Saturday, August 6, 2005

A U.S. lobbyist group, the United Seniors Association, filed a lawsuit in U.S. District Court in Boston to recover Medicare expenses related to tobacco smoking. The suit says there is a link between nicotine addiction and smoking-related diseases.

The first of its kind lawsuit seeks to recover as much as $60 billion in estimated Medicare expenses outlaid for treatment of lung cancer and emphysema patients.

The Medicare Secondary Payer Statute (MSP) allows someone to sue on behalf of Medicare. The medical expenses that another party was legally obligated to cover, in this case the tobacco companies if they are found liable in court, would be split between parties to the suit and Medicare. The MSP statute was entered in part because the government does not have the resources to prosecute every case under Medicare law.

Charles Jarvis, the CEO of the group said, “Our motivation is one of taxpayer protection.” He added, “Considering how badly the taxpayers have been injured financially, we believe the responsible parties — the tobacco companies — should be reimbursing the taxpayer to the greatest amount possible under the law.”

Currently, U.S. employees are taxed by Medicare at 1.45% of their earnings. This payroll tax amount is matched by their employer when paid to the IRS.

The lawsuit names Philip Morris USA, Lorillard Tobacco, the Liggett Group, and R.J. Reynolds Tobacco and two of its subsidiaries as defendants. The United Seniors Association is asking for twice the amount paid by Medicare to treat smoking related illnesses since 1999.