AG Six Secures New Tobacco Settlement Funds

the state of Kansas received $4.5 million in tobacco settlement funds previously withheld by tobacco companies. R.J. Reynolds, Lorillard, and other tobacco companies agreed to transfer the money pending the resolution of an ongoing payment dispute with the states, Attorney General Steve Six announced today.

“These funds will go directly to the Kansas Endowment for Youth Fund and help offset potential budget cuts being considered by the Legislature,” Six said. “I am pleased my tobacco enforcement unit was able to secure these funds.  With the ongoing state budget crisis, funding for the vulnerable, including Kansas youth, is sorely needed.”

Receipt of these funds marks another achievement by Attorney General’s Tobacco Enforcement Unit, created during the first year of Attorney General Steve Six’s term.

The Master Settlement Agreement (“MSA”) requires tobacco manufacturers to make annual payments to the states, in part to compensate for billions of dollars in health care costs associated with treating tobacco-related diseases under state Medicaid programs. Under certain circumstances, the MSA provides for increases and decreases in the size of these payments. The states and participating manufacturers have been in dispute over whether the manufacturers are entitled to a reduction in the amount of money they must pay for certain years based on a loss of market share to firms that were not part of the MSA.

 Some of the companies placed a portion of their payments into a “disputed payments account.” Now, more than $540 millionof that money is being released to the states that participated in the settlement. The majority of Kansas’s $4.5 million share will be used for children’s initiatives.

The Kansas Attorney General's Office was one of the 46 state attorneys general that participated in the 1998 negotiations with certain tobacco companies. The MSA imposes major restrictions on the industry’s advertising and marketing machine, curtails its ability to fight anti-tobacco legislation in the political arena and provides states mechanisms to enforce the agreement. The tobacco settlement is the largest financial recovery in legal history.