Indiana Loses $63 Million From Big Tobacco for Starters

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(Photo courtesy of www.indianapublicradio.net)

Muncie, Indiana – News kind of trickled out this week that due to Indiana’s inability to collect from cigarette companies that were not part of an original tobacco legal settlement, the state will lose $63 million in next years annual share of tobacco settlement funds – but unfortunately, that’s just for starters.

According to our sources, the settlement was reached last month by a three-judge arbitration panel who ruled that Indiana’s 2014 payment will drop from about $131 million to $68 million to offset monies they already received in 2003.

Indiana failed “to do enough” to collect funds from cigarette companies that weren’t part of the original settlement in 1998, so Big Tobacco filed suit and the six non-compliant states were: Indiana, Kentucky, Maryland, Missouri,New Mexico and Pennsylvania.

Therefore, the $63 million drop in next years payment is actually a refund for monies Indiana received in 2003, and the lawsuit for years 2004-2012 are still pending, which means even more losses are coming in the future. Muncie Voice has filed a public information request to find out why Indiana failed to do its job and will offer an update once received.

Sources for Big Tobacco states, ““We are pleased that the arbitration panel found that six jurisdictions failed to meet their diligent enforcement obligations under the MSA,” said Martin L. Holton III, executive vice president and general counsel for R.J.Reynolds. “Between today’s rulings and a settlement reached with 22 jurisdictions earlier this year, R.J. Reynolds should recover nearly $549 million with respect to its 2003 NPM Adjustment claim.”

The money Indiana receives from that settlement is used for smoking cessation programs to help people stop smoking, smoking prevention campaigns, and other health-care programs. These programs are now at risk. According to Joshua Williams, Health Administrator at Delaware County Health Department, “Delaware County received $265 thousand for a two-year grant.”

The attorney general’s office said it disagrees with the ruling, saying “legal action is likely to be taken soon.”

According to Big Tobacco sources, this lawsuit has been underway since 2010, so it sounds like there has already been plenty of “legal action” taken to defend our claims, and we failed to produce the results required. The question is, “Why?”

The state attorney general’s office released a statement Thursday saying that since the first payment in April 1999, Indiana has received more than $1.9 billion in settlement payments from tobacco companies, in annual installments ranging between $125 million and $150 million. The amount the state received depended on annual sales volume from each manufacturer.

Indiana and the other five states remain subject to more than $6 billion in more claims from the cigarette manufacturers on their enforcement efforts in 2004 and later years. These additional claims will be the subject of future arbitration proceedings

Reps. Greg Porter, D-Indianapolis, and Charlie Brown, D-Gary, said they learned about the ruling during a meeting with the Indiana attorney general’s office.

“There is a very real potential here that Indiana is facing multimillion-dollar sanctions over several years, which will have a disastrous impact on many of these health programs,” Porter said.

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