Local News

Easley Outlines Possible Settlement With Tobacco Companies

Posted July 22, 1998

— State Attorney General Mike Easley has proposed a framework for a settlement between North Carolina and the tobacco industry, which could be met without the state filing a lawsuit.

Otherwise, Easley warned tobacco companies he would file a lawsuit to recover billions of Medicaid dollars the state has spent to treat sick smokers.

Easley sent a letter outlining his terms for a settlement to former state Supreme Court Justice Phil Carlton, a Pinetops attorney who has acted as the tobacco industry's lead negotiator in Medicaid lawsuits brought by 40 other states.

The letter is under consideration by his clients - Philip Morris, R.J. Reynolds, Lorillard, Brown & Williamson and U.S. Tobacco, Carlton said Wednesday.

``I'm not sure what will happen next,'' he said. ``It is in a review stage.''

Easley's letter, dated June 10, was not released to the public. A copy was obtained by The News & Observer on Wednesday.

Framework for a settlement includes compensation that would be similar to other settlements the industry has reached with other states.

Easley also proposed reaching a settlement modeled after an agreement reached between the tobacco industry and Minnesota two months ago to settle that state's Medicaid lawsuit.

Also under the settlement, outdoor tobacco advertising would be banned, as would product placements in movies by cigarette makers. Lobbying by tobacco companies would be subject to expanded public disclosure, and the industry couldn't lobby against bills or regulations aimed at reducing youth smoking.

If a settlement can be reached without the state having to file a lawsuit, Easley proposed using 25 percent of the funds, which would otherwise go to attorneys hired to assist the state, to go toward economic aid to tobacco growers, their communities and cigarette workers.

Easley did not specify how much money North Carolina would seek.

Carlton said he thought the letter was a smart move on Easley's part.

``The tobacco companies I represent have all the state cases under the microscope right now,'' he said. ``What Mike Easley has done is let them know he doesn't intend for North Carolina to be left out.''

The tobacco companies might be receptive to a plan that would offer some economic assistance to their employees, Carlton said.

``I think most people would rather see some of the money go to farmers and tobacco workers rather than a bunch of lawyers,'' he said.

Four states have recently reached multi-billion-dollar settlements with the tobacco industry through such lawsuits, and 36 more have lawsuits pending.

Easley has a large obstacle to face before filing a lawsuit.

In 1995, state law was altered by the General Assembly to prevent anyone living in the state from bringing class-action suits against cigarette makers. That exemption probably would have to be eliminated for the state to recover Medicaid funds spent treating smoking-related illnesses.

Easley has asked the General Assembly to do away with that exemption, but it has not acted on his request so far.

Many members of the N.C. Senate are interested in eliminating the exemption, according to Julia White, a spokesperson for Senate President Pro Tem Marc Basnight.

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