The State of Minnesota and the health insurance federation Blue Cross and Blue Shield brought a lawsuit against tobacco companies in 1994. The suit — State of Minnesota et al. v. Philip Morris et al. — ended the companies’ chain of legal victories and turned the tide in anti-tobacco efforts throughout the nation.
Tobacco has been an important commercial crop in the United States since the 1600s. Its use grew after the late 1800s, when machine-manufactured cigarettes became available. By 1901, 3.5 billion cigarettes were sold each year in the United States.
Starting in 1950, medical researchers published studies that raised health concerns about tobacco — particularly its effects on the lungs. Information about the danger of tobacco use continued to grow and reached a peak with the 1964 publication of Smoking and Health: Report of the Advisory Committee to the Surgeon General of the United States. The report announced two major findings. First, it concluded that cigarette smokers faced higher death rates and lung-cancer rates than non-smokers. Second, it linked cigarette smoking to illnesses such as chronic bronchitis, emphysema, and heart disease.
The report confirmed that tobacco companies sold a dangerous product and people were dying from it; by the 1990s, it was clear that the tobacco companies knew this. To win lawsuits against tobacco manufacturers, however, plaintiffs had to prove that the person injured or killed had smoked cigarettes, had seen tobacco advertisements suggesting that smoking was healthy, and had contracted his disease from tobacco use. Such proof required expert witnesses and other legal resources. While the tobacco companies had the money to fight these battles, the smokers themselves were often sick or dying and generally not wealthy. The litigation process compensated a few plaintiffs but did not stop the marketing of tobacco as healthy or prevent new young smokers from becoming addicted.
It was at this point that the State of Minnesota and Blue Cross and Blue Shield (a major health insurance company) came up with a new approach. In a lawsuit filed on their behalf by the Minneapolis law firm of Robins, Kaplan, Miller & Ciresi in 1994, the state and Blue Cross argued that the marketing and sale of tobacco products had harmed them as well as the persons made ill. The state claimed that the tobacco companies’ false advertising had violated consumer protection laws. Blue Cross, which insured nearly 2 million people in Minnesota, claimed that the sale of a dangerous product was making its customers ill. As a result, it argued, these customers were filing more insurance claims. If insurance companies did not raise customers’ premiums in response, they were effectively footing the bill for smoking-related diseases.
For their long-term anti-tobacco strategy to succeed, the state of Minnesota and Blue Cross needed to collaborate. The state could seek to bar some advertising and force the companies to reform their business practices. Blue Cross could use its claims of lost revenue to pressure them to settle quickly. In response, the companies attacked Blue Cross’s right to sue, arguing, among other things, that Blue Cross did not lose money from the tobacco-related claims because it simply raised premiums to cover its rising costs.
In July of 1996 the Supreme Court of Minnesota found that Blue Cross did have the right to sue; in fact, it had been injured as soon as it paid a claim. The possibility of making up that loss in the future did not cancel out the injury.
The court’s ruling forced the companies to seek to resolve the case. In May of 1998, they agreed to pay the state $240 million a year for twenty-five years; to pay Blue Cross $469 million; and to make significant changes in their marketing and advertising programs. The state of Minnesota used large parts of those payments to fund anti-tobacco efforts and health care for tobacco users — programs that have lasted into the 2010s.
For more information on this topic, check out the original entry on MNopedia.