Tobacco Settlement Nets Pa. $126 Million

A ruling from the Pennsylvania Commonwealth Court Friday prevented approximately $126 million from being reduced from Pennsylvania’s annual payments pursuant to the Tobacco Master Settlement Agreement (MSA).

The Commonwealth Court decision upholds a ruling made by the Philadelphia Court of Common Pleas last April, overturning a 2003 decision by an arbitration panel that reduced Pennsylvania’s payments from the fund established in 1998.

“We are very pleased with the Commonwealth Court’s decision, which ensures the terms of the MSA are followed by the arbitration panel and that Pennsylvania is fairly treated under the terms of the agreement,” said Pennsylvania Attorney General Kathleen Kane in a statement. “The court’s decision ensures Pennsylvania receives the funding it needs to forward the important goals of smoking cessation, and to invest in medical research and health programs.”

The Commonwealth Court indicated in its ruling that an arbitration panel that presided over hearings associated with the Tobacco MSA failed to properly apply the terms of the contract.

The arbitration panel found that in 2003 Pennsylvania did not “diligently enforce” certain laws requiring the collection of taxes and other payments from certain tobacco companies that did not sign the 1998 MSA.

The panel’s decision shifted certain financial obligations of states that entered into a 2013 settlement agreement to Pennsylvania. States that joined the 2013 settlement did so to avoid a possible finding that they failed to diligently enforce their laws regarding non-signatory tobacco companies.

In the fall of 2013, Pennsylvania officials filed a motion in the Philadelphia Court of Common Pleas to overturn the arbitration panel decision. An appeal of the trial court’s March 2014 ruling in favor of the commonwealth led to Friday’s ruling by the Commonwealth Court.