Seoul court rules against state health insurer on compensation suit against tobacco firms

After a six-year court battle, a Seoul court ruled against the National Health Insurance Service in the case filed against major tobacco companies, saying there was no direct link with the insurer’s financial burden and the firms’ business activities.

NHIS first filed a compensation suit Against KT&G, the leading tobacco manufacturer here, and the local headquarters of British American Tobacco and Philip Morris, claiming that their sales of cigarettes had caused extra costs for the insurance agency.

Seoul Central District Court rejected the compensation suit worth 53.3 billion won ($48 million), as there were no irregularities found in the firms’ actions.

The 53.3 billion won is NHIS’ total spending from 2003 to 2013 for treating patients of lung cancer and laryngeal cancer, which are strongly related to smoking.

The patients treated are those who smoked more than a pack a day for over 20 years.

“(NHIS’) insurance payment to medical care institutes is merely executing the fund accordingly to the National Health Insurance Act,” the court said.

“Even if the agency suffered from a diminishment of property or incurred financial losses, it is hard to see it as a violation of the law.”

The judge added it cannot be ruled out the possibility that the cases may be caused by factors other than smoking, such as individual lifestyles, heredity, surroundings and professional characteristics.

Adding that the companies did not commit any illegal act, the court said it was hard to find a legal link between the tobacco firm’s business activities and the insurer’s expenditures.

Calling the court’s decision “very shocking and regrettable,” NHIS President Kim Yong-ik said the agency is reviewing whether to lodge an appeal.

By Jo He-rim (herim@heraldcorp.com)