After hearing health advocates sharply criticize the proposed tobacco settlement unveiled yesterday, Maryland Attorney General J. Joseph Curran Jr. said he will continue to press to improve the deal before Friday's deadline to sign.
"We are continuing to talk to industry representatives about Maryland-specific issues," Curran said last night. He declined to elaborate but said Maryland is continuing to work closely with other states that are skeptical about the deal.
Curran said he asked representatives of major health groups to continue to analyze the settlement, a complex legal document of more than 200 pages, and would consult them again before deciding whether to sign or gamble on taking the state's tobacco lawsuit to trial in April.
The tobacco deal, announced at a news conference in Washington by six of the eight state attorneys general who negotiated it, would be the largest civil settlement in U.S. history and would make significant changes in cigarette marketing. It will take effect only if enough states agree to it, but with New York, California and a dozen other states already on board last night, it appeared likely that the settlement would fly.
Tobacco billboards and ads on buses and taxis would be banned, as would tobacco brand names on clothing and other merchandise. Cartoon characters like Joe Camel would be prohibited, but human figures such as the Marlboro Man would be permitted in ads. About $2 billion would be made available for anti-smoking campaigns and research on combating tobacco. The settlement would also pay the states $206 billion over 25 years, of which Maryland's share would be about $4.2 billion. Maryland would also have a good chance of receiving a delayed bonus of as much as $1 billion, to be paid starting in 2008, in recognition of the state's relatively strong case and extensive legal preparations.
But tobacco opponents, already furious that the industry was giving states only five days to accept or reject the settlement, had little good to say about it.
"At first blush, the only substance is the ban on billboards," said ,, Dr. Albert L. Blumberg, president of Smoke Free Maryland, a coalition of anti-smoking groups, who was among those who met with Curran for two hours. "The rest is all loopholes."
Blumberg, a radiation oncologist at Greater Baltimore Medical Center, said Curran is in a difficult position. "The reality is that the state is being offered a lot of money" and there is no guarantee that taking the case to a jury would produce greater benefit for public health, he said.
But Blumberg said a quick review of the settlement language yesterday discovered some "land mines," such as a restriction on future lawsuits by state and local governments over secondhand smoke.
"I'm worried about doing irreparable harm with a document that's going to affect public health in Maryland for 30 years," Blumberg said.
'Fairly weak on public health'
Eric Gally, a lobbyist for the American Cancer Society and the American Heart Association who also met with Curran, praised the attorney general for working to toughen the agreement. But he added: "From our perspective, the settlement appears to be fairly weak on public health."
Gally and others emphasized that even if Maryland settles the lawsuit, the battle against smoking and its costs will go on. Industry analysts say cigarette makers will probably increase the price of a pack by about 35 cents to pay for the deal. By comparison, anti-smoking activists are pushing for a $1.50-a-pack increase in the Maryland cigarette tax to discourage youth smoking.
Public health advocates say the settlement appears to be loaded with subtle protections for the industry. For instance, while the deal would pay for anti-smoking campaigns, it would not permit them to "vilify" tobacco companies. Recent research shows that some of the anti-smoking advertising most effective with teens are those that attack cigarette makers and ridicule their brand names and marketing symbols.
A choice for Angelos
The tobacco deal would create a curious choice for Peter G. Angelos, the Orioles owner and asbestos litigator whose law firm has done most of the legal work on the state's case.
Angelos contracted in 1996 to finance and handle the case in return for 25 percent of any recovery. This year, after settlement became a possibility, the General Assembly cut that fee in half, and Curran said yesterday that Angelos would be entitled to 12.5 percent of each year's payment -- a total of about $500 million over 25 years from Maryland's payout.
But the settlement allows private lawyers hired by the states to ask to be paid from a separate fund created by the tobacco industry -- as long as they are willing to submit their fees to arbitration. That means Angelos could save the state hundreds of millions of dollars by seeking payment from the fund, and he could ask for the equivalent of the 25 percent in his original contract. But he would risk receiving considerably less than 12.5 percent.
Angelos said yesterday that he is studying the matter. "We would like the tobacco industry to pay our fee, not for Maryland to have to pay it," he said. He declined to say whether he thinks the state should settle, saying he is reserving his advice for Curran.
If Maryland agrees to the settlement, the state will receive $54 million in the first year -- a few million more than the cost to operate state government for one day -- $145 million in the second year and $157 million the third year. The payout would peak at $190 million in 2003 before leveling off at $181 million.
In addition, a national panel would divide an $8 billion "Strategic Contribution Fund" among states that had made major contributions to the litigation. That clause is designed to reward states such as Maryland that filed suit early and have worked hard to prepare their cases, by contrast with others that filed recently or have never filed.
Curran said Maryland should be "at least in the top five states" claiming a share of the bonus money. For complicated reasons, the bonus money would be paid between 2008 and 2017.
Scramble for funds expected
If Maryland settles, the flood of money is expected to set off a scramble among legislators and special interests to spend the windfall.
In an attempt to get ahead of that battle, Gov. Parris N. Glendening has called for using the bulk of the settlement to expand children's health care and schooling programs. By espousing both causes, Glendening hopes to forestall an expected push among some legislators for greater tax relief.
"This settlement gives us a unique opportunity to enhance the future well-being of our children," Glendening said yesterday in a prepared statement.
Glendening, whom Curran has consulted about the settlement, has backed a 10 percent cut in state income taxes. But he has been reluctant to embrace further tax reductions, saying the state should make sure the economy remains strong and protect its spending on public schools.
Senate President Thomas V. Mike Miller -- saying the risk of passing up the settlement may be too great -- agreed yesterday that much of the money should be used to build schools, reduce class size and improve public universities.
"Maryland has a better case than most states. But people have to realize this would be a long, drawn-out, costly litigation, and all of the tobacco industry's resources would be targeted on us," Miller said. "And there's the possibility that in the end, you get nothing."
The General Assembly already has agreed that a portion of any settlement be spent on smoking prevention programs and to assist the state's tobacco farmers. Both efforts were stipulated in legislation that was passed in April to strengthen the state's lawsuit against the tobacco industry.
Of the 12,000 farmers in Maryland, only 700 are still raising tobacco as their main crop. Miller, who represents some of the tobacco farmers in Southern Maryland, said the state is "trying to convert people to some alternative means of farming."
Details of the deal
Tobacco companies would pay a total of $206 billion to states by 2025, including an upfront payment of nearly $13 billion over the next five years and $9 billion each year after that.
That amount is in addition to $40 billion in separate settlements previously reached by four other states not part of the current proposed deal.
Of the $206 billion, $250 million over 10 years would go specifically to a foundation to study how to reduce teen smoking.
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The agreement would:
* Allow attorneys general of the settling states access to tobacco company documents, records and personnel to enforce the agreement.
* Beginning July 1, ban distribution and sale of apparel and merchandise with brand-name logos, such as caps, T-shirts and backpacks.
* Ban the use of cartoon characters in tobacco ads or promotions.
* Ban tobacco brand names at stadiums and arenas.
* Extend billboard restrictions to all outdoor advertising and restrict the size of outdoor signs at stores.
* Prohibit free samples except in adult-only facilities.
* Ban payment for placement of tobacco products in television shows, theatrical performances, video games and movies.
* Require proof of age for distribution of free gifts.
* Disband tobacco-related groups, such as the Council for Tobacco Research, the Tobacco Institute and the Council for Indoor Air Research.
* Prohibit tobacco companies from opposing proposed state or local laws or administrative rules that are intended to limit youth access to and consumption of tobacco products.
* Prohibit tobacco manufacturers from trying to limit information about the health hazards of their products or suppressing research into smoking and health.
* Limit minimum pack size to 20 cigarettes through Dec. 31, 2001.
The agreement would not:
* Give the federal government authority to regulate tobacco, as the national proposal that died in Congress last summer would ** have.
* Protect the industry against future lawsuits.
Associated Press
Pub Date: 11/17/98