Debate and Issues Index

draft settlement


TO: Public Health Advocates

From: Jack W Cannon
Billy J Williams
Friday, November 20, 1998

The following analysis should be forwarded to the office of any Governor stating a willingness to sign on to the tobacco industry settlement.

The Master Settlement Agreement released November 14, 1998 obligates all Settling States, "to settle and resolve with finality all Released Claims against the Participating Manufacturers and related entities."

"Released Claims" is defined for both past and future conduct as, "Claims directly or indirectly based on, arising out of or in any way related to, in whole or in part, the use of or exposure to Tobacco Products." (1)

This Agreement further prohibits the State's subdivisions from seeking similar relief on behalf of the general public. Such subdivisions include: municipalities, counties, parishes, villages, unincorporated districts, hospital districts, public entities, public instrumentalities, public educational institutions and even taxpayers. (2) In other words, no entity representing any subdivision of a state can ever seek redress for any claims that could arise from the use of or exposure to tobacco products. This is a contractural relationship whose very design serves the singular purpose of imposing discriminatory sanctions against individuals with disabilities caused by or exacerbated by environmental tobacco smoke.

Through the American's with Disabilities Act (ADA), the U.S. Congress specifically outlawed such contractural arrangements.

29 C.F.R. section 1630.6(a) prohibits public entities from entering into a contractual relationship that has the effect of discriminating against its own employees or applicants with disabilities.

    29 C.F.R. section 1630.6.
    Contractural or other arrangements.

(a) In general. It is unlawful for a covered entity to participate in a contractural or other arrangement or relationship that has the effect of subjecting the covered entity's own qualified applicant or employee with a disability to the discrimination prohibited by this part.

Congress has also provided for appropriate sanctions to enforce this provision.

Section 504 of the Rehabilitation Act, which covers federal financial assistance, was amended by Congress in 1992 to provide for Section 504 the same standards as those of Title I of the ADA. The application of those standards to Section 504 was upheld by the U.S. Court of Appeals for the Third Circuit (3).

The U.S. Supreme Court has held that Medicaid is federal financial assistance for purposes of Section 504 of the Rehabilitation Act. (4) This means that the withholding of Medicaid funding (and other funding) to the states is an appropriate and legal mechanism for enforcement of the ADA.

Any state abiding with the provisions of the MASTER SETTLEMENT AGREEMENT exposes itself to the very real and likely scenario of losing not only its Medicaid funding but also funding from other federal financial assistance programs.

(3) Shiring v. Runyon, 90 F.3d 827, 831-32 (3rd Cir. 1996)
(4) Alexander v. Choate, 469 U.S. 287, 105 S.Ct. 712 (1985)