Idaho May Strike Own Tobacco Industry Deal Early Settlement Would Lock In Payments Without Waiting For Outcome In Congress

Idaho stands to get hundreds of millions of dollars from the tobacco industry over the next quarter century under the proposed national settlement between the industry and the states over tax spending on smokingrelated illness.

Attorney General Al Lance on Thursday did not dismiss the possibility that the state might try to settle its lawsuit against the industry outside the congressional wrangling over the nationwide proposal so it can lock in its cash award should the negotiated agreement fail to win federal approval.

“All options are being reviewed,” Lance said.

Mississippi, which spearheaded the states’ campaign to recover money spent on health care for smoking-related illnesses along with penalties and insurance costs, has settled its lawsuit against the industry outside the framework of the agreement for $3.6 billion.

And Lance has set the state up in a solid position to cut a separate deal as well. When he filed Idaho’s suit against the tobacco companies 7-1/2 weeks ago, he also notified state officials he had named as a special deputy attorney general one of the nation’s most successful personal injury attorneys, Steve Berman of Seattle.

Berman has a long record of securing large settlements from major corporations without ever going to trial.

The formula for distributing the $368 billion in industry payments under the proposed agreement would give Idaho at least $480 million during the first 25 years. The amount would actually be higher since the payment would be increased at least 3 percent annually for inflation.

And the payment of an inflation-adjusted $20 million a year would continue annually after without any termination.

Lance was skeptical that the state would receive all that cash in a congressionally approved deal since a portion of it reflects the federal contribution to Medicaid payments made for treating tobacco-related illnesses. Although the agreement makes no provision for reimbursing the federal government for its share, Lance said Congress could impose that requirement. In Idaho’s case, that could amount to $300 million of the first 25 payments.

But Congress could also forgo that cash in return for slapping strict requirements on the way states use the $25 billion the settlement earmarks for insuring uninsured children.

Idaho gets $19 million over the settlement’s first six years to provide insurance for the estimated 48,000 children without health care coverage now. About 15,000 of them qualify for, but are not enrolled in, the government-subsidized Medicaid program, and about 9,000 are from families with incomes above $30,000 a year.

The initial payment under the proposed agreement would be $22.5 million for Idaho - $8.7 million for uninsured children, $8.7 million for general state use on health programs and $5.1 million for legal fees.

The second year drops to $10 million and then slowly climbs back up - accelerated by the inflation adjustments - to the equivalent of $20 million annually in the seventh year.