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After a multi-billion dollar settlement with the state of Texas, tobacco companies face Minnesota's lawsuit, which was the first of the suits seeking to recover states' Medicare costs in treating smoking-related illnesses. Minnesota claims tobacco companies deliberately misled consumers. Minnesota seeks an undisclosed sum. Fred De Sam Lazaro spoke with representatives of state and the tobacco companies.

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FRED DE SAM LAZARO: Minnesota, under Attorney General Hubert Humphrey, III, was among the earliest of all states to bring a lawsuit to recover billions of Medicaid dollars for treating smoking-related illnesses. Humphrey charged tobacco companies targeted teenagers in marketing cigarettes. Also, he said, they deliberately withheld data about the health consequence of smoking, violations of state anti-trust, and consumer laws.

HUBERT H. HUMPHREY, III, Minnesota Attorney General: These companies promised the public that they would provide a wide range of information on the health issue. They took out full page ads in the local papers and nationally. They, in fact, kept that information from the public, withheld it so that the public didn't have full knowledge of the information, and when they were making decisions as to whether to smoke or not. That's a violation of our consumer fraud laws. You can't promise something and not deliver it in Minnesota. We believe there are damages that flow from that, injuries that flow from that.

FRED DE SAM LAZARO: As part of his legal strategy, Humphrey said he can't disclose how much he's seeking in damages. One fourth of the award will go to the prominent Minneapolis law firm Robins, Kaplan, Miller, and Ciresi, which has done much of the exhaustive leg work in the case, and Minnesota is the only state to have a private co-plaintiff in its case. Blue Cross-Blue Shield of Minnesota, a major health insurer, became a partner to recover smoking-related bills it claims to have paid. CEO Andrew Czajkowski spoke to this luncheon gathering last summer.

ANDREW CZAJKOWSKI, CEO, Blue Cross-Blue Shield: The Minnesota Department of Health has estimated that the cost of tobacco use in Minnesota, just the health care costs alone, were $1/2 billion last year. Since we purchase health coverage for about 1.6 million Minnesotans, we felt that this added cost was something that we needed to address.

FRED DE SAM LAZARO: But tobacco companies say the plaintiffs cannot claim they were deceived on the risk of smoking.

GREGORY LITTLE, Philip Morris: The state of Minnesota has been at the very forefront of this area, and the state of Minnesota, with full knowledge of the health risks involved in smoking, has licensed the sale of cigarettes, has taxed the sale of cigarettes, in some instances has even sold cigarettes with full knowledge of the health risks involved in smoking. To now turn around and pretend that the state was unaware of those health risks really is the height of hypocrisy.

FRED DE SAM LAZARO: And Gregory Little, an attorney with Philip Morris, says the theory behind the lawsuit is fundamentally flawed.

GREGORY LITTLE; Well, individual responsibility, freedom of choice, are at the very center of this case. Everyone knows that individuals choose to smoke with awareness of the health risks involved. And everyone knows that people are generally willing to accept responsibility for that. Mr. Humphrey is aware of that fact also. So, Mr. Humphrey is trying to try this case without any individuals. Mr. Humphrey is trying to bring a consumer protection claim that leaves out the consumer. We don't believe that a jury will accept that.

FRED DE SAM LAZARO: So far, no jury has been asked to consider such a lawsuit because the tobacco industry has settled three previous state cases just before they went to trial. In July, Mississippi settled for $3.4 billion. Florida was next with an $11.3 billion settlement, and today Texas' settlement was for more than $15 billion. Those settlements come on the heels of a proposed national settlement with 39 states announced in June by Mississippi Attorney General Michael Moore.

MICHAEL MOORE, Mississippi Attorney General: We are here today to announce what we think is, we know, we believe is the most historic public health achievement in history.

FRED DE SAM LAZARO: The proposed settlement, which requires congressional approval, would cost the industry $386 billion over 25 years for anti-smoking campaigns. In exchange, cigarette makers' liability would be capped at $5 billion a year, and class action suits would be banned. It would also allow the Food & Drug Administration to regulate nicotine but not eliminate it for 12 years. Both the President and Congress must still approve any final national settlement. Initially, Minnesota Attorney General Humphrey refused to participate in the national settlement. In news conferences and TV appearances like this have vowed to press on with the lawsuit.

HUBERT H. HUMPHREY III: From what I see, the stock prices have continued to soar, and I suspect even after this settlement they're going to continue to soar. Something's wrong with that picture when there seems to be a windfall for the companies that have been violating the law.

FRED DE SAM LAZARO: Humphrey's decision to pursue the lawsuit unraveled what had been bipartisan support for his efforts. State Republican Chairman Bill Cooper charged that Humphrey, who's a Democratic candidate for governor in ‘98, simply wants to stay in the spotlight.

BILL COOPER, Chairman, Minnesota Republican Party: This lawsuit is being pursued to enhance a political career. It is not in the best interest of Minnesota overall.

FRED DE SAM LAZARO: Critics also accused Humphrey of having a cozy relationship with the Robins law firm. Governor Arne Carlson, a Republican not seeking re-election, said lawyers' fees could amount to hundreds of millions of dollars.

GOV. ARNE CARLSON, (R) Minnesota: What I'm very concerned about is to make sure that we maximize the return to the people of Minnesota. It's going to be a multi-billion dollar settlement. Let's not kid ourselves. It's going to be a lot of money. And it'll be paid out over twenty, to twenty-five, to thirty years. So it will come, if you will, in nice driblets throughout. But how much of that is going to be siphoned off to lawyers?

FRED DE SAM LAZARO: For his part Humphrey says the damages he's seeking and, thus, the lawyer's fees, must be confidential, but he insists Minnesota taxpayers won't pay a dime, and he bristles at suggestions of a cozy relationship with the trial law firm.

HUBERT H. HUMPHREY III: I find it rather interesting that this is the same governor that had his recent trip to Australia paid by "the" largest tobacco law firm--tobacco firm, Philip Morris. I find that a very cozy relationship. The people of Minnesota are not going to pay, if I have anything to do about it. Either there's not going to be a legal fee paid because we don't win the case, or we are going to apply to the court and ask that the tobacco industry pay fees, as is our right under the statute, for their violation of state laws.

FRED DE SAM LAZARO: Documents are also a key part of the Minnesota case. Yesterday, Congressman Henry Waxman released R. J. Reynolds' internal documents that he said showed a long-time plan to attract teenagers to smoke. Humphrey says Minnesota is aiming to reveal far more internal documents in its case. Minnesota has gathered more of them than any other state/ Some 33 million pages have been stored in this Minneapolis building as the court decides whether they should be protected by attorney-client privilege. Humphrey says they'll show a history of illegal behavior.

HUBERT H. HUMPHREY III: Only now are beginning to see some of that story told, and the very tip of what we've seen so far is very telling. Wait until you see the rest of the story. I want to tell you, these are not just smoking guns; these are smoking Howitzers.

GREGORY LITTLE: Well, Mr. Humphrey's reference to the documents is really just an example of sound bite litigation. One of the benefits of trial is that you have an opportunity to put documents into the proper context. I think it is important to talk about what a lawsuit is about. This is not a popularity contest. This is not a referendum on the tobacco industry. Certainly, tobacco is a controversial product, and there are societal issues involved with tobacco. But that is the role of the legislature. Mr. Humphrey in many ways is showing nothing but contempt for the legislative process. He is trying to legislate through the courts.

FRED DE SAM LAZARO: The court date has been set for next Tuesday in St. Paul. In a statement released today Attorney General Humphrey said he does not intend to compromise, but he did not rule out the possibility of a settlement like the one reached in other states.

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