No. 83 The States vs. the Tobacco Industry: Smoke and Assorted Mirrors (executive summary - pdf)

Medicaid law allows states to pursue reimbursement from third parties only through the traditional legal theory called "subrogation," which allows the substitution of one party in the place of another. States do not want to sue under this theory, however, because it allows tobacco companies to defend themselves against the state in the same way they defend themselves against individual smokers who sue: by arguing that smokers "assume the risk" of smoking. Tobacco companies have consistently won such lawsuits against individual smokers, and it is unlikely that the states would fare much better.

So the states have been inspired to creatively apply a number of common law and statutory theories against the tobacco companies. When tested, these novel applications of the law have failed. Moreover, they represent a dangerous expansion of tort law that conscientious state attorneys general should avoid.

Two dozen states have filed lawsuits against the tobacco industry seeking reimbursement of Medicaid and other public health monies spent on smokers. As a matter of legal policy, these suits are a bad idea and should fail. If a state government wishes to raise additional moneys to cover smoking-related health care spending, raising the cigarette tax would be a much simpler, much cheaper, and much quicker route.