[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[S. 346 Introduced in Senate (IS)]







106th CONGRESS
  1st Session
                                 S. 346

     To amend title XIX of the Social Security Act to prohibit the 
   recoupment of funds recovered by States from one or more tobacco 
                             manufacturers.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 3, 1999

 Mrs. Hutchison (for herself, Mr. Graham, Mr. Voinovich, Mr. Abraham, 
 Mr. McConnell, Mr. McCain, Mr. Lott, Mr. Leahy, Mr. Smith of Oregon, 
Mr. Gorton, Mrs. Murray, Mr. Allard, Mr. Burns, Mr. Frist, Mr. Cochran, 
Mr. Craig, Mr. Bunning, Mr. Kyl, Mr. Lugar, Mr. Inhofe, Mr. Hutchinson, 
 Mr. Mack, Mrs. Lincoln, Mr. Torricelli, Mr. Bayh, Mr. Murkowski, Mr. 
Gramm, and Mr. Thompson) introduced the following bill; which was read 
             twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
     To amend title XIX of the Social Security Act to prohibit the 
   recoupment of funds recovered by States from one or more tobacco 
                             manufacturers.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. FINDINGS.

    Congress makes the following findings:
            (1) Over the last decade, State governments initiated 
        lawsuits against the tobacco industry, asserting a variety of 
        claims, including the violation of consumer fraud and other 
        State consumer protection laws, antitrust violations, unjust 
        enrichment, conspiracy, racketeering, and others. Several State 
        lawsuits did not include any claims for reimbursement of 
        tobacco-related health care costs paid under the medicaid 
        program.
            (2) The lawsuits against the tobacco industry were 
        initiated by the States without any financial, technical, or 
        other assistance from any branch or agency of the Federal 
        Government, at any stage of the litigation or settlement 
        process.
            (3) Culminating in a comprehensive, 46-State agreement 
        reached in November, 1998, all of the States, the District of 
        Columbia, and the United States territories, have entered into 
        settlement agreements with the major tobacco manufacturers in 
        the United States. The States' Attorneys General carefully 
        crafted these agreements to reflect only State costs, direct 
        damages, civil penalties, disgorgement of profits, injunctive 
        relief, and other appropriate remedies.
            (4) States that entered into the comprehensive, 46-State 
        settlement agreement, as well as the other States that entered 
        into individual settlement agreements, have planned for or have 
        begun to plan for the allocation and expenditure of the funds 
        received under those agreements. Several States have already 
        received and expended funds under those agreements.
            (5) The medicaid third party recovery provisions of the 
        Social Security Act do not encompass, nor did Congress intend 
        them to apply to, situations in which States initiate lawsuits 
        on behalf of all their residents against manufacturers of 
        products, asserting a variety of consumer protection and other 
        causes of action.
            (6) If the Secretary of Health and Human Services were to 
        claim that each of the States' settlement agreements include 
        the existence of specific medicaid claims, arbitrarily assume 
        that some portion of the settlement funds received by the 
        States are related to such medicaid recovery claims, and then 
        seek to recoup what is determined to be the Federal share of 
        those funds, it would likely result in protracted and costly 
        litigation that would cause unnecessary conflict between the 
        States and the Federal Government and would delay or preclude 
        States from using their settlement funds for the health and 
        welfare of their residents, as determined by the needs and 
        priorities of those residents.

SEC. 2. PROHIBITION ON TREATING ANY FUNDS RECOVERED FROM TOBACCO 
              COMPANIES AS AN OVERPAYMENT FOR PURPOSES OF MEDICAID.

    (a) Amendment to Social Security Act.--Section 1903(d)(3) of the 
Social Security Act (42 U.S.C. 1396b(d)(3)) is amended--
            (1) by inserting ``(A)'' after ``(3)''; and
            (2) by adding at the end the following:
            ``(B)(i) Subparagraph (A) and paragraph (2)(B) shall not 
        apply to any amount recovered or paid to a State as part of the 
        comprehensive settlement of November 1998 between manufacturers 
        of tobacco products, as defined in section 5702(d) of the 
        Internal Revenue Code of 1986, and State Attorneys General, or 
        as part of any individual State settlement or judgment reached 
        in litigation initiated or pursued by a State against one or 
        more such manufacturers.
            ``(ii) Except as provided in subsection (i)(19), a State 
        may use amounts recovered or paid to the State as part of a 
        comprehensive or individual settlement, or a judgment, 
        described in clause (i) for any expenditures determined 
        appropriate by the State.''.
    (b) Prohibition on Payment for Administrative Expenses Incurred in 
Pursuing Tobacco Litigation.--Section 1903(i) of the Social Security 
Act (42 U.S.C. 1396b(i)) is amended--
            (1) in paragraph (18), by striking the period and inserting 
        ``; or''; and
            (2) by inserting after paragraph (18) the following new 
        paragraph:
            ``(19) with respect to any amount expended on 
        administrative costs to initiate or pursue litigation described 
        in subsection (d)(3)(B).''.
    (c) Effective Date.--This section and the amendments made by this 
section shall apply to amounts paid to a State prior to, on, or after 
the date of enactment of this Act.
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