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State health insurance agency loses damages suit against major tobacco companies on appeal
Cigarette packs are displayed at a shop in Seoul, Thursday. Yonhap
By Park Ung
The National Health Insurance Service (NHIS), which administers Korea’s universal health insurance system, lost its appeal seeking financial compensation from major tobacco companies, after also losing a lower court case in 2020.
The Seoul High Court ruled Thursday that it found no error in the lower court’s ruling and dismissed NHIS’ appeal, siding with KT&G, Philip Morris Korea and British American Tobacco Korea.
In 2014, the NHIS filed a 55.3 billion won ($37.58 million) lawsuit against the top three tobacco companies by market share at the time, seeking to hold them responsible for smoking-related damages and to curb health insurance losses from cigarette-induced illnesses.
The national insurer’s claim is based on insurance benefits paid by the NHIS between 2003 and 2012 for 3,465 lung and laryngeal cancer patients with subtypes strongly linked to smoking, all of whom had smoked for more than 30 years, including at least 20 years of smoking 20 or more cigarettes a day.
In 2020, the lower court dismissed the damages claim, ruling that lung cancer can stem from causes other than smoking. It also found that the insurer’s payments merely fulfilled statutory obligations, concluding that NHIS lacked standing because it was not a direct victim.
The lower court also rejected claims that tobacco products were defectively designed or labeled, or that the companies had downplayed or concealed the addictive nature of smoking.
The appellate court echoed that reasoning, ruling that NHIS insurance benefit payments cannot be subject to a damages claim and it was therefore difficult to conclude that any legally protected interest had been infringed.
NHIS’ assessment of the massive health insurance losses caused by smoking, along with its broader harm to public health, underpinned its decision to file the lawsuit and pursue an appeal.
As of 2011, smoking-related diseases generated about 1.7 trillion won a year in avoidable national health insurance medical spending, accounting for roughly 3.7 percent of total national health insurance spending.
Related medical spending rose to about 3.8 trillion won by 2023, more than doubling over the past decade.
The appellate court ordered NHIS to bear the costs of the appeal, while the insurer said it plans to take the case to the Supreme Court.
“While tobacco companies reap enormous profits and flaunt their wealth, the people harmed by their products are left suffering and dying in hospital beds,” Jung Ki-suck, NHIS president, told reporters after the ruling.
Jung added, “If the state continues to fail to protect the public from tobacco as it has, the social rights enshrined in the Constitution that we aspire to will collapse or disappear.”