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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