II

103D CONGRESS

2D SESSION S. 2245

To provide additional methods of recovering costs to the Federal Government

health care programs attributable to tobacco related illnesses and diseases, and for other purposes.

IN THE SENATE OF THE UNITED STATES

JUNE 28 (legislative day, JUNE 7), 1994

Mr. LAUTENBERG (for himself and Mr. HARKIN) introduced the following bill;

which was read twice and referred to the Committee on Finance

A BILL

To provide additional methods of recovering costs to the

Federal Government health care programs attributable

to tobacco related illnesses and diseases, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Medicare and Medicaid

5 Third Party Liability Act’’.

6 SEC. 2. FINDINGS AND PURPOSE.

7 (a) FINDINGS.—The Congress finds that—
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1 (1) illnesses and diseases that result from the

2 use of tobacco products cost Federal Government

3 health care programs billions of dollars, including at

4 least $16,000,000,000 in the medicare program and

5 $3,000,000,000 in the medicaid program for inpa6 tient hospital services in fiscal year 1994;

7 (2) over the next 20 years, such illnesses and

8 diseases will cost the medicare trust funds at least

9 $800,000,000,000;

10 (3) in April 1994, the trustees of the medicare

11 trust funds concluded that such funds may be insol12 vent in 7 years, with $128,000,000,000 of expendi13 tures due to such illnesses and diseases;

14 (4) recent discoveries, including documents,

15 patents and patent applications, and testimony, have

16 shown that—

17 (A) the tobacco industry has known for

18 years that the nicotine in cigarettes is addictive,

19 (B) the industry has attempted both to

20 conceal this information from the public and

21 the Government and to manipulate the amount

22 of nicotine in cigarettes, and

23 (C) it is possible to manufacture cigarettes

24 which are far less dangerous to consumers;
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1 (5) more than 36 percent of medicare recipients

2 are former smokers and 20 percent are current

3 smokers;

4 (6) approximately 43 percent of medicaid re5 cipients smoke, compared to 26 percent of the gen6 eral public;

7 (7) the medicare population is much more at

8 risk of contacting illnesses and diseases that result

9 from the use of tobacco products than younger

10 smokers, because such population has smoked

11 longer;

12 (8) legal scholars and courts are increasingly

13 agreeing that it is appropriate to use statistical evi14 dence to prove causation; and

15 (9) in view of the large number of Americans

16 killed, disabled, or otherwise injured each year as a

17 result of smoking cigarettes, the addictiveness of the

18 nicotine in cigarettes, and the absence of any signifi19 cant benefits to society from smoking, cigarettes are

20 an unreasonably dangerous product and cigarette

21 manufacturers are engaged in abnormally dangerous

22 activities.

23 (b) PURPOSE.—The purpose of this Act is to allow

24 the American taxpayers to recoup billions of dollars in
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1 Federal Government health care funds spent on tobacco

2 related illnesses and diseases.

3 SEC. 3. CLASS ACTION TO RECOVER COSTS TO FEDERAL

4 GOVERNMENT HEALTH CARE PROGRAMS OF

5 TOBACCO RELATED ILLNESSES AND DIS6 EASES.

7 (a) IN GENERAL.—(1) With respect to payments

8 made under any applicable Federal Government health

9 care program to or on behalf of more than one recipient

10 with a disease, illness, condition, or complication caused,

11 in whole or in part, by the use of tobacco products, the

12 Attorney General of the United States may seek recovery

13 for such payments from third parties (or any successors

14 to such third parties) that manufacture tobacco products.

15 The Attorney General (after consultation with the appro16 priate Secretaries who administer such programs) may

17 bring an action in the name of the United States in United

18 States district court to recover such payments made to

19 or on behalf of all such recipients in one proceeding.

20 (2) Any action to enforce the rights of the Attorney

21 General under this section with respect to any payment

22 described in paragraph (1) shall be commenced within 5

23 years of such payment.

24 (3) For purposes of paragraph (1), the term ‘‘applica25 ble Federal Government health care program’’ includes—
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1 (A) the medicare program under title XVIII of

2 the Social Security Act;

3 (B) the medicaid program under title XIX of

4 such Act;

5 (C) the veterans health care program under

6 title 38, United States Code; and

7 (D) any other similar Federal health care pro8 gram.

9 (b) NOTICE UNDER THE CLASS ACTION.—(1) In any

10 action brought under this section, no notice to recipients

11 described in subsection (a)(1) is required, and such recipi12 ents shall have no right to become a party to such action.

13 Such action is independent of any rights or causes of ac14 tion of such recipients.

15 (2) In any such action in which the number of recipi16 ents described in subsection (a)(1) is so large as to cause

17 it to be impracticable to join or identify each claim, the

18 Attorney General shall not be required to so identify the

19 individual recipients for which payment has been made,

20 but rather can proceed to seek recovery based upon pay21 ments made to or on behalf of an entire class of recipients.

22 (c) RULES OF EVIDENCE.—In any action brought

23 under this section, the Federal Rules of Evidence shall be

24 construed, regarding the introduction and probative value

25 of evidence on the issues of causation and damages, in
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1 order to effectuate the purposes of this Act to the greatest

2 extent possible. The issues of causation and damages in

3 any such action may be proven by use of statistical analy4 sis or epidemiological evidence, or both.

5 (d) SHARE OF LIABILITY.—In any action brought

6 under this section in which a third party is liable due to

7 its manufacture, sale, or distribution of a tobacco product,

8 the Attorney General shall be allowed to proceed under

9 a market share theory, if the products involved are sub10 stantially interchangeable and substantially similar factual

11 or legal issues would be involved in seeking recovery

12 against each liable third party individually. In the alter13 native, the Attorney General shall be allowed to proceed

14 under a theory of concerted action or enterprise liability,

15 or both, if warranted by the facts presented to the court.

16 (e) DISTRIBUTION OF RECOVERY.—Amounts recov17 ered under any action brought under this section shall be

18 paid to the United States and disposed of as follows:

19 (1) In the case of amounts recovered arising

20 out of a claim under title XIX of the Social Security

21 Act, there shall be paid to each State agency an

22 amount bearing the same proportion to the total

23 amount recovered as the State’s share of the amount

24 paid by the State agency for such claim bears to the

25 total amount paid for such claim.
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1 (2) Such portion of the amounts recovered as is

2 determined to have been paid out of the trust funds

3 under sections 1817 and 1841 of the Social Security

4 Act shall be repaid to such trust funds.

5 (3) The remainder of the amounts recovered

6 shall be deposited as miscellaneous receipts of the

7 Treasury of the United States.

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