‘Budget issues’ behind insurer’s cigarette manufacturer damages suit in Korea

| January 28, 2014

The decision by South Korea’s National Health Insurance Service (NHIS) to sue cigarette manufacturers operating in the country has been described by a tobacco industry group as a misguided attempt to solve budget issues, according to a Yonhap News Agency story.

In an English-language statement, the Korea Tobacco Association (KTA) said it was disappointed with the tentative decision by the state-run NHIS to file a suit against tobacco manufacturers.

The suit had ‘little legal merit’ and wasn’t in the best interest of taxpayers, it added.

The NHIS’ board decided on Friday to file a damages suit against KT&G and other tobacco companies seeking up to WON333 billion.

But the Ministry of Health and Welfare opposes the suit and warned that, based on overseas experiences, the NHIS’ chances of winning were low.

It warned too that the cost of the action could be a financial burden to the NHIS.

No decision has been made on when the suit will be filed, but an NHIS official has said that it will be done “as soon as possible”.

In its statement, the KTA noted that the NHIS was ignoring a government directive on how public corporations should not file lawsuits unless the reasons for such suits and the amounts claimed are made clear in advance.

“Litigation against a lawful and highly taxed industry is a reckless attempt to solve NHIS’ budget problems by forcing smokers to pay more than their fair share in health care costs,” Brian Kim, the KTA’s chairman, was quoted as saying.

“Instead of reaching further into the pockets of smokers and exposing Korean taxpayers to years of costly litigation, the NHIS should learn from the failure of similar attempts by other governments and focus on finding a real solution to their budget woes.”

Category: Breaking News

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