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Cities want their share of historic tobacco settlement
Updated Dec. 14, 1998
2:50 p.m. ET
KANSAS CITY, Mo. (Court TV) — Feeling excluded by the $206 billion settlement between 46 states and the tobacco companies, several American cities may seek to their own compensation for treating sick smokers after a court hearing this Thursday.
According to Kristen Cormier, legislative counsel for the National League of Cities (NLC), last month's tobacco settlement left "no financial mechanism for cities to recover their costs." The NLC passed a resolution supporting efforts to include cities in tobacco settlement proceeds.
Nonetheless, on Dec. 17, the city of St. Louis and a group of Missouri hospitals will try to convince a judge that last month's tobacco settlement prevents city governments from seeking damages for the costs of treating sick smokers. Seeking to recover similar costs, many cities who felt shortchanged by last month's tobacco settlement will be watching the hearing closely.
"If a state is being compensated (by the settlement), some of those dollars may have their origins in local government," said Charles Lubinsky, a attorney representing the National Association of Public Hospitals. The association, which represents more than 100 publicly operated hospitals and 10 percent of the nation's publicly operated medical centers, estimates that its members have spent $800 million on caring for patients with smoking-related illnesses.
Despite the money spent by cities on sick smokers, several cities have felt excluded by the settlement, particularly by the fact that it was made on behalf of the states and all their political subdivisions. This last term of the agreement was intended to shield the tobacco companies from liability to city and county governments.
And that is the focus of Thursday's hearing. The city of St. Louis and a coalition of 53 Missouri hospitals are expected to argue that Missouri Attorney General Jay Nixon wrongly negotiated away the power of the cities and counties to recover their medical costs. St. Louis and the hospitals want their share of the state's stake in the $206 billion settlement. (They want more than $1 billion of the state's $4.4 billion agreement.)
Nixon agrees that the cities should get their money, but only through the legislative process and after the state receives its money.
"The vast majority of local entities are prepared to make their case in the proper forum," Nixon said. "That forum is in the Missouri Legislature."
Nixon also claims that the settlement is fair to local governments and labeled St. Louis and the hospitals as a faction that only "wants to slow up the process and milk the cash cow before it gets back to the barn."
But, to Nixon's dismay, more factions may want to milk that cow. New York City is reportedly unhappy with its $6.7 billion of the state's $24 billion share of the settlement and is considering refiling its suit against the tobacco industry. Nationally, cities will watch the outcome of Thursday's hearing because a victory for St. Louis and the hospitals could encourage other cities to seek money from their state settlements and lead to other fights over the settlement between state and local governments. A victory could also delay budgeting of the state's settlement money.
Unlike most states, California promised half of its $24 billion settlement to local governments. If St. Louis and the hospitals are unsuccessful in the hearing, they have suggested that they will pursue a separate suit against the tobacco companies.
The Associated Press contributed to this report.
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