Judge Dismisses Two Lawsuits Against Tobacco Industry September 29, 2000
News Summary
The U.S. government suffered a setback in its attempts to recover billion of dollars from cigarette manufacturers when a federal judge dismissed two of the claims in its federal lawsuit, the Associated Press reported Sept. 28.U.S. District Judge Gladys Kessler ruled that the government could not use the Medical Care Recovery Act (MCRA) or the Federal Employees Health Benefits Act (FEHBA) to recover Medicare expenses related to ill smokers. She said the government should have acted sooner if it wanted to recover expenses dating back to the 1950s.
"Congress' total inaction for over three decades precludes an interpretation of MCRA that would permit the government to recover Medicare and FEHBA expenses," Kessler ruled. "Accordingly the government's MCRA claim must be dismissed."
Kessler, however, allowed the government to pursue federal racketeering claims against the tobacco industry. As such, the government can continue in its attempt to prove that cigarette makers misled the public about the dangers of smoking and should be forced to surrender the profits from past years resulting from "unlawful activity."
The U.S. government filed the lawsuit against the major tobacco companies last year. The suit seeks to recover $20 billion a year spent by Medicare and other federal health plans to treat smoking-related illnesses. The government claimed it was entitled to seek payments as far back as 1954, when the Justice Department accused cigarette makers of starting to conspire to mislead the public about the dangers of smoking.
The Clinton administration tried to put a positive spin on the ruling. "We believe that moving forward on the basis of racketeering on mail fraud and racketeering on wire fraud is an important victory for the Justice Department and the American people," said White House spokesman Joe Lockhart.
Even though Kessler dismissed two of the four claims in the government's lawsuit, Lockhart said the case is still strong. "We think the most egregious abuses of the tobacco companies can and will be addressed in the context of this court case. We think it is a victory she has refused to dismiss these racketeering counts," Lockhart said.
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