Health Care Policy
Should the federal government sue tobacco companies for Medicare and Medicaid payments?Tobacco Farmers Must Be Supported
By Rep. Walter Jones Jr.
Ever since the Medicare and Medicaid programs were founded, it has been the position of every Justice Department -- Democratic and Republican alike -- that the federal government does not have the authority to sue the tobacco industry to recover costs spent on patients who happen to smoke.
There have been some rumors, however, that the Clinton Justice Department may now, suddenly, stand years of legal precedent on its head and unilaterally declare that it has such authority. I think that is a bad idea, not just for tobacco companies, but for all American businesses.
After failing this year to impose a tobacco policy that could have effectively resulted in a new Prohibition, the administration, according to
the Aug. 17 Chicago Tribune, "ordered a top-to-bottom review of the options for federal lawsuits to recover Medicare costs ... for tobacco-related illnesses."
Any such lawsuit would effectively skirt the role of Congress to create effective tobacco policy, threaten the livelihood of U.S. tobacco farmers and those involved in the production of tobacco and would lead to a host of similar actions against other industries.
The public should be able to trust that any case brought by its government is based on law, yet there is no legal or policy basis to file such a lawsuit against the tobacco industry -- or any industry. The Clinton administration has already recognized this fact.
At an April 30, 1997, Senate Judiciary Committee hearing, Attorney General Janet Reno said that "what we have determined was that it was the state cause of action, and that we needed to work with the states, that the federal government does not have an independent cause of action [to recover health care expenditures]."
In addition, Joe Krovisky, a Department of Justice spokesman, was quoted in the April 29, 1997, Federal Filings Business News as having said, "Medicare and Medicaid statutes do not provide explicit authority for the federal government to pursue suit."
The administration's approach to tobacco this year may be some indication of the lawsuit's merit. First, the effort to impose unprecedented taxes on hard-working Americans in order to fund its big-government goals was rejected with Sen. John McCain's (R-Ariz.) failed tobacco tax bill.
Then the administration's illegal attempt to dodge the role of Congress by expanding the Food and Drug Administration's jurisdiction to cover tobacco products was rejected by the Fourth Circuit Court of Appeals. If the Justice Department is serious now about suing the tobacco industry for Medicare and Medicaid reimbursements, it stands to create a dangerous precedent that could be used to take massive funds away from any American industry.
If the courts were to misapply these legal principles, a dark cloud would hang over our entire business community. I can only begin to imagine what industry will be targeted next to contribute its "share" of medical expenses. The food industry, when the Surgeon General and the FDA have cautioned against eating foods high in fat?
How about alcohol, which has its own warning label and is thought to contribute to disease as well as a tragic number of auto accidents? Why doesn't that industry have to pay?
Speaking of accidents, shouldn't the auto industry compensate the government for all the medical costs that it has caused? By the time we're done, every hospital bill in this country could be accompanied by a demand for reimbursement by the private business whose product is claimed to have contributed to the associated costs.
The law simply does not -- and should not -- permit the government to sue industries for making legal products. Nor should it permit the government to sue for products simply because they can be linked to increased risk of disease, or charge the manufacturer for medical expenses for after-the-fact claims related to those products.
The risks associated with the use of tobacco products have been widely known for decades. In 1966, the federal government itself first mandated that warning labels stating these risks be printed on every package. How then, can the government now successfully claim that it was deceived by the tobacco industry about these risks, or that it would have terminated Medicare and Medicaid payments to smokers had it known they might get sick?
Tobacco is a legal crop. Adults make the choice to use tobacco products knowing the potential health risks. If they then become sick or suffer related illnesses, how can we justify punishing the tobacco companies or the tobacco farmers?
Smokers already pay their way through heavy excise taxes. For example, a Congressional Research Service report on this subject reached two related conclusions: "Existing taxes exceed some reasonable estimates of the social cost of smoking; and the average smoker appears to have made the smoking decision while in the possession of adequate information, at least with regard to health hazards."
As a representative of one of the largest tobacco-growing districts in the nation, I know firsthand that tobacco not only is the livelihood of the communities and farmers of eastern North Carolina, but also has contributed to the economic development of the entire state.
Tobacco, from the planting of the seed to the manufacturing of the products, has a total economic impact on North Carolina totaling more than $7 billion. You can compare it to the way the auto industry has built up the Midwest or how any major industry can help to build and establish America's most rural areas. In the very same way, tobacco has become an integral part of North Carolina's communities.
Suing the tobacco industry, then, would jeopardize our farmers' jobs and result in devastating social and economic impacts on the state of North Carolina. Tobacco companies have helped fund libraries, schools, churches, art exhibits and medical centers within the state. When you threaten to take away the industry, you threaten the jobs, the families and the communities who have come to depend and rely on it for their survival.
In North Carolina and elsewhere in the United States, tobacco is a way of life. The industry has helped develop our rural eastern North Carolina communities and has built our state into what it is today.
We cannot continue to allow the administration to threaten our nation's tobacco farmers and, subsequently, all U.S. industry. Allowing the federal government to sue tobacco companies is neither reasonable public policy nor is it in the best interest of the American people.
Rep. Walter Jones Jr. (R-N.C.) is a member of the Banking and Financial Services Committee.
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