Maine prevails in nearly $50M case with Cigarette Manufacturers

September 12, 2013

(AUGUSTA, Maine) An arbitration panel of three retired federal judges has rejected an effort by tobacco companies to reclaim nearly $50 million owed to the State of Maine under the terms of the 1998 Tobacco Master Settlement Agreement. Maine Attorney General Janet T. Mills applauded the decision, which was handed down on Wednesday.

Maine was one of nine states found to have been in compliance with a key provision of the settlement, while six others were deemed to have failed to comply with the provision. The result of the decision is that Maine will be eligible for the full payment of settlement funds for 2003 ? retaining the $44 million already paid to the state and receiving an additional estimated $5 million that the companies withheld pending this decision.

?This is a big win for the people of the State of Maine who continue to pay the price due to the deceptive practices of the tobacco companies,? said Attorney General Janet T. Mills. ?Every year in Maine thousands of adults will die from tobacco use and thousands more ? including kids ? will get sick from tobacco-related illnesses. It is unconscionable that cigarette manufacturers are still trying to slip out of their obligations under the Master Settlement Agreement. I am hopeful that this decision will show that these corporations cannot escape liability for the deadly products they sell. They should cease to withhold these payments owed to the people of Maine.?

Under the terms of the 1998 Tobacco Master Settlement Agreement, Maine and 47 other states became eligible for perpetual annual cash payments from tobacco companies in exchange for the states dropping lawsuits seeking to recover ongoing costs the states incurred in treating tobacco-related illnesses. Beginning in 2003, however, tobacco companies began withholding portions of payments to states like Maine, asserting that they were not diligently enforcing laws against tobacco companies that did not join the settlement and therefore were not eligible for the full payments.

The Maine Attorney General?s Office is responsible for enforcing tobacco laws and the terms of the agreement in Maine. The decision means that Maine will keep the approximately $44 million already paid to the state, and will also receive an additional $5 million in tobacco settlement funds that had been withheld for 2003. The cigarette manufacturers are also challenging diligence in ensuing years and are withholding a portion of these settlement payments as well. Hearings on diligence for these years have yet to be held.

Attorney General Mills expressed special appreciation to Assistant Attorneys General Vivian Mikhail and Chris Taub who presented the state's case to the 3-member Arbitration Board over a period of 3 days. ?They were up against some the nation's highest paid trial lawyers who put up an exhausting battle on behalf of big tobacco. But we won!?

In Maine, tobacco settlement funds are deposited in the ?Fund for A Healthy Maine? and have been largely used for healthcare and disease prevention related efforts like the Healthy Maine Partnerships, school-based health centers and for offsetting Medicaid costs due to tobacco use. According to the Maine Office of Fiscal and Program Review, the state of Maine has collected nearly $700 million in Master Settlement Funds since 2000.


Supporting documents

NPM Diligent Enforcement Decision 2013-09-11