Up in Smoke

York, Byron

ichard Scruggs didn't like what he was hearing. It was early 1996, and the Mississippi lawyer was working on state lawsuits that stood to win an enormous settlement-more than $24o billionom...

...9 Advance notice of articles appearing in upcoming issues...
...Young people tend to believe the number is even higher, and all groups overestimate the number of years that smoking cuts from one's life expectancy...
...All of which underscores the final dilemma for the Justice Department...
...But just what was the conspiracy...
...To spread this message, the executives formed a new organization, the Tobacco Industry Research Committee...
...The tobacco companies have perpetrated a fraud on the American people for decades," Democratic congressman Henry Waxman told the New York Times...
...In 199o, for example, when the Gallup organization asked smokers whether they considered themselves addicted to cigarettes, 61 percent said yes...
...Racketeering Act No...
...End of statement...
...According to the lawsuit, the ad "depicted the Joe Camel character in a Formula One-type automobile racing suit, opening a bottle of champagne, with racing cars whizzing by in the background...
...The classic example is the serviceman in the car accident, but in this case we think we ought to recover for Medicare costs...
...But it won't happen anytime soon...
...If one assumes that the actions were simply normal business practice, then none of the acts-the newspaper ads, the press releases, the telephone calls--appears to be part of a conspiracy...
...To the uninitiated, it might seem curious that the Justice Department would attempt to classify a number of everyday public relations techniques as part ofa pattem of mail and wire fraud...
...Through the summer and the fall we were looking at it and talking about it...
...The tobacco companies have insurance...
...Until now...
...The executives came up with an elaborate scheme to deceive the American people about the health risks of smoking...
...Even at that early date, the lawsuit says, they knew about smoking's harmful effects but decided to publicly maintain that there was no evidence that smoking caused lung cancer or any other disease...
...MCII = $$$$$ The fundamental question in the case is whether the government can force tobacco companies to pay the medical bills of Medicare patients who suffer from smoking-related illnesses...
...Using a law designed to prosecute Mafia kingpins, the suit alleges that the tobacco industry, while appearing to be a normal American business, has in fact operated for decades as a kind of continuing criminal conspiracy...
...They have to be in furtherance of the scheme to defraud...
...By 1953, they felt the situation had become so serious that they needed to take immediate action...
...14 charges that on February z, 1967, tobacco executives used the mail to seek out pro-tobacco witnesses to testify in upcoming congressional hearings...
...Therefore, the brief continues, it seems reasonable to conclude that the act was not intended to apply to Medicare patients...
...And common sense is backed up by statistical evidence...
...The White House pushed Congress to intervene and put together a "global agreement" $ 8 IJ~ h 8 CallS~ that would bring a large portion of any tobacco settlement to the federal gov~87 ernment...
...But did they...
...Justice had no more legal justification to go forward in 1999 than it had years earlier...
...Justice Department lawyers old him there just wasn't a case...
...It has never before been used to go after the parties whom the government believes are responsible for the injury or illness that lands the insurance holder in the hospital...
...blatantly political move," one spokesman called the new lawsuit, "a witch hunt against a legal industry...
...According to Viscusi, mortality statistics show that smoking-related diseases kill between 18 and 36 of every lOO smokers...
...Michael Moore, the Mississippi attorney general who led he anti-tobacco fight, had the same experience...
...Say a person who is covered by Medicare is also covered by some form of private insurance-which happens to be the ease for millions of Americans...
...But in a trial the department will have to balance that position against the act's long history...
...But it was not until a few weeks ago, when the tobacco industry filed court papers sketching its initial defense, that the outlines of the legal battle began to come into focus...
...Reynolds Company placed an ad in Newsweek which said, "If you're like a lot of smokers these days, it probably isn't smoking that you want to give up...
...The defendants and their agents," the lawsuit charges, "determined, in furtherance of this Enterprise and conspiracy, to deny that smoking caused disease and to maintain that whether smoking caused disease was an 'open question,' despite having actual knowledge that smoking did cause disease...
...9 A one-year complimentary subscription to The American Spectator, sent via first-class mail directly from the printer...
...And by 199o, it was up to 96 percent...
...According to the lawsuit, Paul Hahn, who was president of the American Tobacco Company, sent a telegram to other tobacco company heads, suggesting that they get together to come up with an "industry response" to the research...
...But Justice Department lawyers say it also applies to the tobacco case, in the following way: The tobacco companies caused the Medicare patients' health problems...
...The record of government assistance, support, regulation, and financial benefit from its association with Big Tobacco is so extensive that the United States itself might as well be listed as a co-conspirator in the Justice Department's lawsuit...
...Wait 'Em Out At Justice Department headquarters these days, the 17 lawyers on the Tobacco Litigation Team are moving ahead at full speed...
...Date: Please return this form with payment to: The American Spectator Educational Foundation, Inc...
...Fast forward to September 22, entireindustr 999...
...The operative phrase is somebody covered by government benefits...
...during that time they received extensive encouragement from the White House, Democrats in Congress, and several plaintiffs' lawyers who all strongly urged Justice to go ahead and sue...
...And that was because, the lawsuit alleges, the cigarette companies concealed the truth about tobacco...
...A close reading of the documents reveals that the Justice Department proposes to use a number of laws in novel, never-before-tried ways, and that the tobacco industry is preparing for protracted, point-by-point combat on each charge...
...The tobacco lawsuit makes no sense unless the government can prove that those millions of Medicare The American Spectator _9 Marc h ~ o o o 29 patients are the victims of some sort of wrongdoing by the tobacco companies...
...But there was also no intention to quit-not inside the White House and not inside the Justice Department...
...The government is thus the "secondary payer," after the patient's private insurance...
...It's a made-up theory," says Stuart Gerson...
...But even that argument appears seriously flawed...
...To do that, the Justice Department has turned to one of its most potent enforcement weapons, the Racketeer Influenced and Corrupt Organizations Act, better known as RICO...
...Racketeering Act No...
...MSP = SSIIS Even as they pursue their case under the Medical Care Recovery Act, Justice Department lawyers say they have another, separate, legal basis for suing the tobacco companies...
...In 1947, United States v. Standard Oil landed in the Supreme Court, which ruled that there was no federal law allowing the government to sue on behalf of an injured soldier...
...It's an interpretation of the law that strikes some experts as almost breathtaking in its audacity...
...The emergence of scientific research showing the health dangers of smoking gave the government an incentive to become even more involved in tobacco...
...It's a system designed to prevent patients and their insurance companies from sticking the government with bills that should be paid by private business...
...Tobacco company executives kept a careful eye on the studies, fearing that too much bad publicity might spell the end of their business...
...fed- lllaSSi~8 la~'l~ eral law did not allow it...
...It's some of that 'tar' and nicotine you've been hearing about...
...It would be difficult to imagine a better illustration of that than United States v. Philip Morris, R.J...
...Speakers at previous dinners have included New York City Mayor Rudolph Giuliani, Senator Phil Gramm, Henry Kissinger, author Tom Wolfe, TAS Editor-in-Chief R. Emmett Tyrrell, Jr., and TAS columnist Ben Stein...
...no individual cases would be examined, and damages would be calculated by using statistical models...
...The legitimacy of the attack on tobacco disappears if the government is complicit in the alleged crimes of the defendants...
...To make their case, government lawyers cite a legal precedent that dates back well before the current fight over tobacco--and even before Medicare itself...
...If that were Reno's motive, she could have filed a suit back at the time her lawyers were telling Richard Scruggs there was no basis for one...
...But there's a third possibility...
...It is for Congress, not the judiciary, to make new laws concerning the rights of the government to recover for the loss of a soldier's services," the justices said...
...The law says that Medicare is an insurance fund and that other kinds of insurers will pay before Medicare," Jays the senior Justice Department official...
...In addition, there is no evidence that RICO, the g0vemment's ultimate weapon against mobsters, applies at all to a Medicare insurance case...
...not just everyday Americans, but government scientists themselves were taken in by the fraud...
...The Justice Department was doing precisely what it had refused to do for years...
...But a victory by George W. Bush might bring the case to a quick end...
...Not against negligent drivers," the tobacco brief says, "not against doctors responsible for malpractice...
...Remember what the Supreme Court said back in 1947, in United States v. Standard Oil...
...Reynolds, Brown fly Williamson, Lorillard, Liggett, and Ameriean Tobacco...
...In 1939, Congress established a tobacco price support program through which the Department of Agriculture became the de facto price control mechanism of the entire American tobacco market...
...They basically refused us...
...To many in the tobacco industry, in Congress, and in the legal profession, it appeared that the suit was filed because the Clinton administration simply ran out of other ways to carry on its war against what it likes to call Big Tobacco...
...Which means that the government can do what it wants...
...ORI would prefer to charge my membership fee of $1,000 or more...
...Big Tobacco was suddenL! !1] GPU~h a l l ly very, very vulnerable...
...The American Spectator _9 Mar c h 2 o o o 27 Anti-tobacco activists were ecstatic...
...Racketeering Act No...
...By 1977, the figure was at 9 ~ percent...
...But in the tobacco lawsuit, the Justice Department proposes to throw out that long-standing precedent and collect damages for a vast aggregate of patients...
...They claimed the committee was an impartial clearinghouse for scientific information about smoking, but each executive knew that it was in fact a public relations front for the tobacco industry...
...It said there was "no proof that cigarette smoking is one of the causes" of lung cancer...
...The governor believes that the fact that the government changed course [filing the suit after earlier saying there was no basis for one] indicates the facts are unclear," says Bush spokesman Scott McClellan...
...P.O...
...Department officials explained that they were prompted in part by the discovery of secret internal documents from the tobacco industry--documents they said confirmed the existence of the industry's decades-long conspiracy to deceive the public and the government about the health risks ofsmokng...
...According to House and Senate reports from the legislative debate, the law was intended to apply to "care [given] by the Department of Defense to military personnel and their dependents, the Public Health Service to Coast Guard personnel and other classes of persons, and the Veterans' Administration to veterans...
...by the middle of 1998, there was no glob1 ~OBK al agreement and no criminal case...
...We made every effort in the world to get the Justice Department to nitiate litigation," he recalled later in testimony before the Senate...
...When that fell apart, in the spring of'98, the department started looking at whether [a civil lawsuit] would be feasible...
...The Medical Care Recovery Act, known to wonks everywhere as MCRA, was passed in 1962 and gave the government the power to sue for damages when a soldier or other government agent is wrongfully injured...
...The average consumer has not been fully aware of the addictive properties of nicotine," the lawsuit says...
...The federal government has been involved in a very extensive and very effective anti-smoking campaign...
...In light of all that, it seems hard to argue that either the public or the government is the victim of a massive fraud perpetrated by the tobacco companies...
...several sources interviewed for this story believe that a Republican Justice Department would simply withdraw the suit...
...Beginning in 1994, at about the time the state lawsuits were getting started, Justice lawyers began an extensive criminal investigation of cigarette makers...
...The httrpr|s6 As flawed as the Medicare allegations appear to be, there is an even more basic objection to the Justice Department's legal strategy...
...In January 1954at the very dawn of the tobacco conspiracy- 7 ~ percent said smoking was harmful...
...But ! Moore didn't get any farther than W~|18 llouse Scruggs...
...perhaps they had distributed unsafe products...
...In December, Reno decided to reverse the department's earlier position...
...What did each smoker know about the health risks of smoking...
...14,396 were made by the defense agencies, 3,843 by the Veterans' Administration, and 572 by the Department of Health, Education and Welfare...
...Copies of Newsweek were, of course, delivered to subscribers through the mail...
...According to the Justice Department, the plan worked...
...He believes in legislation instead of lawsuits...
...But the reds explained to Scruggs that they had no egal basis on which to sue...
...When the Justice Department wins, it will be a great victory by the American taxpayers...
...He couldn't get out of the way and the truck couldn't stop...
...And it pledged tobacco industry support for further scientific research...
...The government made its position clear in September, when Reno formally presented the 131-page lawsuit...
...But Congress refused...
...As an expression of our gratitude for this very welcome and generous support, we extend to Washington Club members: Two complimentary tickets to the Spectator's annual Washington Club dinner...
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...An investigation showed that the truck driver had been negligent, and the government sued Standard Oil, seeking to recover $t23.25 for the cost of Etzel's hospitalization and $69.31 for the wages he was paid while unable to serve...
...According to the lawsuit, the executives committed their first act of conspiracy and fraud on January 4, 1954, when, under the committee's name, they placed a full-page ad in major newspapers entitled "A Frank Statement to Cigarette Smokers...
...Members of the public believed in the truth and completeness of the statements made by defendants and their co-conspirators...
...32 Marc h 2 o o o _9 The American Spectator The Washington Club includes all who contribute $1,000 or more to The American Spectator Educational Foundation, which publishes the magazine...
...Unlike the situation in some states, where legislatures passed new laws makng it easier for the state governments to sue tobacco companies, there was no new federal statute that paved the way for the department's lawsuit...
...It was the federal government that issued the health warning in 1964 about the risks of smoking...
...The case was called United States v. Standard Oil...
...Justice officials subpoenaed company records and summoned tobacco exec~d0~ 01 Bill ' utives to appear before a grand jury, but, try as they might, they could not construct a case that gave them even a I~b~CG01 I h 8 remote chance of winning in court...
...Through the years, the government has filed hundreds of thousands of claims (the majority of them stemming from auto accidents), and not a single one of them- not one--has sought to recover Medicare costs...
...Even if one accepts the contention that the industry's past acts were part of some sort of criminal enterprise, the defendants are not committing them anymore...
...not against any business or individual in our nation who, during the 34 years since Medicare was enacted, has engaged in one or more forms oftortious conduct that cost the Medicare program money...
...There's an old rule that says ifa government agency pops up and says it has a certain authority that it has never, ever used, then that argument is inherently suspect," says an attorney working for one of the tobacco companies...
...It is, to use the word one hears most in describing the lawsuit, a stretch...
...That would greatly ease the government's way, of course, because prosecutors would not have to deal with the messy details of any particular smoker's choice to smoke--a factor that has been decisive in dozens of jury decisions to throw out individual claims against tobacco companies...
...court decisions as recently as 1993 have held that the law's "primary purpose was to enable the government to recoup some of the millions of dol]ars it expends annually providing medical care to military personnel...
...Wouldn't a RICO enterprise have to be based on a series of illegal acts...
...it sideswiped Etzel, leaving him with a large gash in his head and cuts and bruises all over his bo@ Etze] was hospitalized at an Army facility and wasn't able to return to his unit for 29 days...
...Tonight I announce that the Justice Department is preparing a litigation plan to take the tobacco companies to court...
...Winning the suit would be the culmination of a career...
...The act is designed so that when somebody commits a tort against a government employee or somebody covered by government benefits, the government can recover health costs," says the senior Justice Department official familiar with the case...
...Less noticed in all of the back-and-forth was what the suit would actually be about...
...Of all their claims, this one is the biggest stretch," adds Greg Little, associate general counsel of Philip Morris...
...They point to a law called the Medicare Secondary Payer Act, known as MSP, which was a healthcare cost-cutting measure enacted by Congress in 198o...
...Right now, the Bush campaign will only hint at what might happen...
...In November 1949, in response to the question, "Do you think cigarette smoking is harmful, or not...
...Nor had there been any change in the law...
...spectator.org The American Spectator Educational Foundation is a 501 (c)3 non-profit organization...
...Racketeering Act No...
...perhaps their executives committed perjury in testifying before Congress...
...The tobacco brief points out that the secondary payer law was designed to allow the government to go after insurers who are legally bound to provide coverage for their policy holders...
...The government won the case, then lost on appeal in United States Circuit Court...
...Yet that is precisely what Justice Department lawyers are saying-but with a twist...
...She formed what became known as the Tobacco Litigation Team, chose a longtime anti-tobacco lawyer to mn it, and directed him to begin work on a lawsuit...
...In several studies, Harvard economist W. Kip Viscusi has demonstrated that most people believe smoking is more dangerous than it actually is...
...If this law 28 Marc h 2 o o o " The American Spectator were intended to apply to Medicare, then anytime anyone who is on Medicare is injured, then the federal government would have a cause of action," says Stuart Gerson, who headed the Justice Department's Civil Division during the Bush administration...
...Once you have a conspiracy, then practically any acts that the conspiracy commits are part of the conspiracy," says the senior Justice Department official...
...A meeting was arranged for December 15, 1953, at the Plaza Hotel in New York City...
...4 charges that on December 9, 1959, two tobacco executives used the mail to share a report about the smoking habits of high school students...
...We couldn't get anywhere with hem," he said...
...Schultz brought sterling ideological credentials to the job: Before joining Justice, he spent years with Ralph Nader's Public Citizen group, then worked for Henry Waxman in the House, and finally took a position as a top aide to David Kessler at the FDA...
...The government can only recover damages when a patient is injured as a result of someone else's negligence or misconductlike John Etzel and the Standard Oil truck...
...And didn't the 30 Marc h 2 o o o _9 The American Spectator Justice Department try and fail to bring criminal charges against the tobacco industry...
...The statute does not apply...
...76 alleges that from April 1 through June 30,1988, Reynolds placed an ad in Sporting News magazine--again, delivered through the mail-that was headlined "Get On Track With Camel's 75th Birthday...
...The government comes to this case with dirty hands," says one former Justice Department official...
...In the lawsuit, the ad is referred to as "Racketeering Act No...
...without a license, a farmer had no right to sell the product...
...In the example from 1978 , the government filed 18,811 separate claims, each of which was evaluated on its own merits...
...Furthermore, both the Secondary Payer Act and the Medical Care Recovery Act authorize the government to seek payment on behalf of individual patients...
...Frankly, C[iUI~IS war 0 hat's where the big bucks are in this :ountry on this particular issue...
...But the Justice Department maintains RICO is an appropriate prosecutorial tool in this case-because the department's ultimate goal is to stop the conspiracy, to make sure the tobacco companies do not engage in any illegal acts in the future...
...Underlying predicate acts have to be based on violations of criminal statutes," he says...
...And of course the government also taxes cigarettes-taking in $39.5 billion in just the last seven years alone...
...Furthermore, a look at decades of polling done by Gallup suggests that the public has long been aware of the general dangers of smoking, which include not only the risk of lung cancer, emphysema, and heart disease but the risk of becoming addicted as well...
...They weren't alone...
...They estimated that cost to be about 33 cents for each pack of cigarettes that is consumed-a figure that takes into account medical expenses, sick leave, higher life and fire insurance premiums, and other factors brought on by smoking-related illnesses...
...There is no question that this is the industry's worst nightmare," former Food and Drug Administration chief David Kessler told the Washington Post...
...It was early 1996, and the Mississippi lawyer was working on state lawsuits that stood to win an enormous settlement-more than $24o billionom the tobacco industry...
...They said RICO is not intended to apply to personal injuries...
...The essence of the alleged conspiracy was deception...
...For their part, the tobacco companies were caught completely offguard...
...To cite one example: In 1978, the government made 18,811 claims under the act...
...Congress itself wrote the warning labels," says a tobacco industry lawyer...
...Racketeering Act No...
...After all, the vice president is the man who used a long and lugubrious account of his sister's smoking-related death to pledge his eternal opposition to Big Tobacco...
...The decision stood for several years until Congress did in fact make a new law to cover situations like Etzel's...
...It's a question the Justice Department's lawsuit seems specifically designed to avoid...
...This is a product that is directly regulated by Congress...
...Why did Justice go where once it had :lared not...
...In 1935, Congress passed the Tobacco Inspection Act, which authorized the Secretary of Agriculture to designate government-supervised tobacco auction markets where tobacco growers could have their product inspected and graded...
...It seems harder still when one realizes the degree to which the government itself has been involved in the tobacco industry...
...But when people are asked to give their own estimates of the death rate, they guess that more than 5 ~ of every loo smokers will die from smoking-related illnesses...
...36 charges that at various times in 1975, the R.J...
...Not a problem, says the Justice Department...
...We both wrote letters, had personal meetings, and urged he federal government through the 1O I118 tillal ~hl ustice Department and others, to !ile a lawsuit on behalf of Medicare," Moore told the Senate...
...the tobacco brief asks...
...If that person requires medical treatment, the Secondary Payer Act requires that the private insurer pay its full obligation first-and only then will the unpaid portion be covered by Medicare...
...it has been widely reported that prosecutors are hoping for an out-of-court settlement, a gigantic payday that might cripple at least some of the tobacco companies...
...Instead of caving, as they did in the state lawsuits, the companies might choose to wait the government out--and hope for a change in the White House...
...Reading the Justice Department's lawsuit, one might assume that those revenues are dwarfed by the costs of treating smoking-related illnesses, but in fact the opposite appears to be the case...
...The department began issuing licenses to farmers to sell tobacco...
...Therefore, the tobacco companies should pay the Medicare bills...
...Perhaps when it's all over, that will be the final lesson of the Clinton administration's war on tobacco...
...Everybody knew a certain amount," says the senior department official, "but, to take addiction, not much was known about addiction for a long, long time...
...By all accounts, they have an immensely able leader in William Schultz, a long-time anti-tobacco activist who was brought to the Justice Department for the purpose of running the lawsuit...
...Then Gravelle and Zimmerman point out that federal, state, and local taxes on cigarettes average more than 5 ~ cents per pack...
...In the tobacco lawsuit, the Clinton administration proposes to use the Medical Care Recovery Act as its main weapon against Big Tobacco...
...While that investigation was going ,~SS 18 ~S8 9 on, the states won their spectacular settlement...
...Like Michael Moore, they knew this suit could be the Big O n e - i f the tobacco companies settled with the states for $24o billion, who knew how much a federal lawsuit might net...
...1." There are many, many more...
...One of the theories that they used was RICO...
...What had changed...
...Federal courts all across the country rejected it...
...After the state cases were settled, there were a number of claims that were brought by labor funds and insurance companies that were trying to recover for their increased health care costs," says Little...
...The tobacco companies perpetrated their fraud, the lawsuit charges, "to induce members of the public and governmental agencies to believe that cigarettes are not addictive and to believe that cigarettes are not dangerous to health...
...Ira President Bush were to stop the suit, the matter might go away entirely, or it might re-emerge in Congress, which has always been free to do whatever it wants on the tobacco issue...
...A victory by Al Gore this November would almost certainly mean a long legal battle with no letup from the Justice Department...
...While the statute doesn't say Medicare," the Justice Department official says, "it doesn't limit itself to anything in particular...
...It s simply not possible, says Phdlp Morris s Greg Little...
...In other words, that they give all their illgotten gains to the governmentwhich could mean virtually every dollar the tobacco companies have made since the executives got together at the Plaza Hotel in December 1953 . illllillllct, H C6-Cuslt!r|tor Beyond arguments over the specific meanings of the law, there is a surreal underpinning to the government's case...
...60 percent of those polled said yes...
...Contributions are tax-deductible to the extent allowed by law...
...Hoping to bring a wide-ranging indictment against the industry and its leaders, prosecutors explored a variety of legal theories...
...The government, they conclude, not only does not lose money from the nation's smoking habit...
...It's OPEC for tobacco, a government-organized cartel of tobacco farmers...
...No charges were brought...
...Yes, they concede, the government knew something about the health risks of smoking-it would be hard to disavow all those Surgeon General's reports...
...On what legal grounds was the administration launching an unprecedented action against an entire industry...
...They are evidence of an enterprise...
...It involved a man named John Etzel, who was an Army private stationed in California during World War II...
...Perhaps the companies had committed fraud by hiding the dangers of smoking...
...Making new laws is Congress's job, not the courts...
...What once applied only to injured soldiers would, under the administration's reading, apply to every person covered by Medicare...
...Given more than a half century's worth of media images of smokers hooked on cigarettes or having a hard time trying to quit, it defies common sense to assert that the public had no idea that smoking can be addictive...
...it makes a tidy profit on the side...
...That number has now fallen to four percent, a statistically insignificant figure...
...Nevertheless, the Justice Department wants Big Tobacco to pay, and pay dearly, for the way it has done business...
...As he stepped off the curb, he saw a Standard Oil Company tractor-trailer truck barreling toward him...
...At the end of the lawsuit, the government demands that the tobacco companies be forced to "disgorge all proceeds derived from any violation" of the RICO statute...
...This Enterprise and conspiracy still continues today," the lawsuit says...
...The government scenario begins in the early 195o's, when scientists began to publish research about the health hazards of smoking...
...The ad said that research linking smoking to lung cancer was "not regarded as conclusive...
...6 charges that on July 9,1963, the tobacco companies used the mail to send out a press release that said the tobacco industry did not encourage smoking among young people...
...They decided what they would say, where on the pack they would be placed, how big the type would be...
...The Justice Department maintains the message was insufficiently frank about the dangers of smoking-even though it specifically said that "by some definitions, including that of the Surgeon General in 1988, cigarette smoking would be classified as addictive...
...The absence of any reference to Medicare, the lawyers explain, actually means there is no reason the act couldn't apply to Medicare...
...Visa ~ Mastercard ~ American Express ~ Discover Amount $ Signature: Exp...
...Viewed from the other side, in 1977 only seven percent of those asked said that smoking was not harmful to their health...
...The first thing we would emphasize is the absurdity of the federal government suggesting that it has been misled about the health risks of smoking," says Greg Little...
...The Justice Department alleges that "A Frank Statement to Cigarette Smokers" was an act of mail fraud, because some copies of newspapers containing the ad were delivered to subscribers by the United States Mail...
...And that is the real problem with this lawsuit...
...That's the way it has worked over the years...
...The plain meaning of the law makes clear that it was targeted toward insurance companies...
...Early in the morning of February 7,1944, Etzel was in downtown Los Angeles, at the cotnor of Eighth and Figueroa, when he started to cross the street...
...Army lawyers who hoped the court would create a new precedent were disappointed...
...In an influential 1994 study, Jane Gravelle and Dennis Zimmerman, economists at the Congressional Research Service, traced the cost that smoking imposes on the society at large...
...The administration was very interested in a global settlement with Congress," says a senior department official familiar with the tobacco case who spoke to TAS on the condition that he not be named...
...But it all depends on one's assumptions...
...So he tried to join forces...
...In essence, the government grants the right to use so many acres for the production of leaf tobacco," says Peter VanDoren, editor of Regulation, an economic journal published by the Cato Institute...
...None were for Medicare costs...
...The American Spectator _9 Marc h 2 o o o 31 Indeed, an argument could be made that while the Justice Department attempts to criminalize the tobacco industry's understatement of smoking's health risks, the government itself is guilty of overstating those risks...
...But many of those documents had been publicly available for years, having been released by the boxful by Democrats in Congress who were investigating cigarette makers...
...The tobacco companies' brief points out that the original wording of the 1962 act did not mention Medicare at a l l - i t couldn't, because Medicare was not created until 1965 . And even after the act was amended in 1996 , it still said nothing about Medicare...
...they had thought they were in the clear when congressional settlement talks went bust...
...Name: Address: City: State: Zip: Enclosed is my check for $1,000 or more made out to: The American Spectator Educational Foundation, Inc...
...So why proceed...
...The Justice Department alleges that those patients became sick because of the tobacco companies' misconduct, and therefore the government should be allowed to collect...
...The list goes on until the final Racketeering Act, No...
...But she kept her plan a secret, so that President Clinton could officially unveil it in his State of the Union address on January 19,1999 . "Our children are targets of a massive media campaign to hook them on cigarettes," the president told a joint session of Congress...
...That figure is 72 percent today...
...But if one assumes at the beginning, as the Justice Department does, that the companies were involved in a massive fraud, even the most commonplace activities can be classified as part of a RICO enterprise...
...By mandating the placement of warning labels on cigarette packs, lawmakers gave tobacco the status of a government-controlled substance...
...For them to turn around and suggest that they have been unaware of those health risks doesn't have much credibility...
...But the tobacco companies "misled everybody" about what the department views as the critical issue here: that smoking is addictive...
...The law was passed to address a simple problem...
...But he knew his side would be even stronger if the federal governaaent were involved, suing the tobacco companies on behalf of ~nillions of Medicare patients...
...It was there, the Justice Department contends, that the tobacco conspiracy was born...
...Walking into a conference :oom on the first floor of Justice Department headquarters in Wash- it 1118 r S l ~ !10 ngton, Attorney General Janet Reno announced that the government had X~| [iled a massive civil lawsuit against I I U u ~ the tobacco industry to recover money on behalf of...Medicare patients...
...116, which alleges that the Brown & Williamson company committed wire fraud in 1999 when it posted a message on its Website about the addictiveness of cigarettes...
...The theory is that the tobacco companies have a combination of insurance and self-insurance"-and should be responsible for the bills...
...What the suit does not mention is that, as a result of the state lawsuits, the tobacco companies entered into enforceable agreements with all fifty states to stop the very activities-things like advertising to teens and minimizing the dangers of smoking-that are at the heart of the government's case...
...Recently the judge in the case--a Clinton appointee who is thought to be sympathetic to the government's position--estimated that if all goes well, a trial might begin in January 2oo 3. Of course, that might not be what the Justice Department wants...
...If they couldn't find that the companies broke any laws, how can they claim that there was an illegal conspiracy...
...The decisions made by these chief executives at the Plaza Hotel meeting have shaped the actions of the cigarette companies...

Vol. 33 • March 2000 • No. 2


 
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