Missouri hospitals last week joined state attorneys general and health plans in dozens of states in suing tobacco companies to recover the costs of treating smoking-related illnesses.
The suit is the first major case filed by private-sector hospitals claiming that tobacco companies owe them for the uncompensated costs of treating indigent patients and Medicaid beneficiaries. Some state and local governments have sued on behalf of public hospitals, however, and at least two hospital-affiliated HMOs have sued the tobacco companies (March 16, p. 10).
The suit names 27 defendants, including four tobacco companies, holding companies, distributors, trade associations and public relations firms.
Filed in St. Louis Circuit Court, the suit claims at least $1 billion in costs at 53 hospitals related to treating indigent, uninsured smokers and costs not covered by the government for treating the smoking-related illnesses of Medicaid beneficiaries.
The hospitals represent 14,644 licensed hospital beds, or roughly 60% of the total licensed beds in the state. The facilities had tried to join the state of Missouri's case against the tobacco companies, but the circuit court denied the motion, saying it would slow the state's case.
In filing the suit, the Missouri hospitals have attempted to put their hands directly into the pockets of the tobacco companies, rather than waiting for reimbursement increases to trickle down to them through Medicaid or other healthcare programs funded by a proposed tobacco settlement.
That agreement, hammered out between eight state attorneys general and the tobacco companies, was announced the same day that the Missouri hospitals sued the tobacco companies. The settlement would yield up to $206 billion over 25 years from four major tobacco companies. More than 40 states that joined the suit would reap the rewards. The states are seeking to recoup the smoking-related treatment costs of Medicaid beneficiaries.
The allocation formula is based on the costs to Medicaid and other public programs in each state from treating smoking-related illnesses, said Pennsylvania Attorney General Mike Fisher.
Attorneys for the Missouri hospitals said the settlement with the attorneys general could determine whether they continue to press their case in court.
"It is our belief that the settlement may include our claims; if it does, we should get a portion of the settlement," said Rick Watters, an attorney with the St. Louis law firm of Lashly & Baer. "If it doesn't include our claims, we are prepared to proceed" separately.
All states have endorsed the national agreement. Tobacco companies, which were waiting for a sufficient number of states to agree, have signed on.
Under the deal, the tobacco industry will pay the states over 25 years starting in 2000. The deal doesn't say how states are to use the money, but Fisher said he hopes his state will use it to fund its children's health program.
The use of the tobacco companies' money has been controversial. Earlier this year, the tobacco industry successfully portrayed government proposals to use settlement money for education programs and other functions as a tax increase aimed at expanding federal bureaucracy.