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Strange Announces Settlement in Tobacco Case

By Brandon Moseley
Alabama Political Reporter

Alabama Attorney General Luther Strange announced on Wednesday that Alabama was part of multi-state agreement with the major tobacco companies.  Wednesday’s agreement settles a 10-year dispute regarding payments under the 1998 Master Settlement Agreement (MSA).

AG Strange said, “This settlement is important for Alabama and essential to the future of our public health funding from the Alabama 21st Century Fund.  The Legislature has utilized the state’s MSA funds by funding incentives for economic development and supporting health care programs for children and seniors. Our office is focused on maintaining the integrity of that fund. Under the terms of the settlement, we avoid the significant uncertainty of costly litigation and the potential loss of one or more entire annual MSA payments.”

In 1998, the major tobacco companies agreed to pay states more than $200 billion over 25 years (up and beyond the already significant tobacco taxes the states charge) to settle lawsuits claiming that state governments are subject to paying the health care costs related to smoking (mostly through Medicaid). Over the last decade the tobacco companies and the states have been in dispute over portions of the payments.

Alabama alone has received almost a $billion from the MSA since 2003. AG Strange said that if Alabama risked keeping this case in arbitration it is possible that Alabama could lose as much as $14 million a year of the money that the state has already received (potentially as much as $140 million).  The tobacco companies were alleging that they have been overcharged over the last decade.

On December 17, 2012, Alabama joined Arizona, Arkansas, California, Georgia, Kansas, Louisiana, Michigan, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, Tennessee, Virginia, West Virginia and Wyoming as well as the District of Columbia and Puerto Rico in agreeing to the settlement.

Written By

Brandon Moseley is a former reporter at the Alabama Political Reporter.

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