WASHINGTONJust when the tobacco companies thought they had put
major litigation woes behind them, they now face the threat of a
potentially far more devastating legal action than the
state-initiated lawsuits that they settled last year. President
Clinton announced during his State of the Union address that the
Justice Department is preparing a litigation plan to take the
tobacco companies to court to recover money the federal
government has spent to treat tobacco-related illnesses.
The states were right about this, the President said.
Taxpayers shouldnt pay for the cost of treating lung
cancer, emphysema, and other smoking-related illnessesthe
tobacco companies should.
Antismoking advocates cheered word of the impending lawsuit, which
many had urged after the collapse in the Senate last year of
comprehensive tobacco legislation. This lawsuit would present a
very significant threat to the tobacco industry, said Matthew
L. Myers, of the Campaign for Tobacco-Free Kids. The cost to
the tobacco industry for a Medicare lawsuit would exceed the cost of
all the state Medicaid suits combined.
After the collapse of legislation intended to enable a $368.5 billion
settlement reached in 1997 between Big Tobacco and the attorneys
general of 40 states, the companies worked out a less-encompassing
$206 billion agreement with 46 states, the District of Columbia, and
four US territories. Four other states had previously reached
individual settlements with the companies. The industry and
antitobacco groups alike expected that the agreement would greatly
reduce the likelihood of any Justice Department suit.
The four major US tobacco companies pledged to battle any federal
action. The industry will vigorously defend itself against this
entirely political lawsuit, they said.
The Presidents announcement, however, left unanswered when the
government will file its tobacco suit. A Justice Department task
force is currently developing the details of the governments case.
The Medical Care Recovery Act enables the federal government to sue
for its costs incurred in treating patients if a third partys
negligence accounts for the patients diseases. The Justice
Department suit would seek to recover money spent by a number of
federal programs, including Medicare, federal-employee health
insurance plans, and the Departments of Defense and Veterans Affairs.
Medicare pays out about $10 billion a year to treat its beneficiaries
who have tobacco-related illnesses. The suit would not involve
Medicaid payments, which were covered in the states settlement.
The President also plans to push Congress once again to hike the
federal tax on cigarettes another 55 cents a pack. The White House
earlier had said the request will go to Capital Hill as part of the
Presidents budget request for fiscal year 2000. Legislation to
increase tobacco taxes failed last year and will likely face strong
opposition again in the current Congress.