Negotiators Grapple Again With States’ Smoking Suits

Negotiators for the tobacco industry and state attorneys general are engaged in settlement talks aimed at resolving huge lawsuits by 37 states, including California, that seek to recover billions of dollars in health-care costs and punish cigarette makers for allegedly deceptive marketing practices.

Although sources said an agreement is not imminent, the talks are meant to head off a slew of upcoming trials of the state cases, which seek reimbursement of Medicaid funds spent to treat sick smokers. About a dozen of the cases have trial dates in the next several months, beginning with Washington in September and including California early next year.

Rob Stutzman, a spokesman for California Atty. Gen. Dan Lungren, said Lungren will “settle for nothing that does not rightfully compensate California taxpayers, as well as hold the industry accountable for the way they market to children.” Stutzman was among several sources who confirmed the talks.

Officials familiar with the negotiations said talks were held Thursday in New York and included representatives for Lungren as well as for Washington Atty. Gen. Christine Gregoire, New York Atty. Gen. Dennis Vacco, North Carolina Atty. Gen. Michael Easley and Colorado Atty. Gen. Gail Norton. Further discussions of a proposed deal are expected early next week at the National Assn. of Attorneys General annual conference in Durango, Colo.

Tobacco industry officials refused to confirm the talks. “We’re not commenting,” said Steve Duchesne, a spokesman for the major cigarette makers.

The settlement talks bring negotiators full circle, back to early 1997 before the announcement last summer of a $368.5-billion tobacco peace accord that ultimately failed to gain congressional approval. Those initial talks began as an effort to settle the state cases, but mushroomed into a far-reaching proposal to curb tobacco advertising, affirm the powers of the Food and Drug Administration to regulate nicotine, and restrict the types of anti-tobacco lawsuits that could be filed in the future.

However, Congress, which would have had to ratify the deal, balked. A much tougher and more expensive legislative proposal failed last month in the Senate. That, in turn, has prompted the industry and the states to resume the quest for a narrower resolution of the pending state cases. It would include payment of money damages and some tobacco marketing curbs but no legal protections for cigarette makers and no resolution of FDA authority, the subject of a pending industry challenge in the U.S. 4th Circuit Court of Appeals.

Citing “sources on both sides,” Gary Black, a tobacco analyst with Sanford C. Bernstein & Co., said in a report issued Thursday that a settlement with the states costing the industry between $180 billion and $200 billion over the next 25 years could be announced by next month.

Considering that the industry reached separate settlements in the first four state cases (Mississippi, Florida, Texas and Minnesota) totaling about $36 billion, a deal of between $180 billion and $200 billion with the remaining states would appear to give the states a little more than they would have received under the $368.5-billion proposal. That’s because the states would have received just over half that amount--with the rest going to the federal government to fund health agencies and anti-smoking programs.

One top aide to an attorney general whose case is set for trial early next year said the industry must come up with a lot more money if the deal is to fly--stressing that the states have incurred an additional year of Medicaid payments since the original settlement.

Sources said it was possible that not every state would want to join in a settlement.

Unlike the original deal, this one would cut out the federal government. It would also not resolve a growing number of private anti-tobacco class-action suits by smokers and health insurance plans.

However, recent federal court decisions that tobacco cases may not proceed as class actions have raised industry hopes of knocking out most of those cases.

A hearing that could affect the shape of tobacco litigation in California is set for July 20 in San Diego County Superior Court. A judge will consider whether to consolidate five cases that raise common issues. The plaintiffs include the state of California, Los Angeles County, San Francisco, Lt. Gov. Gray Davis on behalf of thousands of smokers, and a San Diegan suing the industry’s Council on Tobacco Research for deceptive business practices.