Long term tobacco use continues to be the leading cause of preventable death in Canada, killing nearly 48,000 citizens each year (roughly 130 per day). For a product that is sold, quite legally, in virtually every convenience store and gas station in the country, that’s a staggering fatal statistic when compared to other significant public health emergencies such as Covid-19, which has taken the lives of less than 60,000 Canadians since the beginning of the pandemic four years ago. Whether this is an appropriate public health comparison or not, few Canadians would disagree that smoking and tobacco use requires control and regulation to protect public health, and Canada has practically written the book on laws against big tobacco to enforce these measures.
Canadian Healthcare
Mounting pressures on Canadian healthcare resources have long been at the center of the nation’s tobacco control debate. In addition to sweeping changes to advertising, marketing, and packaging laws affecting tobacco products, Canadian governments have sought to control the price, point of sale, and the constituents of tobacco products themselves. On the face of it, these measures, brought at both provincial and federal levels spanning several decades have certainly reduced per capita tobacco consumption; from roughly 30% of adults in the 1970’s to roughly 10% of adults in the present day. Not only has this been a public health success, but it has also (inadvertently) placed Canada as a “world leader” in tobacco control measures and laws against big tobacco; with its legislative efforts often emulated by other nations seeking to reduce tobacco consumption amongst its citizens.
The tobacco industry in Canada faces not only regulatory restrictions but also mounting legal pressures. The provinces have successfully sued the industry, but this has also raised concerns about the potential impact on other legitimate businesses. Canadian provinces have sought approximately $500 billion in damages from tobacco companies. Numerous lawsuits filed by the provinces against these companies have been progressing through the Canadian legal system. In March 2019, Imperial Tobacco, Rothmans, Benson & Hedges Inc., and JTI-Macdonald Corp. were granted creditor protection in Ontario's Superior Court under the Companies' Creditors Arrangement Act (CCAA). This protection paused ongoing litigation and prevented new claims against the tobacco companies. The objective was to facilitate negotiations for a nationwide settlement of the provinces' claims against the tobacco industry in Canada. The CCAA stay has been extended several times and is now set to expire on March 29, 2024.
Smoking Related Illnesses
The argument that the industry deserves punishment for its role in smoking-related illnesses may be valid, but it ignores the broader implications of such action. The legal framework for these lawsuits could set a dangerous precedent, potentially undermining the stability of laws and regulations for all businesses operating in Canada. While the negative health effects of tobacco are indisputable, the means by which the industry is being held accountable may have far-reaching consequences that go beyond dried leaves and paper.
Recouping Healthcare Costs
In 1998, British Columbia made headlines by becoming the first Canadian province to pass a law that aimed to recoup healthcare costs related to tobacco use. However, the tobacco industry challenged the legislation in court, claiming that it interfered with the judiciary and imposed unfair penalties on legal business activities. The province's Supreme Court rejected these arguments, but ultimately struck down the law due to its extraterritorial reach. Undeterred, British Columbia revised and reintroduced the legislation in 2000, which was eventually upheld as constitutional by the Supreme Court of Canada in 2005. This paved the way for other provinces to follow suit, introducing similar laws of their own. In essence, the government learned from their initial failure and persisted in their efforts to hold the tobacco industry accountable, ultimately imposing a retroactive penalty on otherwise perfectly legal business activities.
The tobacco health care cost recovery laws in Canada established a new cause of action based on the belief that harm caused by tobacco-related illnesses to a group of persons is a direct harm to the government. These laws also eliminated time limits for filing claims against tobacco companies and removed defenses like assumption of risk (i.e. “you knew the consequences of smoking cigarettes, but you ignored the health warnings”, etc). Provinces were no longer required to prove a direct link between an individual's illness and tobacco use, as they could rely on general statistical data that the government themselves collected.
Canadian Tobacco Health Cost Recovery
The Canadian tobacco health cost recovery legislation diverges from traditional common law principles by altering the rules surrounding causation, enterprise liability, and damage assessment. This legislation permits recovery in civil matters without the need to demonstrate both causation and damages, distinguishing it from “normal” subrogation or class action proceedings. The legislation enables provinces to sue tobacco manufacturers for past and future health costs incurred by an unspecified segment of the population treated for tobacco-related illnesses. Unlike traditional legal proceedings, the legislation does not require the Crown to identify specific individuals or prove that certain healthcare services were provided to them. Instead, provinces can rely on statistical research as evidence in their litigation. The recoverable health costs are broadly defined in the legislation as the total expenditure on health services provided to insured individuals who have suffered from or are at risk of suffering from tobacco-related diseases. It is estimated that tobacco illnesses cost Canada’s healthcare system $6.5 billion a year, yet federal and provincial governments are collecting over $9 billion annually from tobacco excise taxes (to say nothing about the sales and other taxes collected on top of this). With “more than enough” collected through taxes, it does beg the question exactly what the damages sought are supposed to cover? This legislation forms part of the laws against big tobacco that allow governments to recoup the financial burden of tobacco-related healthcare costs.
This uniquely Canadian approach retroactively penalizes business actions that were not clearly punishable at the time of the offense. This legal nuance may be troublesome for other businesses operating in Canada, both in terms of its potential impact on their financial bottom line and its questionable ethical implications.
Businesses Outside of Big Tobacco
The messages conveyed by governmental legal maneuvers have considerable implications for businesses outside of big tobacco. The reality is that a small number of large industries, which have substantial negative impacts on public health and the environment, provide the majority of the financial flexibility to provincial and federal public budgets. Alcohol and fast food are easy parallels to consider, but what about the extraction of oil and other energy sources that contributes over 10% to Canada's economic output? Should energy companies, which operate in a regulatory environment that is arguably more challenging than that of tobacco, worry about potential retroactive compensation? The public and political narrative in Canada is increasingly agreeing that climate change will have significant consequences for public health. Should energy companies start considering the possibility of health cost recovery lawsuits in the future?
Cost Recovery Against Food and Drink Manufacturers
How might industries that contribute to illness, such as alcohol and fast food, be impacted by efforts to address the financial consequences of obesity? Governments may be able to follow in the footsteps of tobacco cost recovery litigation and pursue legal action against food and drink manufacturers who deliberately promoted unhealthy products, while at the same time portraying Canada as a nation where legal rules can be upended in favour of the government, especially when significant political pressure arises to scrutinize an industry.
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