Appeals Court Rules Hawaii Medicaid Beneficiaries Do Not Have Claim to State’s Tobacco Settlement Funds

The 9th U.S. Circuit Court of Appeals on Nov. 18 rejected an attempt by Hawaiian Medicaid beneficiaries to challenge the way the state allocates its share of the national tobacco settlement, the AP/Honolulu Advertiser reports. In a unanimous decision, the court ruled that states have the right to use their tobacco settlement funds "for any expenditures deemed appropriate by the state." Hawaii is expected to receive about $1.38 billion in tobacco settlement funds over 25 years. The state Legislature has passed a measure that allocates 24.5% of the funds to a budget reserve, 35% for the state's CHIP program, 12.5% for the Hawaii Tobacco Prevention and Control Trust Fund and 28% to pay bonds for a new medical facility at the University of Hawaii. State Medicaid beneficiaries sued to receive a portion of the settlement funds, but the appeals court, following similar decisions by other federal courts that have addressed the issue, rejected the claim (AP/Honolulu Advertiser, 11/19). Earlier this year, the 4th U.S. Circuit Court of Appeals ruled that individual Medicaid beneficiaries are ineligible to receive a share of the national tobacco settlement to pay for smoking-related medical costs, upholding decisions by courts in North Carolina, South Carolina and West Virginia in lawsuits filed by Medicaid beneficiaries who argued that because the settlement was designed to repay states for smoking-related Medicaid costs, individual Medicaid beneficiaries should be entitled to a share of the settlement funds (Kaiser Daily Health Policy Report, 5/24).

Tobacco Expenditures 'Disappointing'
In related news, the Campaign for Tobacco-Free Kids has listed Hawaii as one of the "most disappointing" states based on the CDC's recommendations for spending tobacco settlement funds on smoking prevention programs. However, Gov. Ben Cayetano (D) cited a recent study that found that Hawaii ranks among the top four states in the amount of tobacco funds spent per capita on tobacco-control programs (AP/Honolulu Advertiser, 11/19). "Even amidst fiscal difficulties, Hawaii has been a leader in using money we received from the tobacco settlement to reduce smoking and improve health," Cayetano said (Associated Press, 11/18).