Blue Cross chief executive and employees celebrate tobacco settlement

EAGAN, Minn. (AP) — The chief executive of Blue Cross and Blue Shield of Minnesota met with his employees Monday to celebrate the health plan’s $469 million share of a $6.6 billion settlement with the tobacco industry.
Andrew Czajkowski told them that Blue Cross intends to use the money to try to reduce smoking among its members by 30 percent, which he said would save $350 million over the next 10 years.
Czajkowski said Blue Cross plans to fund programs for members and nonmembers alike to help smokers quit, and to fund prevention programs to keep underage youth from starting to smoke. Details are still being determined.
While Blue Cross already covers smoking-cessation programs for people covered by its health plans, the money means the company will not have to pass the costs on to its members.
Czajkowski also said that as a taxable nonprofit corporation, Blue Cross will pay 41 percent of its money from the settlement in federal and state taxes — over $192 million.
Blue Cross joined the state in filing the lawsuit in 1994. They sought to recover what the $1.77 billion they claimed to have spent treating smoking-related illnesses. The suit was settled Friday shortly before the case was due to go to the jury, and Blue Cross got the full amount of damages it was seeking.
“It was a total realization of all of our objectives, so we wanted celebrate that with all of our employees,” Czajkowski said in an interview.
Czajkowski said he told employees Blue Cross had been part of something historic.
“It’s been a terrific morale booster, I think, for our employees,” he said.
He added that the publicity from the case is paying other dividends as well. “It’s been a good recruiting tool for us in the tight labor market,” he said.
Some Blue Cross policyholders have expressed interest in forcing the insurance company to return its share of the settlement to those who paid premiums, according to Minneapolis attorney Jordan Lewis. Blue Cross earlier paid nearly $4 million to its policyholders to settle a 1994 lawsuit that claimed the company had overcharged them on some co-payments.
Mike Hatch, a DFL candidate for attorney general, agreed Monday that Blue Cross should issue refunds to policyholders. He cited the 1996 Minnesota Supreme Court decision allowing Blue Cross to sue the tobacco companies because costs had been passed to its members.
“The Blues represented itself in court to be a nonprofit association which had members pay higher rates because of the costs of tobacco-related illnesses,” Hatch said. “Accordingly, it is only fair that the proceeds be allocated fairly to those members who had to pay for those costs.”
The fate of one defendant, Liggett Group Inc., remains unresolved. The state settled with Liggett before the trial began, but Blue Cross did not, and Liggett was not part of the deal announced Friday.