Tobacco firms, NHIS bicker over planned lawsuit

Tension escalated over the state-run health insurance agency’s planned lawsuit against cigarette makers, as tobacco firms criticized the plan as an attempt to solve budget issues.

The Korea Tobacco Association, a group of tobacco companies here, said Saturday that the plan would have “little legal merit” and is being planned to force taxpayers to pay extra money for health care costs.

“Litigation against a lawful and highly taxed industry is a reckless attempt to solve the National Health Insurance Service’s budget problems by forcing smokers to pay more than their fair share in health care costs,” said KTA’s chairman Brian Kim in a statement.

“Instead of reaching further into the pockets of smokers and exposing Korean taxpayers to years of costly litigation, the NHIS should learn from the failure of similar attempts by other governments and focus on finding a real solution to their budget woes.”

The statement came a day after the NHIS decided to start a legal battle against the tobacco industry to pay for health costs allegedly caused by smoking-related diseases.

NHIS held an executive board meeting Friday evening. The majority of its members voted for filing a lawsuit against tobacco makers.

The decision marks the first time a South Korean public agency has mounted a legal challenge against the tobacco industry, which includes the largest cigarette maker, KT&G, and a handful of foreign companies.

To this, tobacco companies blamed were NHIS for ignoring a government directive on state-run agencies and companies against filing lawsuits unless they come up with clear reasons and amounts claimed.

The Ministry of Welfare, which supervises the NHIS, asked the agency to discuss the legal options rather than making a final decision, citing the lack of consultations and preparations.

The health agency is reportedly considering filing the lawsuit around February, seeking financial compensation of about 60 billion won ($56 million). The compensation level was based on medical costs used to treat patients with lung and larynx cancer.

It eventually aims to raise the compensation level sought to 1.7 trillion won, adding that it spends that amount of money every year to treat smoking-related diseases. This accounts for 3.7 percent of the total insurance expenses for all illnesses. South Korea is estimated to have 14 million smokers.

The KTA claimed that smokers are already contributing to the national health promotion fund, saying that 1.5 trillion won out of 7 trillion won in tobacco taxes every year goes to the fund. The group said the amount was already sufficient to cover annual health care costs to treat diseases related to smoking.

“The NHIS is seeking more money through litigation, which will eventually come out of smokers’ pockets, for legal activities that the government already heavily regulates,” the KTA said.

So far, four tobacco lawsuits had been filed by individual smokers here. The court already ruled in favor of the tobacco industry in one case and the remaining three are still pending, with legal experts expressing doubt.

“Even if the agency proves the causality of smoking and health problems, it’s very difficult to prove why the tobacco industry should be held accountable for the medical costs,” said Song Ok-rial, a law professor at Seoul National University.

By Lee Hyun-jeong (rene@heraldcorp.com)