Tobacco Talks Spark Debate Over Payouts

When negotiations for a massive tobacco settlement resume in a few days, money will be a key issue.

Not just the amount of money, but how it will be distributed.

A group of attorneys who have filed class-action lawsuits across the country on behalf of smokers contend that billions of dollars should go for smoking-cessation programs, medical monitoring and cancer research.

The attorneys, known as the Castano group, assert that about 22.5% of the total settlement pot--which is expected to exceed $300 billion--should go toward these kinds of programs.

“Tobacco use is the single most preventable cause of premature disability and death in the United States,” the attorneys said in a 31-page document outlining the programs, a copy of which was obtained by The Times. “Smoking cessation is a priority under the Castano programs both to improve the health of the population and to preserve health-care resources.”

“These programs are the kind of relief we’re asking for in our lawsuits,” said Charles Zimmerman, a Minneapolis attorney who played a key role in formulating the Castano group’s six-point program.

“There will be no settlement unless a substantial amount of settlement funds is set aside for these programs,” said New Orleans attorney Russ Herman, a member of the Castano executive committee.

But considerable haggling lies ahead in the tripartite negotiations between the tobacco industry, the class-action lawyers and the 36 state attorneys general who have sued the cigarette companies to recover billions in Medicaid funds spent treating sick smokers.

Sources close to the talks said they expect 10% of the settlement funds will go to the federal Department of Health and Human Services for a massive nationwide anti-smoking campaign.

What is unresolved is how the remaining 90% would be allocated. A healthy chunk is expected to go to the states for Medicaid reimbursement, with a portion of that reimbursed to the federal government.

It also is expected that billions will go into a fund used to compensate individuals who win personal-injury lawsuits against the companies. The Castano attorneys maintain that the cessation, monitoring and research programs should get as much money as the lawsuit fund.

Mississippi Atty. Gen. Mike Moore, a key player in the negotiations, said smoking-cessation programs will be part of any settlement. He also said he expects that Donna Shalala, secretary of HHS, and state officials will have an important voice in whatever plan is adopted.

“Some Castano lawyers have come up with some pretty good ideas, and they’ll be taken into consideration,” Moore said.

But another attorney general, speaking anonymously, scoffed at the programs and suggested they are an attempt by the class-action lawyers to inflate their role in the suits, thus paving the way for larger fees.

“We don’t need these guys telling us how to design health-related programs,” the attorney general said.

But Herman said any fees the Castano lawyers get will not be taken out of the funds allocated to these programs. “We will negotiate separately for fees with the tobacco companies, above and beyond whatever is in the settlement,” he said.

The proposals, which include a special cessation program for pregnant teenagers, are outlined in some detail and are subject to the anti-fraud and inspection rules of the federal Health Care Administration. The programs would be administered by boards with appointees representing all the sides participating in the negotiations.

The Castano sources said they have discussed the programs with tobacco industry lawyers, including Steve Parrish, a senior attorney at Philip Morris. Parrish declined to comment.

David Kessler, former commissioner of the Food and Drug Administration, also endorsed the inclusion of smoking-cessation programs in any settlement or long-term national tobacco-control policy. Kessler said it was premature to say what the components of a cessation program should be because tobacco control advocates have not yet obtained all the industry’s internal research on nicotine and addiction.

Zimmerman acknowledged that the Castano proposals would be subject to “fine-tuning.” But, he stressed, “without programs like this, there can’t be a deal. This would enable addicted smokers to get help without having the kind of physical injury they would have to have in order to file a successful lawsuit against the cigarette companies . . . .”

Meanwhile, more than 30 attorneys general involved in anti-tobacco litigation had a two-hour conference call Wednesday in which they reviewed the week’s developments. Afterward, Woods--one of their five negotiators--and Atty. Gen. Tom Miller of Iowa said they were hopeful that a resolution could be reached next week and legislation drafted.

Later, at his daily briefing, White House Press Secretary Mike McCurry said he thought the negotiators still had “a lot of work to do.” He said the White House does not intend to sign off on anything until a special advisory panel headed by Kessler and former Surgeon Gen. C. Everett Koop has an opportunity to review the settlement.

“I think we would very closely consider the views of the public health advocates and their community prior to rendering any judgment on a bill,” McCurry said.

* FOLLOWING SUIT

California’s attorney general is expected to join in suing the industry. A3