Clalit loses record lawsuit against tobacco companies

Supreme Court hurriedly issues long-delayed verdict on NIS 7.6b. lawsuit begun in 1998; Clalit to request rehearing.

man smoking 311 (photo credit: Marc Israel Sellem/The Jerusalem Post)
man smoking 311
(photo credit: Marc Israel Sellem/The Jerusalem Post)
A unanimous opinion by three Supreme Court justices on a NIS 7.6-billion lawsuit by Clalit Health Services dating back to 1998 ruled on Wednesday against the country’s largest health fund, which was demanding compensation from foreign and Israeli tobacco company giants for treating members who were victims of smoking.
The three justices did not deny the tobacco companies’ responsibility for harm done to the health of Clalit and other insurers’ members, but stated that rather than filing a direct action against the tobacco companies, Clalit should sue on behalf of each individual harmed by tobacco.
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The case was heard by just-retired Supreme Court justice Ayala Procaccia, who was given a few months to hand down rulings on a series of uncompleted cases, along with Justice Miriam Naor and Justice Esther Hayut. Clalit was represented by Israel Council for the Prevention of Smoking chairman and lawyer Amos Hausner and Dr. Lipa Meir, who frequently represents the health fund.
The tobacco industry included the Brown and Williamson Tobacco Corporation; the British American Tobacco Company Ltd. and other members of the same group; Philip Morris International; Philip Morris USA and other parts of the group; and Israel’s Dubek Ltd. and other members of its group. Dubek was represented by Gad Naschitz.
The sum of money demanded by the plaintiffs – until it was filed the largest amount in any lawsuit in the history of the state – would have provided a huge boost to the country’s health system, especially to Clalit, which owns 14 hospitals and many hundreds of community clinics around the country. Such an influx of money would have solved many problems in the system, which has been struck by Israel Medical Association and Nurses’ Union labor disputes since April.
No appeal of the three-justice panel’s ruling is allowed. However, The Jerusalem Post learned that there is a small glimmer of hope that the lawsuit has not reached an end if Clalit applies for an expanded Supreme Court justice panel, instead of the existing three members. In the US, such a procedure is called a “rehearing en banc.”
Hausner has represented Clalit since 1998. He modelled its case after the huge lawsuits by healthcare systems of the 50 US states, which ended in a settlement of $245 billion for the states.
In 2003, the Jerusalem District Court ruled in Clalit’s favor, but the high-powered Israeli and foreign tobacco companies appealed to the Supreme Court, which had all the evidence in 2005 but held back from issuing a verdict until now.
Maccabi Health Services, the second-largest health fund, had asked in 1999 for a declaratory judgement against Dubek alone; its lawsuit was dismissed by the late Tel Aviv judge Adi Azar. Clalit asked for restraining orders against the tobacco companies similar to those agreed upon in the US state settlement, but Maccabi did not seek that.
Hausner said it was unfortunate that the tobacco companies, which have caused huge damage to the health of smokers and non-smokers exposed to their smoke, had not been forced to pay the medical expenses of the health fund for treating the victims. He noted that the health system could be transformed by the infusion of this money, embroiled as it is in a seemingly endless labor dispute over hospital overcrowding and severe shortage of medical manpower.
The Health Ministry, for unexplained reasons, has not commented on the case nor allowed the Post to interview senior officials about it.
Clalit Health Services commented that it regretted the decision and would study the verdict.