(The Center Square) – Iowa Attorney General Tom Miller filed a lawsuit Thursday in which he alleges 18 tobacco companies defrauded Iowa out of more than $133 million.
The 1998 Master Settlement Agreement requires tobacco manufacturers to pay billions annually to participating states, which agree not to sue them for health-related damages to citizens, a news release from his office said. Iowa has received $1.41 billion under the Master Settlement Agreement in the past 24 years. Each company is supposed to pay annually. Iowa law says tobacco companies selling in Iowa must join the agreement or deposit a certain dollar amount per unit sold in an escrow account.
A non-participating manufacturer adjustment allows tobacco companies participating in the agreement to reduce their annual payments in certain circumstances, including loss of market share to non-participating competitors and showing that a state failed to “diligently enforce” state laws against tobacco companies that did not sign the agreement.
The state’s motion in Polk County District Court alleges the companies have withheld some of their annual payments to Iowa in bad faith and “through a scheme of false claims and feigned ignorance.”
According to the motion, the tobacco companies demand Iowa go to arbitration to recover each year’s withheld payment and it takes years to litigate the disputes, creating backlogs and growing withheld payments.
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