Minn. Court Rules Cigarette Fee Violates MSA

Rejects state's attempt to impose additional healthcare costs

Published in CSP Daily News

RICHMOND, Va. -- A Minnesota state court yesterday struck down the state's recently enacted health impact fee as a violation of the state's settlement agreement with the settling cigarette manufacturers, including Philip Morris USA. The court ruled that the state's efforts to seek additional reimbursement of tobacco-related health care costs clearly violates the [1998 Master] Settlement Agreement.

The court found that the state is bound, like any other party is bound, to the contracts to which it freely and knowingly enters, and from which it benefits. [image-nocss] Accordingly, the court ruled that the legislation violates the constitutional provision that prohibits any law impairing the obligation of contracts.

Richmond, Va.-based PM USA and other tobacco companies have already paid Minnesota more than a billion dollars under the settlement agreement.

We are pleased the court recognized that this law was a prohibited attempt to impose additional healthcare costs related to smoking in violation of our settlement agreement and the Constitution, said Denise Keane, PM USA executive vice president and general counsel.