Pa. joins 30 states in rejecting '98 tobacco master settlement

By Jon Campisi | Apr 18, 2013

Pennsylvania Attorney General Kathleen Kane said this week that the

commonwealth has opted to decline the tobacco industry’s settlement arising out of the 1998 lawsuit, with the Keystone State instead vowing to continue litigation.

Kane was quoted as saying that she arrived at her decision because the settlement offer was based on financial estimates provided by the cigarette industry that either lacked solid evidence or could not be verified, and could have cost state residents hundreds of millions of dollars during the course of the next few years.

“Our job is to diligently protect the citizens of Pennsylvania,” Kane said in a statement released by her office. “I could not agree to a settlement that contained unclear terms and financial projections.

“After a thorough review of the proposal and after speaking with Attorneys General across the country, I decided that at this time, based upon a lack of concise information, the settlement was not in the best interest of the Commonwealth.”

In a news release from the Attorney General’s Office, Kane said that the terms proposed by the tobacco settlement “called for the imposition of a tax that the Office of Attorney General had no authority to impose, and terms that benefitted tobacco manufacturers and not Pennsylvanians.”

“On the surface, this deal may appear attractive,” Kane said. “Long term, it may have cost Pennsylvanians hundreds of millions of dollars, and if we did not comply with some rather burdensome terms and conditions, those losses would have been increased dramatically.”

Thirty other states have decided to go the same route as Pennsylvania.

Fifty states and one territory back in 1998 joined the Master Settlement Agreement to resolve claims that the country’s major tobacco companies had caused serious financial harm to the country through cigarette sales.

The actual settlement amount was valued at $206 billion over 25 years, with Pennsylvania’s share of the money being more than $300 million.

For years now, there has been a dispute about whether the tobacco companies are entitled to a reduction in their payments, according to the Attorney General’s Office, with the dispute concerning whether Pennsylvania and other states were collecting enough payments from the non-participating cigarette manufacturers.

Pennsylvania’s share of the disputed amount averages about $50 million per year, with a major variance from year to year, Kane stated.

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