South Korea's state health insurer to pursue tobacco lawsuit

SEOUL (REUTERS) - South Korea's state health insurer plans legal action against tobacco firms to get reimbursed for some of the US$1.6 billion (S$2 billion) it says the country spends each year on treatments linked to smoking.

The move could spark a legal battle with major global firms such as Philip Morris and British American Tobacco .

The two firms, together with Japan Tobacco International (JTI), an affiliate of Japan Tobacco Inc, have a combined share of close to 40 per cent of South Korea's tobacco market, worth an estimated US$9.3 billion.

Over the past decade, the three firms have grabbed away market share from former state-owned tobacco and ginseng products maker KT&G Corp, reducing it to 61.7 per cent by the end of 2013 from 76.7 per cent.

The decision to seek damages was made at a meeting of the National Health Insurance Service (NHIS) board on Friday, but the scope, timing and counterparties of the lawsuit have not yet been decided, a spokeswoman for the insurer said.

KT&G, privatised in 2002, declined to comment. Local units of Philip Morris, BAT and JTI could not be reached for comment.

NHIS Chairman Kim Jong Dae wrote on his personal blog in December that it could initially sue for the reimbursement of 43.2 billion won (S$51 million) spent for lung cancer treatments in 2010 alone.

Kim also said it could provide information or assistance to any regional governments or lung cancer patients and their families if they wanted to pursue lawsuits.

Only four "tobacco" lawsuits have ever been brought in South Korea, all by individuals or families.

There is no precedent of a successful action against a tobacco company, with two of the cases now awaiting rulings by the country's Supreme Court, wire service Yonhap has said.

Trade group Korea Tobacco Association issued a rejoinder to Kim's comments in a statement this week.

Because KT&G was formerly state-run, it added, the national health insurer's claims for patients who began smoking in the 1980s and 1990s could result in a government body suing the government.