Academic journal article Vanderbilt Law Review

Big Tobacco, Medicaid-Covered Smokers, and the Substance of the Master Settlement Agreement

Academic journal article Vanderbilt Law Review

Big Tobacco, Medicaid-Covered Smokers, and the Substance of the Master Settlement Agreement

Article excerpt

[W]e will not sacrifice substance to form.

- William BIackstone'


In 1994, executives from "Big Tobacco" - industry leaders Philip Morris, R.J. Reynolds, Brown and Williamson Tobacco, and Lorillard2 - appeared before Congress and denied that nicotine is addictive despite internal documents disclosing a long history of industry-wide awareness about the addictive nature of the drug.3 One executive even denied that smoking causes death despite the wellestablished scientific consensus to the contrary.4

Worse still, tobacco companies had consciously targeted children as young as fourteen-years-old in their advertising schemes. In an internal R.J. Reynolds memorandum to Vice President of Marketing CA. Tucker, J. F. Hind wrote: "To ensure increased and longer-term growth for CAMEL FILTER, the brand must increase its share penetration among the 14-24 age group which have a new set of more liberal values and which represent tomorrow's cigarette business."5 The popular cartoon character "Joe Camel" was born soon thereafter. Philip Morris shared the same marketing strategy; in an internal research report, a research executive for Philip Morris wrote that "[t]oday's teenager is tomorrow's potential regular customer."6

The misdeeds of Big Tobacco have been reported extensively by the media in an understandably negative light.7 The label "merchants of death" has been etched into popular culture as a particularly appropriate appellation for not only Big Tobacco executives, but also lobbyists who assist the industry.8 This characterization contrasts starkly with descriptions of those who challenge the tobacco industry, who are often presented as heroes, lionized by both the media and legal scholars as David-types battling the great Goliath.9

The most important legal challenge to Big Tobacco came from Michael Moore, a lawyer who decided to "make a difference."10 As attorney general of Mississippi, Moore was selected as the "Lawyer of the Year" and graced the cover of the National Law Journal in 1997. n Underneath a caricature of Moore, the caption on the cover read, "Mississippi Attorney General Michael C. Moore took on Big Tobacco and came out smokin.' "12 Moore, described as "[a]mbitious and charismatic," was praised by the National Law Journal for his political and personal courage; "Moore Did Good Like an Attorney General Should," read the secondary headline.13

What did Moore do to deserve such lavish praise? In 1994, Mississippi, with Moore at the helm, was the first state to bring a Medicaid-recoupment suit against Big Tobacco.14

Established in 1965 as Title XIX of the Social Security Act ("the Act"), Medicaid is a joint federal-state program that provides medical assistance to needy families.15 Today, all fifty states and the District of Columbia have Medicaid programs.16 Mississippi's suit sought reimbursement from Big Tobacco for the costs of treating tobaccorelated disease through its Medicaid program. "It is only fair," Moore said, "for the industry that primarily caused the damage to pay for it."17

And Big Tobacco paid mightily: the industry settled the Mississippi suit for $3.6 billion.18 Other states, using the Mississippi complaint as a model, soon filed their own lawsuits. Big Tobacco settled individually with three other states, and in 1998 the companies and the remaining forty-six states, the District of Columbia, and five U.S. territories executed the Master Settlement Agreement ("MSA"), settling the rest of their claims.19 The reported value of the settlement for the first twenty-five years is $206 billion, although the tobacco companies must continue to make annual payments of $9 billion a year into perpetuity even after the initial $206 billion.20 Moore's work thus led to a truly "landmark outcome": an industry that had been virtually untouched throughout almost fifty years of litigation agreed to pay amounts that make even the largest tort-liability judgments seem trivial. …

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