A settlement agreement involving major tobacco companies will release more than $34 million from an escrow account to North Dakota, the state attorney general's office announced Tuesday, March 13.
The agreement settles a decade-long dispute between the state and the major tobacco companies over enforcement of the 1998 Tobacco Master Settlement Agreement (MSA). The agreement requires the tobacco companies to make annual payments to the 46 states that signed on to the agreement, including North Dakota.
The MSA settled state litigation against the four major tobacco companies for health care costs and other damages imposed upon the states by cigarette smoking, according to the National Association of Attorney Generals.
The payment provisions of the MSA were designed to compensate the states, in part, for the billions of dollars in health care costs associated with treating tobacco-related diseases under state Medicaid programs. To date, states have received more than $50 billion in settlement payments, the NAAG said.
"This is a win-win proposition for North Dakota. We will see an immediate payment of more than $34 million, and will also eliminate the need for an expensive arbitration process year after year," Stenehjem said in a statement.
In addition to paying the states annually, the tobacco companies must permanently restrict their advertising, promotion and marketing of cigarettes, the NAAG said.
The tobacco companies have withheld part of their combined annual settlement payments, claiming the states, including North Dakota, had not diligently enforced a specific tobacco-control statute, the attorney general's office states in a press release. The adjustment, which is subject to arbitration, has forced North Dakota "to devote considerable resources and money to prove it diligently enforced its laws."
North Dakota won its first arbitration dispute, concerning funds withheld in 2003. If it had not won, the state risked losing more than $20 million.
Without the settlement, North Dakota was scheduled to arbitrate the 2004 payment dispute this month, which was worth around $23 million.
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