Montana reaches historic $100M settlement with delinquent tobacco companies
The state of Montana will receive roughly $100 million over the next decade from a handful of tobacco companies who withheld tens of millions of dollars owed to the state in a 2004 settlement.
Attorney General Tim Fox on Monday said the tobacco companies admitted to having no evidence that Montana had failed to enforce its tobacco laws and, therefor, had forfeited payments stemming from the 2004 settlement.
Fox described the agreement as historic.
“No other state in the union has received 100% of what was withheld by (tobacco) defendants under a similar claim,” Fox said. “No other state has achieved a revenue protection for future payments in full for the next 10 years, and an agreement to not withhold funds under similar allegations in perpetuity.”
From 2003 to the present, Fox said, participating cigarette manufacturers had been withholding $3 million to $4 million a year from Montana's annual Master Settlement Payment under the false allegation that the state was not fulfilling its duties under the agreement.
The annual payments range from $27 million to $37 million. Over the course of 16 years, the withheld payments amounted to around $43 million. The tobacco firms refused to anti up, Fox said, resulting in litigation in state district court.
“We brought this lawsuit to settle claims against tobacco companies who are profiting from a deadly product,” Fox said. “This settlement holds them accountable.”
Under the historic settlement, Montana will receive all the funds withheld to date, plus interest, amounting to $53.5 million. That portion of the settlement will be returned to various state healthcare programs, including the Children's Health Insurance Program.
Fox said an additional $10 million will be deposited into the state's general fund. Under the settlement, the tobacco defendants also agreed not to withhold any funds from the state in perpetuity, amounting to roughly $4.5 million a year.
“We estimate that in the next 10 years, that's worth approximately $55 million in money that will be paid without dispute to the state, in addition to the other annual payments that the tobacco companies pay,” Fox said. “The defendants waived their rights to make any similar claim through the year 2030, protecting the $55 million over the next 10 years.”
The funding stems from a 2004 settlement reached with Big Tobacco regarding the dangers of its product, its deceptive marketing practices and its denial of any associated healthcare risks.
Fox said Montana is the only Master Settlement Agreement state in the country that can litigate the issue in state court and not the more costly and time consuming national court system.
The settlement funds provide important revenue to the Montana Department of Health and Human Services for its smoking cessation and prevention programs. The funds also assist the most vulnerable, including the disabled and seniors, and provide health insurance to children.
“The Master Settlement Agreement released the defendant tobacco companies from liability from their deadly product in return for funds to protect our people, especially our youth, from a lifetime of chronic, deadly diseases,” Fox said. “The defendants reneged on that deal from the get go, and this settlement holds them accountable.”