State to receive $50 million following tobacco settlement repeal, Missouri Supreme Court rules

By Olivia Olsen | Apr 14, 2017

Missouri will receive $50 million in tobacco settlement funds

JEFFERSON CITY — The Missouri Supreme Court recently ruled that the state will obtain $50 million in funds owed to it following the appeal of a tobacco settlement from 1998. 

The original settlement was made between four major U.S. tobacco companies and 46 states, including Missouri, to reimburse the states for the health care costs they had incurred due to hazards inflicted upon their residents due to use of cigarettes and other tobacco products. 

In the 1998 ruling, Missouri was entitled to $130 million annually or about 2.3 percent of the share. However, in 2013, the state and four others were accused of not holding up the escrow provisions set by the settlement in 2003. 

The settlement required states to increase the prices of cigarettes manufactured by companies not named as plaintiffs in the suit to offset the millions being paid by the competition. An arbitration panel determined that the state had not done an adequate job in setting the prices for smaller companies and reduced the funds granted to Missouri from $130 million to $70 million for 2003. 

According to the Missouri Foundation for Health settlement factsheet, in 2015, Gov. Jay Nixon withheld nearly $50 million from the state’s budget when the decision was appealed that year. The state claimed that the adjusted settlement took $35 million away from mental health, senior and social services.

The arbitration decision was appealed through the St. Louis City Circuit Court, where a decision was made in favor of the state. The tobacco companies appealed in September 2015. The matter was then moved to the Supreme Court of Missouri, where the circuit court’s ruling was upheld on the grounds that the arbitration panel did not have the power to alter the settlement funds for the five states. 

Although the state emerged victorious in 2003, a KCUR report said that the tobacco companies could seek an appeal against the state for each year following 2003 when it is believed the state did not diligently uphold the escrow provision.

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