South Korea’s Health Insurer Sues Tobacco Makers for Smoking Damages

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South Korea’s state health insurer, the National Health Insurance Service, is suing two global cigarette makers and local market leader KT&G Corp., the former state-run cigarette maker privatized in 2002, in a South Korean court.

According to Reuters, the National Health Insurance Service said on Monday that it is seeking an initial 53.7 billion won ($52 million)  from three tobacco companies, including the local units of Philip Morris International Inc. and British American Tobacco PLC, for treatment costs that result from diseases linked to smoking. This will mark only the fifth tobacco lawsuit ever heard in South Korea, as the other four were all filed by individuals or families. As a result, there is no precedent the NHIS can follow for successful action.

Reuters reports that the state health insurer’s lawsuit is the first by a government organization against tobacco firms among 37 countries and territories in the western Pacific. The NHIS calculated the damages it is now asking for based on data of payments by state insurers for patients with three types cancer associated with smoking.

The NHIS believes it spends more than $1.6 billion each year on treating diseases linked to smoking. NHIS lawyer An Sun-young maintained to reporters that ”We believe the NHIS, as it takes responsibility for the health of the public and oversees the insurance budget, has a natural duty to bring this tobacco lawsuit,” per Reuters.

The NHIS said in January that it would file a lawsuit, but the Korea Tobacco Association, which represents cigarette makers in South Korea, showed little apprehension about the suit. According to Bloomberg, a spokesperson said the insurer’s proposed lawsuit has no legal merit based on past court rulings in favor of tobacco producers.

Still, KT&G has said that it plans on handling NHIS’s legal action “in line with previous lawsuits,” which is interesting to note, as KT&G will likely take center stage throughout the legal process. Bloomberg reports that the company captured 62 percent of the nation’s tobacco market last year.

The other subjects of the suit, Philip Morris and British American Tobacco, together account for about a third of the $9.3 billion tobacco market in South Korea. Left out of the lawsuit is Japan Tobacco International, an affiliate of Japan Tobacco Inc., which has the smallest market share, at 6.4 percent, according to Reuters. 

The NHIS will take on the lawsuit having no precedent of successful action to follow, although it believes the cost estimates will speak for themselves. KT&G was also just in South Korea’s Supreme Court last week on a separate case brought by individuals — now, it will return to the stand shortly.

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