01/22/2010
Appeals court reverses decision on use of tobacco settlement funds

ODA Staff

On Dec. 31, 2009, the Tenth District Ohio Court of Appeals overturned a decision of the Franklin County Court of Common Pleas that would have effectively prevented the state from using its tobacco settlement funds for Medicaid services, including dental coverage for adults.

Ohio Dental Association President Dr. Stephen P. Simpson hailed the Appeals Court's decision as a victory for low-income Ohioans who rely on the dental Medicaid program for their oral health care.

"Medicaid coverage for dental services is especially critical during the current economic downturn," Simpson said, adding that hundreds of thousands of Ohioans have lost their jobs and their health and dental insurance coverage.

The case giving rise to the decision began nearly two years ago when the Tobacco Use Prevention and Control Foundation (Foundation) sued the State of Ohio in an attempt to prevent the state from re-appropriating tobacco settlement funds to other priorities.

In 1998, the State of Ohio joined other states and entered into a master settlement with the major tobacco companies, in which the companies agreed to transfer more than $200 billion to the states over a 25-year period.

Since 2000, the Ohio General Assembly has utilized tobacco settlement funds for various purposes, including education technology, biomedical research, law enforcement, education facilities and tobacco use prevention and cessation activities conducted through the Foundation.

In recent years, as Ohio's economy began to struggle and unemployment sky-rocketed, the Ohio General Assembly passed a statute directing money in the tobacco cessation endowment fund operated by the Foundation to a series of other programs.

Specifically, the new law directed approximately $230 million into jobs stimulus programs and $40 million for anti-tobacco programs operated by the Ohio Department of Health.

In 2009, Ohio's economy worsened, and state tax revenues shrank while demand for social services grew, as hundreds of thousands of Ohio workers lost their jobs and health and dental insurance.

With Ohio's economy in a free fall, the General Assembly passed the state budget for fiscal years 2010-2011. In signing the state budget into law, Ohio Gov. Ted Strickland announced a portion of moneys formerly contained in the tobacco cessation endowment fund and redirected for jobs stimulus programs would instead be utilized for necessary social services and Medicaid expenditures, including dental coverage for adults.

The Foundation brought suit to block the reallocation of funds away from the tobacco cessation endowment fund, and in August 2009, the Franklin County Court of Common Pleas ruled in favor of the Foundation and invalidated the state's attempt to utilize money that was formerly placed in the endowment fund for anything other than tobacco cessation programs. This ruling effectively put the funding for adult dental Medicaid coverage in jeopardy.

The state immediately appealed the decision, and in October 2009, the ODA led a coalition of health care groups in filing an amicus brief supporting the state's appeal.

Last month, the Tenth District Court of Appeals ruled in favor of the state, agreeing with the ODA's contention that the General Assembly has broad authority to determine the state's budgetary priorities.

ODA Executive Director David J. Owsiany, JD, said the Appellate Court's decision reaffirms the authority of the General Assembly to set the state's budgetary priorities.

"The Ohio Constitution gives the General Assembly plenary authority over the expenditure of public funds and the appellate court's decision reflects that fundamental tenant of Ohio constitutional law," explained Owsiany.

Simpson noted, "The General Assembly and governor made a conscious decision to fund the adult dental Medicaid program because they recognize the importance of oral health and cost-effectiveness of the dental Medicaid program."

The Foundation has announced its plans to appeal the case to the Ohio Supreme Court, so the funds for the adult dental Medicaid program remain frozen until the case is finally resolved.

While the case is pending, the state has pledged to continue to provide for "optional" Medicaid services, including dental coverage for adults.