(a) Cigarette smoking presents serious public health concerns to the State and to
the citizens of the State. The Surgeon General has determined that smoking causes lung cancer, heart disease
and other serious diseases, and that there are hundreds of thousands of tobacco-related
deaths in the United States each year. These diseases most often do not appear until many years after the person in question
(b) Cigarette smoking also presents serious financial concerns for the State. Under certain health-care programs, the State may have a legal obligation to provide
medical assistance to eligible persons for health conditions associated with cigarette
smoking, and those persons may have a legal entitlement to receive such medical assistance.
(c) Under these programs, the State pays millions of dollars each year to provide
medical assistance for these persons for health conditions associated with cigarette
(d) It is the policy of the State that financial burdens imposed on the State by cigarette
smoking be borne by tobacco product manufacturers rather than by the State to the
extent that such manufacturers either determine to enter into a settlement with the
State or are found culpable by the courts.
(e) On November 23, 1998, leading United States tobacco product manufacturers entered
into a settlement agreement, entitled the “Master Settlement Agreement,” with the
State. The Master Settlement Agreement obligates these manufacturers, in return for a release
of past, present and certain future claims against them as described therein, to pay
substantial sums to the State (tied in part to their volume of sales); to fund a
national foundation devoted to the interests of public health; and to make substantial
changes in their advertising and marketing practices and corporate culture, with the
intention of reducing underage smoking.
(f) It would be contrary to the policy of the State if tobacco product manufacturers
who determine not to enter into such a settlement could use a resulting cost advantage
to derive large, short-term profits in the years before liability may arise without
ensuring that the State will have an eventual source of recovery from them if they
are proven to have acted culpably. It is thus in the interests of the State to require that such manufacturers establish
a reserve fund to guarantee a source of compensation and to prevent such manufacturers
from deriving large, short-term profits and then becoming judgment-proof before liability
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