Coalition Announces Major Lawsuits Against Tobacco Companies

    SEATTLE, April 29 /PRNewswire/ -- Regence BlueShield and Blue Cross of
 Washington and Alaska, HealthPlus and Medical Service Corporation of Eastern
 Washington today joined Blue Cross and Blue Shield plans in more than 35
 states in filing federal lawsuits against major tobacco companies whose
 products have forced up health care costs for smokers and non-smokers alike.
     Regence BlueShield is a member of The Regence Group, an affiliation of
 health plans in Washington, Oregon, Idaho and Utah.  Blue Cross of Washington
 and Alaska, HealthPlus and Medical  Service Corporation of Eastern Washington
 are affiliated through PREMERA, their holding company.  Also joining the suit
 from Washington state is the Northwest Washington Medical Bureau.
     The lawsuits were filed on behalf of the Coalition for Tobacco
 Responsibility in federal district courts in Seattle, New York and Chicago.
 (A list of coalition members who are filing suit is attached.)
     "Millions of participants in our plans -- whether or not they smoke --
 have suffered, because the tobacco companies continue to produce and
 vigorously market an addictive product," said Rich Nelson, president and chief
 executive officer of Regence BlueShield, which serves more than 1.1 million
 members in Washington state.
     "These suits recognize the devastating effect of tobacco on the health of
 the public and our members," said Betty Woods, president and chief executive
 officer of the PREMERA companies.  "The tobacco industry should be accountable
 for years of irresponsible and damaging conduct.  We hope these lawsuits will
 change tobacco industry behavior and improve public health."
     The lawsuits allege conspiracy, fraud, misrepresentation, violations of
 federal racketeering and antitrust laws as well as other claims.  The suits
 are among the largest claims ever made against the tobacco industry.  Except
 for the federal statutory claims, the lawsuits filed by the coalition are
 similar to the Medicaid suits brought by the state attorneys general and the
 current suit by the state of Minnesota and Blue Cross and Blue Shield of
 Minnesota.
     Blue Cross and Blue Shield plans that brought the suits are bearing a
 large share of the health care burden resulting from tobacco products.
     "We are concerned about our members' health.  We are filing these lawsuits
 because of compelling new evidence about the tobacco industry's deliberate
 attempts to addict Americans to a dangerous product and to market to children
 to create replacement smokers," said Richard L. Woolworth, chairman and chief
 executive officer of The Regence Group.
     According to a Treasury department report, tobacco-related illnesses cost
 the US economy an estimated $60 billion a year in direct health care costs.
 All Americans, whether or not they smoke, pay more as a result.
     Each year, 8,000 Washington residents die prematurely from smoking-related
 illnesses such as heart disease, stroke, cancer, emphysema, asthma and
 bronchitis.  Nearly 300,000 minors in Washington smoke cigarettes, another
 110,000 use smokeless tobacco and about 1,800 kids begin smoking every month.
 The direct medical costs related to smoking in Washington are estimated at
 $706 million annually.  The medical costs related to tobacco use more than
 doubled between 1987 and 1993.  Between 1980 and 1993, Washington's Medicaid
 expenses attributable to smoking totaled more than $1.1 billion.
     The lawsuits allege that the industry conspired to suppress less harmful
 cigarettes and to hide the health risks of smoking.  The suits also maintain
 that the tobacco industry concealed the addictive nature of smoking,
 manipulated nicotine levels to increase the potential for addiction and
 conducted research and marketing campaigns targeting teen-agers and children.
     The lawsuits are based on federal antitrust and Racketeer Influenced and
 Corrupt Organizations (RICO) statutes, state laws on consumer protection and
 fair business practices and various common law tort claims.  The federal
 antitrust and RICO claims asserted in the lawsuit are among the largest claims
 of these types in US history.
     The suits were filed as Congress is considering legislation that would
 limit accountability of the tobacco companies.  The Coalition for Tobacco
 Responsibility supports the public health measures of the legislation before
 Congress, but believes further thought is needed on the protections given to
 the tobacco industry.
     PREMERA health plans serve more than a million people in the Pacific
 Northwest.  PREMERA serves Washington members through Blue Cross of Washington
 and Alaska (BCWA); HealthPlus, its HMO affiliate and Medical Service
 Corporation of Eastern Washington, a Blue Shield plan.  In Alaska, BCWA
 operates as Blue Cross Blue Shield of Alaska.
     The Regence Group includes Regence BlueShield (Washington state), Regence
 BlueCross BlueShield of Oregon, Regence BlueShield of Idaho and Regence
 BlueCross BlueShield of Utah.  The affiliate plans serve more than 2.9 million
 members.  With headquarters in Portland, Oregon, The Regence Group has
 networks of more than 22,000 professional providers and nearly 1,000
 institutional providers.
     PREMERA health plans and the Regence Group are part of the 55 independent
 licensees of the national Blue Cross and Blue Shield Association.
 
     HERE ARE THE FACTS:
 
     Tobacco and Kids
     * Internal industry documents, released in the Minnesota tobacco case in
       March, reveal that tobacco companies focused marketing efforts on
       children to develop brand loyalty among a new generation of smokers.
     * There are about 1,000,000 new, underage, addicted smokers each year.
       Each day, more than 3,000 teenagers start smoking at an average age of
       12.5 years.  In Washington, about 1,800 kids begin smoking every month.
     * Nearly 300,000 minors in Washington smoke cigarettes and another
       110,000 use smokeless tobacco.  One in eight Washington high school
       students smoke at least five cigarettes a day.  Sixty-thousand are
       regular smokers. The number of eighth-grade smokers has doubled since
       1992.
     * Nationally, $1.26 billion in tobacco products are sold illegally to
       minors.  Vending machines, a common source for minors to obtain tobacco
       products, dispense cigarettes to nearly half a million children every
       day.
     * Every year an estimated 150,000 to 300,000 children under 18 months get
       pneumonia or bronchitis from breathing secondhand tobacco smoke.
 
     Tobacco and Health
     * Each year, 8,000 Washington residents die prematurely from smoking
       related-illness such as heart disease, stroke, cancer, emphysema, asthma
       and bronchitis.
     * More than 400,000 deaths per year, or one out of every six deaths, are
       attributable to tobacco.  This number exceeds the combined number of
       deaths annually related to alcohol, homicide, suicide, AIDS, heroin,
       cocaine and motor vehicles.
     * Some 50 million Americans are now addicted to tobacco.  One out of
       three long-term smokers will die from a tobacco-related disease.
     * The EPA estimates that approximately 3,000 American nonsmokers die each
       year from lung cancer caused by secondhand smoke.
     * Smokers have a 45 percent increase in cervical cancer.
     * Oral cancer occurs several times more frequently among snuff dippers
       compared with non-tobacco users.
     * Cigarette smoking is the single most powerful determinant of poor fetal
       growth in the developed world.
     * Women who smoke have significantly more stillbirths and babies that die
       during the first month of infancy.  Smokers' babies average 1.8 lbs.
       less in birth weight than nonsmokers.
 
     Tobacco and Health Care Costs
     * Tobacco-related illnesses in the United States cost the US economy an
       estimated $110 billion annually -- $60 billion a year in direct health
       care costs and an additional $50 billion in lost productivity.
     * The direct medical costs related to smoking in Washington are estimated
       at $706 million annually.  Of this $706 million, the cost breakdown is:
         30.8 percent (Medicare and Medicaid combined);
         21 percent (self-pay, including state expenditures for state
          employees);
         33.4 percent (private insurance);
         12.8 percent (other state and federal funds) and 2.2 percent (other
          funding sources).
     * The medical costs related to tobacco use more than doubled between 1987
       and 1993.  Between 1980 and 1993, Washington's Medicaid expenses
       attributable to smoking totaled more than $1.1 billion.
     * Tobacco-related illnesses account for 12 percent of all federal
       expenditures on health care.  In 1995, the Medicare program alone spent
       $25.5 billion on tobacco-related illnesses, about 14 percent of its
       total expenditures.
     * Over the next five years, Medicare will spend about $186 billion
       treating tobacco-related illnesses.  The amount the federal government
       would receive from the tobacco industry under the proposed settlement
       would equal only one-sixth of this amount.
     * Some 50 million Americans are now addicted to tobacco.  One out of
       three long-term smokers will die from a tobacco-related disease.
 
     Impact of Proposed Settlement on Tobacco Companies
     * The Federal Trade Commission (FTC) estimated that the tobacco
       settlement, as negotiated by industry officials and the state attorneys
       general, would have only a modest impact on operating profits a drop
       from $118 billion to $104 billion over a 25-year period.
     * The tobacco companies would pay little, if any, of the proposed
       settlement costs.  The FTC predicted that the tobacco companies would be
       likely to raise prices by at "least" the amount of the payments.
     * The proposed settlement does not begin to cover the damages caused by
       tobacco and is too easy on the tobacco industry.  A $6.5 billion payment
       cap represents slightly more than 10 percent of the annual medical
       damage caused by tobacco-related diseases.  If the industry increases
       prices to cover payments, as now proposed, profits actually will
       increase.
 
     

SOURCES: US Treasury Department, Washington State Attorney General, American Cancer Society, Columbia University's National Center on Addiction and Substance Abuse, Center on Budget and Policy Priorities, Koop-Kessler Advisory Committee on Tobacco Policy and Public Health Report, and Federal Trade Commission. The Coalition for Tobacco Responsibility A Group of 37 Independent Blue Cross and Blue Shield Plans As of April 27, 1998 Alliance Blue Cross Blue Shield (Missouri) Anthem, Inc. (Indiana, Ohio, Kentucky and Connecticut) Arkansas Blue Cross and Blue Shield Blue Shield of California Blue Cross and Blue Shield of Florida, Inc. Blue Cross and Blue Shield of Georgia, Inc. Blue Cross of Idaho Health Services, Inc. Blue Cross Blue Shield of Illinois BlueCross BlueShield of Louisiana BlueCross and BlueShield of Maine BlueCross BlueShield of Massachusetts, Inc. Blue Cross Blue Shield of Michigan Blue Cross Blue Shield of Montana Blue Cross and Blue Shield of Nebraska BlueCross BlueShield of New Hampshire Blue Cross and Blue Shield of New Jersey BlueCross BlueShield of Oklahoma Blue Cross Blue Shield of Rhode Island BlueCross BlueShield of Tennessee Blue Cross and Blue Shield of Texas, Inc. Capital BlueCross (Pennsylvania) Empire Blue Cross and Blue Shield (New York) Hawaii Medical Service Association Highmark Inc. (Pennsylvania) Independence Blue Cross (Pennsylvania) Mountain State BlueCross BlueShield (West Virginia) New Mexico Blue Cross and Blue Shield, Inc. New York Care Plus Insurance Company, Inc. Northwest Washington Medical Bureau Rocky Mountain Hospital and Medical Service (Colorado and Nevada) PREMERA Health Plans: (Blue Cross of Washington and Alaska HealthPlus Medical Service Corporation) Regence BlueShield (Washington state) Regence BlueCross BlueShield of Oregon Regence BlueCross BlueShield of Utah Regence BlueShield of Idaho UNYS, Inc. (New York) Wellmark, Inc. (Iowa and South Dakota)

SOURCE Regence BlueShield

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