WASHINGTONBy imposing taxes on tobacco products and mandating
health warnings on cigarette pack-ages, did the federal government,
in effect, collaborate with the tobacco industry in causing
smoking-related diseases in millions of Americans?
That legal theme will likely play out in the coming months and in any
trial that results from the civil lawsuit filed by the US Justice
Department against major cigarette makers. The federal government
seeks to reclaim some portion of the money, now about $20 billion a
year, that it has paid out over four decades to treat
The lawsuit, filed in US District Court, Washington, DC, accuses the
defendants of conspiring since the 1950s to defraud and mislead the
American public and to conceal information about the ill effects of
For more than 45 years, the cigarette companies conducted their
business without regard to the truth, the law, or the health of the
American people, Attorney General Janet Reno said in announcing
the lawsuit. Smoking is the nations largest preventable
cause of death and disease, and the American taxpayers should not
have to bear the responsibility for the staggering cost.
The companies named in the suit vowed to vigorously defend themselves
against the federal action and not to settle it. Philip Morris called
the Justice Department filing politically motivated and
suggested that the federal mandate for health warnings showed the
government was well aware of the health risks of cigarettes.
The new challenge to cigarette makers is similar to the lawsuits
filed by the attorneys general of 46 states against the tobacco
industry and settled for $246 billion. However, that settlement
covered only reimbursement of funds spent for treating Medicaid
recipients with smoking-related illnesses. The new action aims to
recover money paid out through strictly federal programs, such as Medicare.
This suit represents the most serious legal threat the tobacco
industry has ever faced, a threat that dwarfs those posed by the
state cases, said Bill Novelli, president of the Campaign for
The Justice Department alleges in its suit that the defendants:
Made untrue and misleading statements to create a false controversy
about whether smoking causes disease, even though they knew that it did.
Falsely promised to undertake or sponsor research to determine
whether smoking causes disease.
Sponsored research designed not to resolve the issue of smoking and
disease; promoted biased research that would aid them in defending
lawsuits brought by smokers; and suppressed research that suggested
that smoking causes disease.
Knowingly and falsely denied that nicotine is addictive.
Failed to warn consumers about the ill effects of smoking, including
the addictive nature of cigarettes.
Purposely refrained from developing, testing, and marketing less
Denied marketing to and targeting children, while activly seeking to
capture the youth market.
Fraud and More Fraud
The Justice Department said it based its allegations on internal
tobacco company documents that have become public in recent years as
the result of lawsuits, particularly those filed by various states.
We allege that the cigarette companies knew exactly what they
were doing at all timesthat their false and misleading
statements would keep people smoking, said David W. Ogden,
acting assistant attorney general for the Civil Division. Even
when the truth began coming out, the cigarette companies responded
with more fraud and deception.
The government based its legal claims on three federal laws, the
Medical Care Recovery Act, the Medicare Secondary Payer Act, and the
Racketeer Influenced and Corrupt Organizations statue, known as RICO.
The RICO law allows the government to recover ill-gotten gains. The
government alleges that the defendants engaged in more than 100
instances of mail and wire fraud, including making false and
misleading statements to the public using the mails and wire
transmissions to further their fraudulent scheme.
The Justice Department said that a special team, which began working
in early 1999 on a plan to recover federal health-care costs,
developed the federal lawsuit. The department said it had no criminal
investigations of the tobacco industry pending.