Maryland's $13 billion lawsuit against the tobacco industry survived a legal challenge yesterday, as a Baltimore Circuit Court judge refused to dismiss crucial counts in the state's attempt to recover Medicaid funds spent for ailing smokers.
"The heart of this case survived a major hurdle," said Maryland Attorney General J. Joseph Curran Jr. "The judge has accepted our legal theories which entitle the state to recoup every last penny Maryland has spent treating tobacco-related illnesses."
Tobacco company attorneys disagreed, claiming as a victory Judge Roger W. Brown's dismissal of nine of the lawsuit's 13 counts. "The state's case has been gutted," said Thomas F. McKim, assistant general counsel of Reynolds Tobacco Co. in Winston Salem, N.C.
But the judge's decision left intact claims under state consumer protection and antitrust laws alleging that the cigarette companies conspired to deceive the public about the health risks of smoking. Those claims should be sufficient to pursue the state's claims and collect damages, said Richard A. Daynard, a law professor at Northeastern University in Boston who is advising Maryland on its lawsuit.
"The most powerful claims remain," said Daynard, chairman of the Tobacco Products Liability Project. "It's like missile defense -- they have to stop all the missiles. It's not good enough for them to say that only some of the missiles got through."
The ruling came as settlement talks continued in New York between the tobacco companies and the states and private attorneys who are suing them. Curran and Baltimore attorney Peter A. Angelos, whose firm is assisting in Maryland's suit and who has filed a separate class-action suit on behalf of state smokers, have attended some negotiating sessions.
The talks have drawn skepticism and some outright opposition from public health groups that have long led the war on smoking. One such coalition, Smoke Free Maryland, yesterday sent the attorneys general of the 29 states suing for Medicaid costs a petition opposing any "global settlement" requiring the involvement of Congress.
Public health advocates fear Congress will bend under pressure from tobacco lobbyists and strike a deal granting the cigarette companies immunity from future lawsuits or limiting the government's power to regulate the industry.
"Our position is that if the attorneys general want to settle their Medicaid claims, good luck," said Paul G. Billings, deputy tTC director of government relations for the American Lung Association in Washington. "But we think any global settlement will be a global bailout. We fundamentally disagree with the direction they're moving."
Curran said he shares health advocates' concerns about any deal that would permit tobacco companies to avoid future legal liability and pass settlement costs on to smokers as a price increase.
"Unless we get the support of the health community, any proposed settlement is a nonstarter," said Curran, who consulted yesterday by phone with Mississippi Attorney General Mike Moore at the New York talks. "I think the companies understand our need to deal meaningfully with the future health issue."
Early in the talks, negotiators discussed a possible deal in which cigarette makers would receive immunity from lawsuits in return for paying about $300 billion in smokers' and Medicaid claims over 25 years and accepting limitations on advertising.
After an outcry from health groups, some of the attorneys general made it clear they would not accept blanket immunity. Since then, negotiators have discussed more limited protection from future legal claims, such as a $1 million-per-lawsuit cap on damages or a ban on punitive damages, said sources involved in the talks.
Health advocates who have fought smoking for decades are wary of talks dominated by the attorneys general, for whom a settlement might be a political boon, and plaintiffs' attorneys who could reap millions from any deal. Only one public health representative, Matthew Myers of the Campaign for Tobacco-Free Kids, was initially part of the negotiations.
"A self-appointed group of negotiators sitting in a closed room is not the way to settle a public policy issue," said Billings, of the lung association.
Anti-smoking activists say there's no reason to rush to settle at a time when major legal developments are weakening the position of the cigarette companies.
In March, the Liggett Group, the smallest of the five major U.S. tobacco companies, agreed to settle with the attorneys general and to provide them with industry documents supporting the plaintiffs' claim that cigarette makers hid what they knew about the health hazards of smoking.
On April 25, a federal judge in North Carolina upheld the Food and Drug Administration's right to regulate tobacco, a breakthrough that could make it possible for the government to limit the nicotine content of cigarettes and to control how they are sold.
Three days after that, the Supreme Court upheld two Baltimore ordinances banning many cigarette and liquor billboards.
In addition to the legal setbacks, tobacco companies face a Federal Trade Commission probe of their advertising and a Justice Department criminal investigation of their executives for perjury and fraud. While they won one recent lawsuit filed on behalf of a deceased Florida smoker, hundreds more lawsuits await trial.
Curran said the tobacco companies' assertion yesterday that Brown's ruling was a victory was only the public-relations spin of an industry increasingly on the ropes.
"The tobacco folks are going to claim victory, no matter what," he said. "When the smoke clears, we're still in court, and they now face depositions where they'll have to reveal their deception."
Pub Date: 5/22/97