Tobacco, Government Debate Suit

A Justice Department lawyer charged Friday that tobacco companies continue to peddle cigarettes to children and perpetuate the “big lie” that their products are not harmful, despite the industry’s pledges to change its ways.

The accusation came during four hours of heated debate on a motion by the major cigarette manufacturers to throw out the U.S. government’s multibillion-dollar lawsuit against them and signals that both sides are gearing up for what may prove to be years of contentious litigation.

“I saw both sides preparing to go to war today,” said one observer, Matthew Myers, president of the National Campaign for Tobacco-Free Kids, at the close of the hearing in U.S. District Court.

The U.S. government, which brought a massive federal lawsuit against the tobacco industry last year at the direction of President Clinton, is seeking reimbursement for as much as $20 billion a year spent on smoking-related illnesses over the last three decades.

“If this is therefore not the largest lawsuit of all time, it certainly ranks high,” said Herbert Wachtell, a lawyer representing Philip Morris Cos.

Wachtell argued before U.S. District Judge Gladys Kessler that the government’s case should be tossed out before any facts are actually heard because of the “absurdity” of its legal reasoning.

Wachtell mocked the government repeatedly for its sudden realization--after years of denial--that it could recoup millions in medical costs through two arcane federal statutes.

The Justice Department, in a change of position, now claims that two laws, the Medicare Secondary Player Act and the Medical Care Recovery Act, allow it to claim reimbursement from cigarette makers for money the government spent on health care for Medicare recipients, federal personnel, veterans and other people who became ill from smoking.

But Wachtell said: “No such authority has ever existed, and the government knew it.” The notion that government attorneys misread the law for some 35 years and simply overlooked their authority to collect billions in health care costs until now is “preposterous,” he added. But Justice Department lawyers argued that the tobacco industry has created what amounts to a criminal enterprise--built on fraud and conspiracy--that continues to this day.

One of the government’s lawyers, Frank Marine, said that “serious allegations” have surfaced recently suggesting that the major tobacco firms continue to target youths in their marketing, to give out free samples of cigarettes that could reach children and to perpetuate “the big lie that smoking cigarettes does not have adverse health effects.”

Such marketing tactics could conflict with restrictions that the industry agreed to as part of a landmark $246-billion settlement reached with the states in 1998.

“If you put all that together, we have an overwhelming case to go to the next step,” he said in arguing against the industry’s motion to dismiss the lawsuit.

Marine offered few details in court to support his allegations concerning the industry’s marketing tactics, nor would he or other Justice Department officials elaborate afterward.

But Myers, the Campaign for Tobacco-Free Kids president, said there is ample evidence to support the Justice Department’s charges, including two studies released last month suggesting that cigarette makers are reaching more children than ever with their advertising.

One of the studies, by the Massachusetts Department of Public Health, found that cigarette ads in magazines with at least 15% youth readership jumped by $30 million, or 33%, from 1998 to 1999.

The state of California sued R.J. Reynolds Tobacco Co. last month, alleging that its distribution of 900,000 packs of free cigarettes last year violated the terms of the 1998 settlement and threatened to expose children to cigarettes.

Marine told the judge that strong steps are needed to counter “a 45-year pattern of fraud [and] abuse” by the tobacco industry.

But an attorney for the Liggett Group told the judge that, even if she allows the lawsuit to move ahead against the other tobacco companies, Liggett should be dropped from the litigation because of its “historic step” in breaking ranks with other cigarette manufacturers. Liggett became the first major tobacco company to publicly acknowledge smoking’s health risk in 1997, and it agreed that year on its own to settle public health lawsuits brought against the firm by 22 states.

“Liggett is considered to be a pariah among the other defendants,” said Fred W. Reinke, trial attorney for Liggett.

For the government to suggest that Liggett is still conspiring with other cigarette makers, he said, “is about as likely as Fidel Castro being invited to Miami to become an honorary citizen.”

Judge Kessler indicated that she might not rule for several months on the tobacco industry’s motion to dismiss the case. If she does allow the lawsuit to move forward, attorneys said, the trial probably would not start until 2003 because of the enormous amount of pretrial work that will be needed.