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| S P E C I A L | Tobacco Under Attack |
Texas' reaches $15.3 billion settlement with tobacco industry
In this story:
January 16, 1998
- Money earmarked for children's health
- Fees in the billions 'laughable'
- An end to billboard, transit ads
- Politicians want a say
Web posted at: 11:03 p.m. EDT (2303 GMT)AUSTIN, Texas (CNN) -- The state of Texas and the tobacco industry have reached a $15.3 billion settlement that would end the state's lawsuit against the industry.
If U.S. District Judge David Folsom approves the deal, it will be not only the biggest payoff in the war between the states and the tobacco industry, but also the largest legal settlement in U.S. history.
Folsom said he would need the weekend to read the lengthy document and would not make a decision until Tuesday.
Texas Attorney General Dan Morales said the settlement would be paid out over 25 years, with the first $1.2 billion due this year. Much of the initial money is earmarked for a variety of health programs for children, including a foundation for children's health, anti-smoking programs and cancer research at state institutions.
"More than a million poor children in Texas without health insurance will receive the care they need," Morales said. "And the taxpayers of Texas are now fully compensated for the cost of providing health care to those afflicted with tobacco-related diseases."
Morales said that the fees for five private firms that helped the state and spent $50 million of their own money preparing the case would be paid either by the tobacco companies or from the federal government's share of the money.
How much to pay the lawyers has not been determined. The state and the firms had agreed that the lawyers would receive 15 percent of a jury award, but have now agreed to let the court decide the fees in light of the settlement.
Fees in the billions 'laughable'
Morales said it was "laughable" to speculate that the lawyers' fees would be in the billions of dollars, but added that whatever they get was well-earned.
Morales announces the record settlement He said the state could not have hoped to combat the industry attorneys without the help of the private firms. The industry's lawyers, he said, spent $200 million preparing their defense.
"These fellows," he said, gesturing to the attorneys retained by the state, "had we lost this case, wouldn't have been paid a dime."
The tobacco companies said in a statement that the settlement "again demonstrates that the industry is prepared to cooperate with government and the public health authorities to discourage underage tobacco use."
Texas is the third state to settle a lawsuit against the tobacco industry, and the deal is the largest. Florida and Mississippi settled last year with the industry for a combined total of $14.7 billion.
An end to billboard, transit ads
White House spokesman Mike McCurry said the settlement was "another indicator that tobacco companies will be held accountable, and another reason why there should be federal legislation to pursue these issues on behalf of all Americans."
He said tobacco companies are "clearly on the run and they're on the run for good reason."
A L S O :
Nicotine levels posted on Internet
Morales said that among the "non-monetary" concessions made by the tobacco companies include an agreement that they will discontinue billboard and transit advertisements within four months.
He said the companies also agreed not to oppose restrictions on vending machines, and sales and possession of tobacco products to minors.
Matthew Myers, executive vice president of the Washington-based Campaign for Tobacco-Free Kids, termed the settlement a "good deal for the citizens of Texas."
"It ensures that Texas will receive payment for the significant expenses it has incurred in connection with tobacco-caused disease," Myers said.
Rep. Nick Lampson, a Beaumont, Texas, Democrat who serves on the House Task Force on Tobacco and Health, said the deal "should serve as a reminder of the hazards of tobacco products."
"This settlement will allow us to expand anti-smoking education efforts among children, which is crucial," Lampson said. Citing Campaign for Tobacco-Free Kids statistics, he added: "We know that teen-agers who smoke cigarettes are 22 times more likely to use cocaine than their non-smoking peers."
Politicians want a say
But even before the judge has given his OK, Texas legislators filed a motion with the court asking that they be allowed to become part of the lawsuit because they were concerned settlement proceeds were being designated for specific programs in violation of the Texas Constitution and state law.
Gov. George W. Bush said he, too, thought elected officials should decide where the settlement money is allocated.
"I am concerned that the money is going to be pre-spent before those of us who have been elected have an option to decide..." Bush said.
Folsom did not respond to the motion, and Morales insisted that the settlement was consistent with the law. He added that in specifying where the money should go, the settlement was consistent with the intent of the lawsuit he filed two years ago against the industry.
"To protect the children," he said, "and to protect and promote public health."
Armed with internal documents from the tobacco industry, Texas had sued eight tobacco companies and three trade groups for reimbursement of about $8.6 billion in Medicaid funds spent on smoking-related illnesses dating to 1968.
Correspondent Charles Zewe contributed to this report. and The Associated Press contributed to this report.
Related stories:
- Texas, tobacco giants settle lawsuit, avoid trial - January 16, 1998
- Tobacco settlement reached - January 15, 1998
- Secret memos show cigarette-maker targeted teens - January 15, 1998
- Clinton to recommend sharing tobacco money with states - January 12, 1998
- Closing arguments due in Florida woman's tobacco lawsuit - October 29, 1997
- Tobacco industry settles Mississippi lawsuit - July 3, 1997
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