Big Tobacco Ordered To Pay $24M To State Of WI

MADISON, WI — U.S. tobacco manufacturers must pay out $24 million to the state of Wisconsin, an arbitration panel of former judges ruled last week.

The disputed funds were part of the Master Settlement Agreement (MSA) that Wisconsin and 45 other states reached with the tobacco companies in 1998. Companies involved in that settlement include Philips Morris and RJ Reynolds.

The MSA reduces those annual payments based on the increase in market share of manufacturers who did not join the MSA.

However, states can avoid a payment reduction if they can prove they enforced a statute requiring tobacco companies that were not party to the MSA to put money into escrow.

State officials said Wisconsin diligently tracked the sales and escrow payments of the tobacco companies not in the MSA and if one of them failed to make the required payments, Wisconsin would step in and prohibit it from selling its products in the state.

Large tobacco companies have challenged the accounting of Wisconsin and other states, forcing state officials to prove their accounting for each calendar year to secure their full MSA payment.

On Feb. 20, a panel of three former federal judges ruled in favor of Wisconsin for years 2005, 2006, and 2007, finding that "Wisconsin had a comprehensive and well-coordinated program and that the State used its best efforts to successfully eradicate noncompliant [non-MSA] manufacturers."

Payments made under the MSA are applied to the Medical Assistance Trust Fund, officials said.