Ohio Appellate Court Ruling a Major Setback for Efforts to Preserve Tobacco Funds, Protect the Health of Ohioans

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Jan 06, 2010, 01:06 ET

Legacy Board of Directors Filing Appeal to Ohio State Supreme Court

WASHINGTON, Jan. 6 /PRNewswire-USNewswire/ -- Today, the Board of Directors for Legacy(SM) - a national public health foundation devoted to tobacco cessation and prevention - announced it will continue efforts to preserve tobacco funds in Ohio, by taking the battle to the Supreme Court of Ohio.

"We never anticipated being involved in such a protracted legal dispute regarding these funds," said Dr. Benjamin K. Chu, the foundation's Board Chair. "However, when we were asked to join the fight to safeguard these monies for their intended purpose, we considered it a moral imperative and still do. We will ask the Supreme Court to reinstate the trial court's injunction requiring that the funds be spent for tobacco control, thereby honoring the intent of the governing legislation and, in the process, saving countless lives in Ohio through preventing smoking and helping people quit." Legacy's Board is comprised of two state Attorneys General, two state legislators and national public health leaders.

Today's action was sparked by Legacy's deep disappointment in the New Year's Eve decision of the Ohio Court of Appeals of Franklin County, Tenth Appellate District. In that ruling, the appeals court reversed a lower court's order permanently enjoining the State from dissolving the endowment of the Ohio Tobacco Prevention Foundation (OTPF). The decision represents a major step backward in the effort spearheaded by Legacy to safeguard the state's tobacco prevention money for its intended purpose: to save Ohioans' lives. Two Ohioans were also plaintiffs in the case: Robert Miller and David Weinmann, both longtime smokers who relied on services and programs supported by the Ohio Tobacco Prevention Foundation to quit smoking, brought claims on behalf of the intended beneficiaries of OTPF - Ohio smokers.

Today, Legacy and the two individual plaintiffs opposed the State's effort to dissolve the stay pending appeal which had been ordered by the appeals court, thereby enabling it to spend the funds immediately. The plaintiffs informed the court that they will promptly appeal the decision and, given the importance of the case, ask the Supreme Court to hear the appeal on an expedited basis.

Legacy's president and CEO, Cheryl G. Healton, Dr. PH, concurred with Dr. Chu. "We are gravely disturbed by the appeals court decision in this case... Ohio is now dangerously close to joining the growing number of states that have diverted their tobacco settlement monies to purposes for which they were never intended, squandering precious opportunities to, literally, save lives. We at Legacy know that the battle to end the loss of life caused by tobacco is a marathon not a sprint. A recent study found that smoking among Medicaid recipients in Massachusetts fell sharply in response to access to smoking cessation programs. Ohio would be well served both in terms of public health and saving money if they reconsider devoting these funds to the purposes for which they were originally intended - to stop young people from starting to smoke and to help smokers quit and stay quit."

Legacy, a national public health foundation created as a result of the Master Settlement Agreement (MSA), stepped forward in April 2008 to help safeguard the tobacco settlement dollars Ohio had set aside for tobacco control. After OTPF signed a contract with Legacy to preserve tobacco prevention and cessation efforts in the state, the legislature voted to abolish both OTPF and its endowment. The News Year's Eve decision by the Tenth Appellate District to reverse the permanent injunction represents a step backward for the health of Ohioans.

The 1998 MSA provided more than $200 billion to be paid to the states over 26 years in recognition of the lives and money lost to tobacco. To ensure that a substantial portion of its recovery was spent specifically on tobacco control, Ohio established OTPF and created an endowment for it. Most states have spent only a small fraction, if any, of their MSA funds to mitigate the tragic impact of the tobacco epidemic which claims the lives of more than 400,000 Americans each year.

Research shows that tobacco takes an enormous toll on Ohio - both in lives lost and dollars spent. Ohio's smoking rate is 20.1 percent, just below the national average of 20.6 percent. A report from the Campaign for Tobacco-Free Kids and other leading public health groups in December 2009, "A Broken Promise to Our Children: The 1998 State Tobacco Settlement 11 Years Later" found that Ohio is ranked a disappointing 45th among U.S. states in the amount it spends on tobacco control efforts. The report found Ohio is spending only 5.1 percent of the recommended minimum by the Centers for Disease Control and Prevention.

In a state already feeling the brunt of the national recession, smoking costs Ohio more than $4 billion in annual health care costs and another $4.7 billion annually in smoking-related productivity loss (in 2004 dollars). A 2007 report by Legacy found that Ohio's Medicaid system could save $550 million within five years if all Medicaid beneficiaries who smoke, quit. Ohio would reap the third-largest savings of all the states, making the case that despite this economic downturn in Ohio, keeping these funds focused on tobacco control is a wiser long-term investment, ultimately saving Ohioans' lives and money.

Timeline of activity related to the Ohio tobacco funding dispute:

April 2, 2008: Governor Strickland announced plans to fund an economic stimulus package in part by diverting the OTPF's endowment.
April 4, 2008: OTPF's Board responded by authorizing contracts for $190 million with up to three named organizations in order to assure that the work of tobacco control in Ohio would continue to benefit Ohioans.
April 8, 2008: OTPF entered into a contract for this amount ($190 million) with the American Legacy Foundation and provided the state treasurer with instructions to transfer the funds. Later that day, the governor signed into law legislation purporting to liquidate OTPF's endowment. The treasurer did not make the requested payment.
April 9, 2008: OTPF filed a lawsuit asserting that the legislation liquidating its endowment violated Ohio constitutional and other legal requirements.
April 10, 2008: Judge Fais of the Court of Common Pleas ordered the maintenance of the status quo and froze the endowment funds until a preliminary injunction hearing, originally scheduled for April 24, could be held.
April 15, 2008: OTPF's Board purported to withdraw its request that the state treasurer transfer the funds to the American Legacy Foundation.
April 21, 2008: The American Legacy Foundation's filed papers to intervene in the case, asking the court to declare that its contract was valid and that the state funds, wisely dedicated by the State to tobacco prevention and control, could not now be diverted for other purposes. Legacy's motion was granted and the April 24 hearing was postponed until May 8.
May 6, 2008: Governor Strickland signed into law a second bill, again diverting the OTPF's endowment and, this time, abolishing OTPF.
May 8, 2008: Judge Fais met with lawyers from the state and The American Legacy Foundation about the fate of the state's remaining tobacco settlement dollars. He scheduled the next hearing for early June and ordered that the freeze on the funds remain in effect.
May 27, 2008: Two Ohio smokers, David Weinmann and Robert Miller, who had taken advantage of OTPF funded programs to quit smoking, filed a second lawsuit, claiming that the state's decision to dissolve the endowment violated their rights as trust beneficiaries. Their case was consolidated with Legacy's case.
June 2-4, 2008: Judge Fais heard testimony and legal arguments on Legacy's motion for a preliminary injunction. He asked the parties to submit proposed findings of fact and conclusions of law by June 27, later extended to July 3.
Week of June 2, 2008: Ohio Department of Health sent notices to OTPF grant recipients informing them that their grants would be cancelled as of July 1, 2008, claiming that the department was taking this action because of the litigation and the freeze. Legacy notified ODH that Legacy had joined with OTPF in late April to successfully ask the court for permission to spend $5 million to satisfy outstanding obligations, and would like to join now with ODH to seek permission to spend additional funds on tobacco control in Ohio.
June 23, 2008: The American Legacy Foundation and the Ohio Department of Health (ODH) as well as the other state defendants filed a joint motion asking that $10 million be freed up to maintain basic tobacco control programs in Ohio.
June 24, 2008: Judge Fais signed an order designating $4 million to pay OTPF's obligations through June 30 and $6 million to fund tobacco control programs starting on July 1. This was a major decrease from the $40 million OTPF had spent in FY 2008 but it will keep some tobacco control programs alive in Ohio.
February 10, 2009: Judge Fais granted Legacy's and the individual plaintiffs' motion for a preliminary injunction, holding that the State lacked the authority to dissolve the irrevocable trust it created to ensure the state's tobacco settlement funds are used for the important mission of tobacco control and prevention in the State of Ohio. The court rejected Legacy's request to enforce the contract it had entered into with the OTPF.
June 2, 2009: Judge Fais heard testimony and legal arguments on Legacy's and the individual plaintiffs' motion for a permanent injunction. August 11, 2009: Judge Fais granted the individual plaintiffs' motion for a permanent injunction on the basis that the State lacked the authority to dissolve the trust. The court continued its denial of Legacy's contract-based claim.
August 11, 2009: Judge Fais granted the individual plaintiffs' motion for a permanent injunction on the basis that the State lacked the authority to dissolve the trust. The court continued its denial of Legacy's contract-based claim.
October 14, 2009: The case was argued before the Ohio Court of Appeals of Franklin County Ohio, Tenth Appellate District.
December 31, 2009: The Ohio Court of Appeals of Franklin County, Tenth Appellate District, reverses a lower court's order permanently enjoining the State from dissolving the endowment of the Ohio Tobacco Prevention Foundation (OTPF).

Legacy(SM) is dedicated to building a world where young people reject tobacco and anyone can quit. Located in Washington, D.C., the national public health organization helps American live longer, healthier lives. Legacy develops programs that address the health effects of tobacco use, especially among vulnerable populations disproportionately affected by the toll of tobacco, through grants, technical assistance and training, partnerships, youth activism, and counter-marketing and grassroots marketing campaigns. The foundation's programs include truth(R), a national youth smoking prevention campaign that has been cited as having contributed to significant declines in youth smoking; EX(R), an innovative public health program designed to speak to smokers in their own language and change the way they approach quitting; and research initiatives exploring the causes, consequences and approaches to reducing tobacco use. The American Legacy Foundation was created as a result of the November 1998 Master Settlement Agreement (MSA) reached between attorneys general from 46 states, five U.S. territories and the tobacco industry. Visit www.legacyforhealth.org.

SOURCE Legacy