H.749
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. LEGISLATIVE FINDINGS AND INTENT
(1) Regular tobacco use leads to disease and death. There are more than 400,000
tobacco-related deaths each year in the United States, including more than 800 in Vermont.
Nationally, tobacco use causes more deaths than AIDS, homicides, suicides, automobile
accidents, fires and drug and alcohol use combined.
(2) Tobacco use in Vermont is responsible for the largest sustained health care problem
in the history of the state. Through the Medicaid program, which provides medical
assistance to indigent persons, Vermont has paid millions of dollars each year to treat
these persons for tobacco-related health conditions.
(3) Under the Medicaid program, the state has a legal obligation to provide medical
assistance to eligible persons for tobacco-related health conditions, and those persons
have a legal entitlement to receive the medical assistance.
(4) Unlike other consumer products such as
firearms, alcohol, and dairy products, when used as the manufacturer intends, tobacco will
cause disease and death.
(1) Medicaid shall be the payer of last resort for medically necessary goods and
services furnished to Medicaid recipients. Subject to such exemptions as the general
assembly may deem appropriate, all other sources of payment for those medical services
shall be primary to Medicaid.
(2) The state shall not bear the burden of payment for treatment of tobacco-related
health conditions to the extent that the resources of a culpable tobacco manufacturer are
available.
(3) Statutory creation of an additional cause of action for recovery of Medicaid
expenditures for treatment of tobacco-related health conditions from tobacco manufacturers
does not preempt, extinguish or limit existing common law and statutory rights of
recovery. Existing laws and rights are expressly preserved.
(4) This act is remedial in nature and shall be liberally construed.
Sec. 2. 33 V.S.A. § 1904 is amended to read:
§ 1904. DEFINITIONS
When used in this subchapter, unless otherwise indicated:
* * *
(11) "Tobacco manufacturer" means any person engaged in the process of
designing, fabricating, assembling, producing, constructing or otherwise preparing a
product containing tobacco, including packaging or labeling of these products, with the
intended purpose of selling the product for gain or profit. "Tobacco
manufacturer" does not include persons whose activity is limited to growing natural
leaf tobacco or to selling tobacco products at wholesale or retail to customers. "Tobacco
manufacturer" also does not include any person who manufacture or produces firearms,
dairy products, products containing alcohol or other nontobacco products, unless such
person also manufactures or produces tobacco products.
Sec. 3. 33 V.S.A. § 1911 is added to read:
§ 1911. TOBACCO MANUFACTURERS; LIABILITY FOR MEDICAID
EXPENDITURES
(a) After the state has paid medical assistance benefits to eligible persons for
tobacco-related health conditions under this chapter, the state may recover from tobacco
manufacturers the amount paid or likely to be paid for medical assistance to such persons,
plus punitive damages, costs, reasonable attorney's fees and other appropriate relief.
(b) The cause of action created in this
section shall be a direct cause of action and not a subrogated cause of action.
Affirmative defenses relating to subrogated causes of action shall not apply to this
direct cause of action.
(c) In order to recover under subsection (a) of this section, the state shall prove:
(1) that the tobacco manufacturers were either negligent or produced a defective
product unreasonably dangerous to the user or consumer who received or will receive
medical assistance;
(2) that the tobacco product caused the health conditions for which the state seeks
reimbursement; and
(3) the amount of compensatory damages and the appropriateness of any other relief
sought.
(d) The right of the state to bring a cause of action against a tobacco manufacturer
under this section shall be independent of and not construed to affect any rights or
causes of action by an individual Medicaid benefits recipient to recover damages or other
relief as a result of a tobacco-related health condition. In the event that recovery of
Medicaid expenditures has been achieved and the individual recipient thereafter recovers
damages from a tobacco manufacturer, then the tobacco manufacturer shall be entitled to a
setoff for the amount of any such Medicaid recovery which represents the expenditure on
behalf of the individual recipient.
(e) Existing common law and statutory actions available to recover Medicaid
expenditures from a tobacco manufacturer, including direct action, are expressly
preserved. An action brought pursuant to this section may be brought in addition to any
existing common law or statutory action, or both, and shall not preempt, limit or
extinguish those actions.
(1) Joint and several liability applies to any judgment in favor of the state, except
as provided in subdivision (3) of this subsection.
(2) The state may proceed under the market share theory for allocation of damages
between or among tobacco manufacturers, provided that the tobacco products involved are
substantially interchangeable among brands, and substantially similar factual and legal
issues are involved in seeking recovery against each individual tobacco manufacturer. In
the event the state elects to proceed under the market share theory, joint and several
liability shall not apply.
(4) If the number of recipients is sufficiently large so that it is impracticable to
identify, the court may require the state to release information on individual recipients including
individual Medicaid and medical records which are in the possession, custody or control of
the state, to the extent necessary for the defendant to establish its defenses,
subject to such orders as are necessary to maintain the privacy of the recipients and to
prevent Medicaid fraud.
(5) Evidence of statistical analysis may be admissible to prove or rebut
the elements of subdivisions (b)(2) and (b)(3) of this section.
(g) Before the state enters into a contract
with an attorney to represent the state in an action brought pursuant to this section, the
contract shall be reviewed and approved by the joint fiscal committee. The joint fiscal
committee shall approve the contract if it determines that the contract is reasonable
under the circumstances.
Sec. 4. APPLICABILITY
This act shall enable the state to recover state Medicaid benefits for tobacco-related
health conditions paid or to be paid after the effective date of this act. This act
shall not apply to any Medicaid benefits for tobacco-related conditions paid by the state
prior to the effective date of this act.
Sec. 5. EFFECTIVE DATE
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