Mississippi is first to settle tobacco suit
NEW YORK (Reuter) - Mississippi's top legal officer reached
a last-minute settlement of the state's Medicaid lawsuit against
the tobacco industry, averting the first trial of 40 such cases
across the country, his office said Thursday.
Mississippi Attorney General Mike Moore concluded frantic
negotiations that began in Washington last week and was headed
back to Jackson, Miss., to announce terms of the settlement at
an afternoon news conference.
The nation's largest cigarette companies issued a statement
confirming an agreement in principle had been reached with
Mississippi. They said, however, that the pact would be
superseded by last month's broader $368.5 billion settlement, if
it is approved by Congress and the president.
Under the agreement, the companies would pay Mississippi
more than $3 billion over a 25-year period. The first payment of
$170 million is due by July 15.
In addition, the companies said, beginning in December 1998
they will pay Mississippi a 1.7 percent share of the part of the
annual payments that are contemplated to be paid to the states
in the large settlement.
Without adjusting for inflation and changes in sales volume,
this could result in payments to Mississippi of $68 million in
1998 and $76.5 million in 1999, they said.
The payments to Mississippi will scale up to $136 million by
the sixth year and continue at that level, the companies said.
``I think it (Mississippi settlement) is dramatic evidence
that Big Tobacco wants to avoid trials because it knows it will
lose and wants to escape mountains of evidence showing decades
of wrongdoing that would be exposed in a public trial,''
Connecticut Attorney General Richard Blumenthal said.
However, he also pointed out that the agreement did not mean
that the remaining 39 states that have sued the tobacco industry
would be able to reach settlements.
Indeed, a government spokesman in Florida, where the next
trial is scheduled for Aug. 4, said his state would press ahead
with its case.
``There is no deal,'' said Joe Bizarro, spokesman for
Florida Attorney General Bob Butterworth. ``Mississippi's
settlement will have no effect on our plans to go to trial.''
Mississippi was the first state to sue the industry, in May
1994, seeking to recoup $940 million in Medicaid costs of
treating sick smokers.
Moore had given the industry a Thursday afternoon deadline
to reach a settlement or proceed with what would have been a
historic trial.
The Mississippi case was widely watched because it would
have been the first of the lawsuits to go to trial and because
it was considered a particularly strong case.
The case was to be decided by a judge, not a jury, and
Mississippi law is favorable to the plaintiffs, legal experts
said.
If Mississippi had won in court, it would have signaled the
strength of these innovative lawsuits and helped support demands
for a greater amount of money and for further health care
concessions from the industry.
If the cigarette makers had won, however, it would have
boosted the industry's resolve to fight the other lawsuits and
to resist efforts to obtain a harsher overall settlement through
legislation.
Most tobacco stocks rallied on news of the Mississippi
settlement.