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     Blue Cross and Blue Shield Grams criticizes Senate's tobacco tax billTobacco-related Web links |  | Published Thursday, May 14, 1998 |
Friday Blue Cross and Blue Shield was awarded $469 million as part of its settlement with the tobacco industry. Wednesday the legal challenge began over what Blue Cross should do with it. Two class action lawsuits were filed, each demanding that Blue Cross' settlement money go to its policyholders.
In an interview with the Star Tribune Friday, Blue Cross CEO Andy Czajkowski said that using the settlement money for smoking cessation efforts would be "a wiser use of the money as opposed to a rebate."
The suits argue that Blue Cross has a duty to reimburse its subscribers.
"Blue Cross represented to the court in its pleadings and arguments that they were collecting these dollars on behalf of its policyholders who supposedly overpaid because of the tobacco costs involved in health care," said Ron Meshbesher, of the Minneapolis firm of Meshbesher & Spence, which filed a suit Wednesday in Hennepin County District Court.
"They are a nonprofit company. They can't do with that money what they want; they have a trust relationship with their subscribers," Meshbesher said.
The other suit was filed Tuesday in Dakota County District Court by the Minneapolis law firm of Heins Mills & Olson along with five other Twin Cities law firms, which declined to comment Wednesday.
Their complaint said Blue Cross would be "unjustly enriched" if it were to keep both the "increased premiums from its subscribers to cover treatment of smoking-related illness and money from the tobacco industry to reimburse them for the cost of treating those same illnesses."
Although both suits name specific individuals and group policyholders, they seek to recover money from Blue Cross on behalf of all current and former policyholders who paid increased premiums because of smoking-related costs.
One plaintiff in the Dakota County suit is an 18-year Blue Cross employee who, as a smoker, was required to pay higher premiums than other nonsmoking Blue Cross employees, the complaint stated.
A Blue Cross spokesman said Wednesday that the suits are without legal merit. Blue Cross has said its policyholders would save money in the long run if Blue Cross were able to use the settlement money to cut smoking rates in Minnesota.
"If we reduce tobacco consumption by 30 percent over 10 years we'll save $350 million in health care costs," said spokesman Karl Oestreich, quoting company estimates. "Over 15 years the savings will double."
He said the primary beneficiaries of the suits will be the lawyers who file them.
"In 1994 everybody thought we were crazy to take on big tobacco," he said. "Now they [the plaintiffs' lawyers] are lining up trying to get on the gravy train after Blue Cross put its reputation on the line."
The suits are not seeking to claim the $6.1 billion in the tobacco settlement awarded to the state of Minnesota.