South Korea's state health insurer sues Philip Morris, BAT for smoking damages

[April 14, 2014]  SEOUL (Reuters) — South Korea's state health insurer said on Monday it was seeking an initial 53.7 billion won ($51.9 million) from three tobacco companies, including the local units of Philip Morris and British American Tobacco, to offset treatment costs for diseases linked to smoking.

The National Health Insurance Service (NHIS) said it was suing the two global cigarette makers, as well as local market leader KT&G Corp, in a South Korean court.

Only four tobacco lawsuits have ever been heard in South Korea, all by individuals or families, and there is no precedent of a successful action against a tobacco company.

"We believe the NHIS, as it takes responsibility for the health of the public and oversees the insurance budget, has a natural duty to bring this tobacco lawsuit," NHIS lawyer An Sun-young told reporters.

The damages were calculated based on data on payments by state insurers for patients with three cancer types associated with smoking, NHIS added. The insurer has previously said it spends more than $1.6 billion each year on treating smoking-linked diseases.

The lawsuit is the first by a state organization against tobacco firms among 37 countries and territories in the Western Pacific, according to the World Health Organization's Western Pacific Region Office (WHO WPRO).

KT&G said it would base its response to the lawsuit on previous legal processes. Philip Morris was not immediately available for comment. BAT declined to comment.

Philip Morris and BAT combined account for about a third of South Korea's $9.3 billion tobacco market. KT&G accounts for the remaining just over 60 percent while Japan Tobacco International (JTI), an affiliate of Japan Tobacco Inc, has the smallest market share at 6.4 percent. JTI was not named in the lawsuit.

The NHIS lawsuit comes after South Korea's Supreme Court ruled last week in favor of KT&G on a separate case brought by individuals.

(Reporting by Joyce Lee; editing by Miral Fahmy)

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