still giving back to Minnesotans. Blue Cross continues to commit its settlement money to create lasting change that improves health for all Minnesotans. In 2006, Blue Cross launched Prevention Minnesota, a long-term initiative to reduce heart disease and cancers by tackling their root causes -- tobacco use, secondhand smoke, physical inactivity and unhealthy eating. . . .
Blue Cross will mark the tobacco settlement anniversary by hosting a day-long Prevention Minnesota conference at the Minneapolis Marriott Southwest in Minnetonka on May 8. For more information on Blue Cross' Prevention Minnesota initiative, visit http://www.bluecrossmn.com/preventionminnesota.
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Searching for ways to fund their plan for universal health care, Democrats this week turned to an easy-to-vilify target: tobacco. They proposed a $2-a-pack cigarette tax that would generate nearly $2 billion a year and, supporters say, carry the added benefit of curbing smoking, a worthy goal in the context of health care reform.
Problem is, it might be the very thing that dooms health care reform.
A new cigarette tax would be tantamount to a declaration of war on Big Tobacco, which last year spent more than $65 million to defeat a $2.60-a-pack tax on the California ballot and just this week easily turned back an attempt in Oregon to raise tobacco taxes.
"You can bet they would aggressively fight it, and I don't think they'd be alone," said Sacramento political consultant Frank Schubert, who advised tobacco companies during last year's ballot campaign. . . .
"If you have all of the health care community backing reform, I think it can trump the money spent by tobacco," said Kris Deutschman, a political consultant who advised last year's failed campaign to raise the tobacco tax. "Because all they have is money and self-interest."
Less than one month after the state's new smoke-free law took effect, more than 3,000 scientists and health advocates are converging on Minneapolis to attend the biennial National Conference on Tobacco or Health (NCTOH) conference October 24-26 at the Minneapolis Convention Center. NCTOH is the nation's largest and longest-lasting gathering of the U.S. tobacco control movement. Through the expertise of approximately 1,200 presenters, more than 100 of them local, the conference aims to improve and sustain the effectiveness and reach of tobacco control programs and activities in the United States. Experts will be presenting on topics ranging from the latest evidence on health impacts to new treatments in cessation, from secondhand smoke policy approaches to youth and priority populations advocacy, and much more. Conference organizers selected this location because of its smoke-free status.
According to a new study, Health Care Costs and Secondhand Smoke, $215.7 million is spent each year in Minnesota to treat health conditions caused by exposure to secondhand smoke. Dr. Marc Manley of Blue Cross and Blue Shield of Minnesota (Blue Cross) will present the report findings to the Minnesota House Commerce and Labor Committee during its 4 p.m. hearing today on the Freedom to Breathe legislation. "This study is based on the 2006 U.S. Surgeon General's report on secondhand smoke and also on Minnesota-specific data, so it provides the first-ever look at the health care costs related to secondhand smoke in Minnesota," said Hugh Waters, Ph.D., lead researcher for this study and health economist at Johns Hopkins University.
S Y L L A B U S The imposition of the Health Impact Fee under Minn. Stat. § 256.9658 (Supp. 2005) does not violate the 1998 settlement agreement between respondent tobacco companies and the state because the terms of the settlement agreement do not unmistakably relinquish the state legislature’s sovereign authority to impose such an exaction on tobacco products in order to recover health care costs related to the use of tobacco products and to discourage smoking.
Reversed.
Heard, considered, and decided by the court en banc. . . .
PAGE, Justice (concurring specially).
While I concur in the result reached by the court, I write separately to make two points.
First, the state’s 1994 litigation against the major tobacco manufacturers was premised on the notion that the tobacco industry – “not the State of Minnesota, or its citizens” – should pay for the health care costs caused by tobacco use. Despite this premise, nothing in the 1998 settlement agreement between the state and respondents required respondents themselves to bear the cost of the settlement. Indeed, as we observed in Council of Independent Tobacco Manufacturers of America v. State, the manufacturers simply raised their prices to cover the cost of the settlement. ___ N.W.2d ___, 2006 WL 648137 at *2 (Minn. Mar. 16, 2006). As a result, while the state has collected hundreds of millions of dollars in annual payments from tobacco companies thus far under the terms of the 1998 settlement agreement, the lion’s share – perhaps all – of the cost of that settlement has actually been borne by smokers.
Ending a dispute that critics said was unfair to nonsmokers, Blue Cross and Blue Shield of Minnesota said it will issue refunds to nonsmoking policyholders who claim they were unfairly charged higher smokers' premium rates.
Until Thursday, the Eagan-based insurer had routinely refused to issue refunds to nonsmoking subscribers who complained that Blue Cross had never told them they weren't receiving the 25 to 35 percent discount given to nonsmokers.
After one longtime subscriber, William Marek of Montgomery, Minn., won a $2,000 judgment in small-claims court in March against Blue Cross for "unjust enrichment," the state's largest health insurer asked a district court to overturn the decision.
But on Thursday, Blue Cross senior vice president Richard Neuner said: "We've concluded that we are on the wrong side of this issue. We have done a lot at Blue Cross around the issue of tobacco cessation and prevention of smoking. We have members that are nonsmokers and we want to reward them in any way that we can."
We've concluded that we are on the wrong side of this issue. We have done a lot at Blue Cross around the issue of tobacco cessation and prevention of smoking. We have members that are nonsmokers and we want to reward them in any way that we can.Richard Neuner, senior vice president of Blue Cross and Blue Shield of Minnesota, which will issue refunds to nonsmoking policyholders who claim they were unfairly charged higher smokers' premium rates.
Several of the state's leading health advocacy organizations today launched a statewide advertising campaign to emphasize the health benefits of the 75-cent tobacco price increase. The radio and newspaper ads highlight the impact that higher tobacco prices have on preventing kids from smoking and helping more people quit smoking. The advertisements are sponsored by Blue Cross and Blue Shield of Minnesota, the American Cancer Society, American Lung Association of Minnesota, American Heart Association, Minnesota Medical Association, AARP, Campaign for Tobacco-Free Kids and the Minnesota Smoke Free Coalition.
Bob Gehlen isn't proud of the cigarette habit he picked up 40 years ago as a Marine in Vietnam, but one thing's for sure: He doesn't want county officials deciding where he and other veterans can smoke.
"Let them take care of the roads and ditches and stay the hell out of my personal life," said Gehlen, commander of the local American Legion post and a committed opponent of the McLeod County Board's plans for a countywide smoking ban.
Despite Gehlen's objections, this county of small towns west of the Twin Cities is one of the few places in Minnesota where smoking restrictions are on the agenda this spring. But McLeod could soon have company. By summer, Blue Cross and Blue Shield of Minnesota will start sending out money to push as many as a dozen local efforts to ban smoking.
Smokers, take heart -- if you want to quit, help is available.
The question is just who's going to pay for it.
The state Department of Health and the state's largest health insurers agree that smokers should receive a combination of counseling and medication. It's just that each one thinks the other should foot the bill.
Governor Carcieri has proposed paring down the services the state offers for smokers, saving $1.2 million by eliminating counseling and reducing antismoking advertising.
At the same time, he is trying to force commercial insurers to cover a three-pronged combination of stop-smoking treatments: counseling, nicotine patches or other nicotine replacement medication, and drugs to reduce nicotine cravings.
Gov. Tim Pawlenty's most controversial fee -- the 75-cent add-on for a pack of cigarettes -- heads for its day in court in April, thanks in part to a judge's refusal to buy the word "fee" for what looked and walked like a tax. The rest of the credit goes to cigarette company lawyers who, for once, may have been on the right side of history in arguing that imposing the fee to pay for health costs related to smoking amounts to double jeopardy.
They have a point because the state already sued the tobacco companies in 1998, settling for $6.1 billion, under the logic that big tobacco owed the state for decades of health-care costs. . . .
But most of the settlement money -- 76 percent, according to one Department of Health breakdown -- went directly into the state's general fund, which makes it hard for the state to argue it needs more money specifically for tobacco-related ills. Luckily, another party in the case is keeping its part of the bargain. Blue Cross/Blue Shield of Minnesota, which joined the state in the suit, finalized its settlement last fall, and last week announced it's earmarking the lion's share -- $241 million -- to smoking cessation and preventive health programs.
Unlike the state, whose health impact fee is supposed to have the dubious dual effect of both forcing smokers to quit while collecting big bucks from those who don't, the Blues have stated goals of reducing the smoking rate by 50 percent (from 18 percent of all Minnesotans to less than 10 percent) and reducing the exposure to secondhand smoke by 90 percent. . . .
the Blues' intention is truer to the lawsuit than the state's absorption of tobacco money into the general fund. Cancer kills. It's a measure of hope to see someone fighting back.
Eleven years, three months and fourteen days after Blue Cross and Blue Shield of Minnesota (Blue Cross) filed its landmark lawsuit against the tobacco industry, the health plan was finally cleared to begin using proceeds received from that lawsuit settlement to make Minnesota a healthier place to live and work. The appeals period on a related lawsuit settlement expired November 22, concluding a legal action that had been holding up the implementation of Blue Cross' plan for its tobacco settlement proceeds.
"Blue Cross has long been committed to improving health in Minnesota -- it's a heritage and a role we take very seriously. Our lawsuit was a turning point in changing the public and political environment on tobacco. It's a much different world today than when we took that step 11 years ago," said Marc Manley, M.D., vice president and medical director, population health.
Previously undisclosed tobacco industry documents that shed light on years of industry deception and target marketing were made public because of the Blue Cross lawsuit, and are now the source of health and policy research worldwide. State after state has passed increases in the price of cigarettes -- a scientifically proven strategy for decreasing smoking and, therefore, reducing heart disease and cancer rates. Local governments, major cities, states and countries have passed comprehensive smoke-free workplace policies in acknowledgement of the damaging effects of secondhand smoke.
Blue Cross was the first health plan in the nation to sue the tobacco industry, to hold the industry accountable for its actions and to prevent a new generation of smokers in Minnesota.
Blue Cross and Blue Shield of Minnesota has been cleared to start spending settlement money from a lawsuit against the tobacco industry.
Eagan-based Blue Cross, which originally filed the lawsuit more than 11 years ago, agreed to a $469 million settlement in 1998. The settlement had been delayed by a class-action lawsuit from some policyholders who wanted larger shares from the settlement.
Blue Cross plans to distribute $241 million to prevention and health improvement programs, with work scheduled to start in early 2006.
As a health care insurer, Blue Cross and Blue Shield of Illinois recognizes that the costs associated with secondhand smoke go beyond direct medical expenses. These expenses are significant but only constitute about half of the total costs of secondhand smoke. Besides the incalculable loss of life, secondhand smoke costs include lost business productivity, absenteeism, disability and maintenance costs.
But, more important, secondhand smoke is a public health issue. The strain on our health system created by secondhand smoke is passed on to the taxpayer and the business owner. It directly burdens employers who provide health care benefits to employees.
The heaviest exposure to secondhand smoke is in the restaurant and bar industry, where employees are least likely to have health insurance. The cost of diagnosis and treatment for secondhand smoke-related disease, including asthma, emphysema, stroke and cancer, falls on the public health system and the taxpayers.
In either case, disease caused by secondhand smoke is very expensive. Actuaries report that nonsmoker exposure to secondhand smoke costs America $10 billion annually. Chicago's cost from secondhand smoke is approximately $10 million each year.
The Chicago City Council has an opportunity to lessen the strain on our public health resources by approving the comprehensive smoke-free legislation introduced by Health Committee Chairman Ald. Ed Smith. More important, the city council can save lives.
Following the implementation of the Smoke-Free Air Act in New York City, the New York Health Department found a sixfold reduction in air pollution in bars and restaurants that previously allowed smoking. During the same period, restaurant employment and tax receipts increased.
This is not radical legislation. Orlando, Fla., Los Angeles, Boston and every other major city in the United States already protects workers, visitors and residents from the unhealthy impact of secondhand smoke. The ordinance before the city council is not only the right thing to do for our work force, it is good business and will enhance Chicago's reputation as an appealing place to work, visit and raise a family.
Blue Cross and Blue Shield of Minnesota (Blue Cross) received court approval today to end a class action lawsuit that has been preventing the company from fully launching its plan to make Minnesota a healthier place to live and work. The court order moves Blue Cross an important step closer to launching its plan for tobacco proceeds received as a result of Blue Cross' historic 1998 settlement with the tobacco industry.
The settlement between Blue Cross and the employer groups who filed the class action in 2002 received final approval today from a Dakota County court. Approval by the court represents a significant development toward releasing the money that Blue Cross has earmarked for health improvement initiatives and other health-related investments under the Healthier Minnesota plan. Blue Cross received the money from the tobacco industry to settle the consumer fraud and conspiracy lawsuit the health plan filed against tobacco companies in 1994.
Two key elements of the plan are the Community Clinics Fund, which will improve access to health care services for thousands of Minnesotans, and Prevention Minnesota, Blue Cross' settlement-funded health improvement effort that will tackle Minnesota's leading killers: tobacco use, heart disease and cancer by reducing tobacco use, promoting physical activity and improving nutrition.
As part of the tobacco proceeds spending plan approved more than three years ago, eligible Blue Cross groups and individual subscribers will begin receiving checks by mid September.
Blue Cross and Blue Shield of Minnesota (Blue Cross) announced today that it has entered into a settlement agreement to end a class action lawsuit that has been preventing the company from launching its plan to make Minnesota a healthier place to live and work. The settlement agreement moves Blue Cross one step closer to launching its tobacco proceeds spending plan as a result of its 1998 settlement with the tobacco industry.
The settlement between Blue Cross and the employer groups who filed the class action received preliminary approval today from a Dakota County court. It remains subject to final court approval following notification of class members.
"When we sued the tobacco companies in 1994, we made the promise that any funds we received would be used to benefit consumers by improving the health of all Minnesotans. The court's preliminary approval of the settlement agreement brings us a huge step closer to fulfilling the pledge we made almost 11 years ago," said Mark W. Banks, MD, Blue Cross President and CEO.
The health plan had sued the tobacco industry for consumer fraud and conspiracy. The Minnesota Department of Commerce, which regulates health plans, and had jurisdiction over a portion of the funds, approved the Blue Cross plan in 2002 to distribute $30 million to fully insured Blue Cross groups and make other health investments.