Cigarette companies consider settlement Up to $250 billion may be paid to 21 states seeking to recoup health expenses

February 18, 1997|By BLOOMBERG NEWS

WASHINGTON -- U.S. cigarette companies are in talks with anti-tobacco lawyers and state officials to settle all health-related lawsuits for as much as $250 billion, people involved in the negotiations said.

The talks, held at hotels in Washington and Memphis, Tenn., and by telephone in the past few months, may settle lawsuits by 21 states to recoup billions of tax dollars spent treating smoking-related illnesses, the negotiators said. The negotiations, which intensified in the past month, also may end class action suits by smokers and their survivors, they said.

Philip Morris Cos., RJR Nabisco Holdings Corp. and other tobacco companies spend an estimated $600 million a year to fight litigation, and until 1996 never paid damages or settled a case. The industry is more willing to settle now because of adverse court decisions and threatened regulation.

"There have been discussions as far as settlements," said Chris de Witt, spokesman for the Michigan Attorney General's Office. "Members of the staff have been involved." He declined to give specifics. Louisiana also confirmed it is participating in the talks.

Any settlement faces several obstacles, including the need for federal legislation to limit future suits and to determine whether the government can regulate cigarettes as devices that deliver drugs, the people said.

Anti-tobacco attorneys asked representatives of the industry to have the companies pay as much as $10 billion a year for 25 years, partly to finance smoking education and cessation programs, the people said. A settlement could prove to be a boon for tobacco companies' shares by eliminating concern about future liability, analysts said.

Philip Morris and RJR spokesmen referred calls to Bozell Sawyer Miller Group Inc., a public relations firm hired to represent the tobacco industry. Bozell Sawyer declined to comment.

Also, a spokesman for London-based B. A. T Industries PLC, parent of No. 3 U.S. cigarette company Brown & Williamson, said it was not participating in the talks.

Pub Date: 2/18/97

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