|
Clinton's threatened suit against tobacco industry not a sure thing, still faces legal hurdles
Updated January 21, 1999
7:19 p.m. ET
NEW YORK (Court TV) — When President Clinton announced the Department of Justice intended to sue the tobacco companies to recover the healthcare costs of treating sick smokers, industry officials protested and vowed to fight.
However, despite U.S. Attorney General Janet Reno's promise to bring litigation against the companies with "deliberate speed," a federal suit against Big Tobacco may still face several legislative hurdles — and needs to find a firm basis — before it becomes a reality.
"It'll be quite a while before we start talking about a trial," said Mary Aronson, a tobacco analyst and head of Aronson Washington Research. "I think when Clinton made his announcement, he was talking more about a plan to think of ways for the Department of Justice to sue the industry."
Aronson added that, "officials from the DOJ have sought clarification of their current authority to sue cigarette makers, and it's possible that when the president's announcement included legislative clarification."
"We'll probably see the President go to Congress and suggest stronger legislation that would allow the government to recover Medicaid costs," she said.
The Justice Department's desire to sue Big Tobacco is rooted in a dispute between federal and state governments over who is entitled to tobacco settlement proceeds. The federal government, citing that it funds a portion of Medicaid in each state, believes it is entitled to a portion of the $246 billion total state settlement because the states were trying to recover Medicaid money.
State officials say the federal government never offered assistance in state suits against the tobacco industry and are therefore not entitled to any settlement proceeds.
The Clinton administration has considered reducing state Medicaid payments to recover money spent on smoking-related illnesses and has offered a deal that would involve state officials keeping settlement money but using the proceeds only for healthcare. Various objections to that proposal led to Clinton's announcement in his State of the Union address.
But, Aronson noted, although Clinton's announcement of a possible suit shocked tobacco industry officials, it is not a new idea. Aronson claimed the it first arose during the failed $368 billion settlement proposed in 1997. She indicated that the Justice Department may rely on a medical cost recovery law to provide a legal basis for its suit.
"While the idea of such litigation has been talked about ever since the states attorney general announced their June 20th settlement in 1997," Aronson said. "Since then, some [Justice] Department officials have questioned the adequacy of the authority of the federal government to move forward with such a case."
She added that "some anti-smoking advocates interested in such a suit have focused on using a generic statute — the Medical Care Recovery Act — which has been used historically by the military to tap third parties for the medical costs of injured enlistees."
Still, Aronson noted, Justice Department officials have doubted that the Medical Recovery Act gives them adequate authority to sue Big Tobacco. Aronson also pointed out that Justice Department officials could also find a basis for a suit against the tobacco companies by awaiting the outcome of a federal suit in Texas.
In that instance, a group of plaintiff attorneys are trying to recover Medicare program expenditures on tobacco-related illnesses and have based their case partly on the federal Medicare Secondary Act, which gives parties the right to recover Medicare payments from the tobacco industry. The attorneys are awaiting a federal judge's ruling on whether to give their case class certification.
The tobacco industry has reacted to the Justice Department's threatened suit with predictable scorn.
Tommy Payne, senior Vice President of R.J. Reynolds, accused Clinton of using the industry for political gain. Kentucky Gov. Paul Patton, whose state is tobacco dependent and whose farmers have suffered from state settlements, denounced the suit and suggested it could destroy the industry.
"This industry is under siege," Patton said. "There's a limit to what this product can bear, and we're coming close to that limit."
The Justice Department has released few details about the upcoming suit and a task force will soon be set up to develop legal strategy. Justice Department officials have not said where the suit will be filed or how much money will be sought. The suit is expected to be officially filed in a few months.
— Bryan Robinson
The Associated Press contributed to this report.
| 
