DC Federal Court Tosses Out Health Claim Against Tobacco

May 22, 2001 (PLANSPONSOR.com) - A federal appeals court handed the tobacco industry a legal victory against the claims of union health care funds that they should be compensated for the costs of treating sick smokers.

Attorneys for US labor funds and the nations of Guatemala, Nicaragua and Ukraine had argued in separate claims that the US cigarette companies committed conspiracy and fraud, violating antitrust and racketeering laws.

Remote Controls

However, the US District Court of Appeals for the District of Columbia aligned itself in a unanimous decision with seven other circuit courts that have already ruled on the issue. In the court’s written opinion, Judge Judith Rogers said the countries and the benefit funds could not prove they were directly injured by the tobacco companies, finding that the alleged injuries of the were “too remote” to be the proximate result of the defendants’ alleged conduct.

The court was the eighth federal appeals court to issue such a ruling against union health care plans and the first to address claims of foreign governments.

First Impression

While the Republics of Guatemala, Nicaragua, and Ukraine sought to distinguish their claims, arguing that as sovereign nations they were constitutionally or otherwise legally obligated to provide free health care and other forms of social welfare to their residents, or at least to those who cannot afford to pay for such benefits.

But the court held that the “tortured path” from the defendant’s alleged wrongdoing to the economic impact on the plaintiffs was the same type of indirect claim made – and rejected – in other cases.

Last year US District Judge Gladys Kessler had ruled that the government could pursue racketeering claims in the case.

The case is Service Employees International Union Health and Welfare Fund v. Philip Morris Inc., at http://pacer.cadc.uscourts.gov/common/opinions/200105/00-7093a.txt .

– Nevin Adams    editors@plansponsor.com