N.Y. Joins Parade With Suit to Recover Funds From Tobacco Firms

The city of New York, joining a growing roster of states and municipalities, Thursday filed suit against the major tobacco companies to recover what Mayor Rudolph W. Giuliani says is $300 million a year in city funds spent coping with the ravages of smoking-related disease.

The city, in a complaint filed in New York State Supreme Court, contends the tobacco industry defrauded the public by pledging to conduct unbiased research on smoking but then suppressing evidence of the harm it causes and simultaneously pushing to recruit new smokers through deceitful marketing campaigns.

Cigarette makers quickly denounced the suit. Defendant Philip Morris Cos. Inc., headquartered in New York, issued a statement accusing Giuliani of “blatant political grandstanding” and saying the city has “no viable legal basis” for the action.

A spokesman for Brown & Williamson Tobacco Corp., also a defendant, called the action “hypocritical” and “anti-business.”

Like Los Angeles and 10 other California counties, as well as the cities of San Francisco and San Jose, New York City acted after the state attorney general, Republican Dennis Vacco, declined to file such litigation, saying it would be too costly in terms of money and staff resources.

During a news conference at City Hall on Thursday, however, Giuliani, himself a Republican, declined to criticize Vacco or Republican Gov. George Pataki, saying only, “I would advise the state to file a lawsuit.”

Anti-tobacco activists were quick to brand Pataki and Vacco as beholden to the tobacco industry for campaign funds. Similar criticism has been leveled at California Gov. Pete Wilson and Atty. Gen. Dan Lungren, both Republicans, for their refusal to go to court.

Besides New York and the California municipalities, 17 states have filed similar lawsuits, and Erie County, N.Y., Buffalo’s home county, is preparing its own case.

New York says it pays for smoking three ways: It covers 25% of the costs of treating lung cancer and other diseases in city Medicaid patients; it picks up the full tab for indigent, uninsured patients in municipal hospitals and clinics; and it pays substantially higher health insurance premiums for the city’s 500,000 employees because of tobacco-related ailments.

“A Columbia University study estimates that the city spends $300 million per year on health costs attributable to tobacco use,” Giuliani said.

Corporation counsel Paul A. Crotty, New York’s chief lawyer, said the potential damages are in the billions of dollars because the city seeks compensation going back many years and may be entitled to triple damages under state law if it can prove fraud.

Crotty said the city would avoid incurring large legal fees while the litigation is underway by farming the case out to private law firms working on a contingency basis, under which the firms assume the upfront costs and earn a negotiated share of any settlement or court judgment.

Giuliani said during the news conference that he expects Philip Morris to retaliate by threatening to leave the city, along with its 1,500 New York employees. “I never am affected by people who threaten,” Giuliani said. “If they want to leave the city of New York, we’ll replace those jobs with other jobs.”

Michael York, a lawyer for Philip Morris, said the company has never made such a threat and that the city “has no finer corporate citizen.”

Separately on Thursday, a U.S. District Court judge in Louisiana granted Brown & Williamson a summary judgment in a case brought in behalf of a former smoker. Judge Richard T. Haik agreed with B&W; that the case should not go to trial because the risks of smoking were so widely known that the Louisville-based cigarette maker had no duty to warn its customers.

* LUNG CANCER STUDY

A study finds exactly how a chemical in cigarette smoke sets the stage for lung cancer. A1