-Caveat Lector-
TOBACCO LITIGATION
[01/20] Clinton announces plans to sue tobacco companies
WASHINGTON (Reuters) - The Justice Department is planning a lawsuit against
tobacco companies to recover the costs to the federal government of
smoking-related illnesses, President Clinton said Tuesday night.
``Taxpayers shouldn't pay for the cost of lung cancer, emphysema and other
smoking-related illnesses. The tobacco companies should,'' Clinton said in a
surprise announcement in his State of the Union speech.
Clinton did not specify how much money the Justice Department would seek
from tobacco companies, but he said smoking had cost taxpayers ``hundreds of
millions of dollars'' as ill smokers sought treatment under Medicare and
other programs.
``So tonight I announce that the Justice Department is preparing a
litigation plan to take the tobacco companies to court,'' Clinton said. He
said the funds recovered would be used to bolster the Medicare program.
The federal government began considering a suit against tobacco companies
after the collapse last June of a $516 billion anti-smoking bill in the
Senate.
The nation's biggest tobacco companies agreed Nov. 23 to pay 46 states $206
billion and submit to advertising and marketing restrictions in a broad deal
that was the largest settlement of civil suits in history.
The Justice Department said it was creating a task force to study the best
legal grounds for a lawsuit.
An administration official, speaking on condition of anonymity, said the
Justice Department was still evaluating the amount of damages to be sought,
the time when a lawsuit would be filed and other litigation issues.
Another administration official said the Justice Department was likely to
seek a settlement that could run into the billions of dollars.
``It's more important that this be done right than it be done quickly. We
will bring litigation when we are fully prepared to do so, and we are not at
this point going to set any type of time frame on it,'' the first official
said.
``The tobacco industry's potential liability for government-provided health
care is of an unprecedented size and nature.''
Justice Department spokesman Myron Marlin said Attorney General Janet Reno
had decided to proceed with the plans after determining there were ``viable
grounds for recovery.''
Asked about the ramifications of taking on the powerful tobacco industry
before the 2000 presidential election, Marlin said: ``This is a decision
based on the law. ... We will make our decisions based on what the law and
the facts provide.''
The tobacco industry cried foul.
``It's a political move. It's a political gesture,'' industry spokesman
Scott Williams said. ``The Justice Department has looked at this repeatedly
in the past and has not acted on it.''
He said it was ironic that the Clinton White House had complained that the
impeachment process was political but that the president used the State of
the Union speech ``to try to score political points against the tobacco
industry.''
``It's disappointing because people have been working hard to try to bring
resolution to these issues over the last two years and have sought the White
House's support in that effort, only to have them ridicule the industry,''
Williams said.
The Treasury Department has estimated smoking costs the economy about $130
billion a year, including $60 billion in medical bills.
Some $20 billion in health costs are borne by the federal Medicare program
and the state-federal Medicaid program, the department estimates.
A Justice Department fact sheet said the department's litigation effort
would not seek funds collected by the states through their settlement.
It suggested the federal government could seek more than the states got.
``The amount of money paid out by the federal government under various
programs is even larger than that paid out by the states through the
Medicaid program,'' the fact sheet said.
In another assault on the tobacco industry, Clinton was described by aides
to be proposing a 55-cent-per-pack increase in the federal cigarette tax to
raise $8 billion over five years to offset the health care costs of smoking.
The American Wholesale Marketers Association (AWMA) denounced the proposed
increase in the cigarette tax, saying it ''could have devastating
implications on small businesses.''
The tax increase is expected to be contained in Clinton's proposed budget
for the next fiscal year, to be submitted to Congress Feb. 1.
Cigarette manufacturers raised prices by about 45 cents a pack after their
$206 billion settlement.
Last Updated: 01/20/99 00:53 EST
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