TOBACCO: Judge Rejects Part of DOJ Tobacco Suit
U.S. District Judge Gladys Kessler on Thursday threw out a "large part" of the Department of Justice's civil lawsuit against the tobacco industry, but allowed the government to pursue its allegations that the industry violated federal racketeering laws by conspiring to conceal the dangers of smoking from the public, the Washington Post reports. Kessler rejected the federal government's claim that they could recover billions of dollars in smoking-related health care costs under the Medical Care Recovery Act and the Medicare provision of the Social Security Act. Kessler ruled that the Justice Department could not use the two laws to recover damages in the case because Congress had not written the laws for those purposes (Miller, Washington Post, 9/29). In her ruling, Kessler said that "it is simply inconceivable" that after more than 30 years the government could now hold the tobacco industry responsible for an estimated $20 billion a year for smoking- related costs. However, Kessler did clear the way for the case to proceed under the Racketeer Influenced and Corrupt Organizations Act, ruling that "it would be premature" to throw out those claims now (Lichtblau/Rubin, Los Angeles Times, 9/29). The federal government filed the suit last September, at President Clinton's request, hoping to recover smoking-related medical costs paid by Medicare and other government health plans. The government also is using the suit to take over tobacco industry profits earned by covering up smoking-related health risks and marketing to children (Washington Post, 9/29).
Both Sides Win?
Both the Justice Department and the tobacco companies claimed victory after the decision. David Ogden, assistant attorney general in charge of the Justice Department's Civil Division, said, "We look forward to proceeding to trial and holding the tobacco companies accountable for the fraudulent conduct alleged in this lawsuit." Antitobacco activists also were satisfied with the ruling. The Campaign for Tobacco-Free Kids said, "Taxpayers deserve their day in court to hold the tobacco companies responsible for their illegal behavior." However, the tobacco industry also claimed victory in yesterday's proceedings. William Ohlemeyer, vice president and general counsel for Philip Morris, called the ruling "an important step in the ultimate dismissal of the case" (Stout, New York Times, 9/29). R.J. Reynolds Assistant General Counsel Thomas McKim agreed, saying that by dismissing the Medicare reimbursement claim, "Judge Kessler has literally knocked out hundreds of billions of dollars of damage claims from the government's case" (Fields/Faiclough, Wall Street Journal, 9/29). Despite the claim, industry analysts indicated that the case will still involve billions of dollars. Mary Aronson, an independent tobacco analyst, said, "The bottom line [is that federal officials] have fewer claims, fewer pieces of ammunition, but that doesn't mean they still can't make a significant recovery" (Los Angeles Times, 9/29).