MONTGOMERY, Ala. (Legal Newsline) -- Major cigarette makers -- including Philip Morris and R.J. Reynolds -- on Tuesday reached an settlement with 17 states about payments they must make under a 1998 agreement.
The 17 states will receive their share of $4 billion in disputed payments and the manufacturers will receive credits against future payments. The payments come from the 1998 agreement that forces the companies to help cover the medical expenses of smokers.
The 10-year dispute over payments from the 1998 Master Settlement Agreement (MSA) will ensure the stability of continued payments in the future, one attorney general said.
Forty-six states participated in the 1998 agreement. The tobacco companies have said the amount of payments they owe after losing market share to companies did not agree to the 1998 settlement.
The states in the latest settlement are Alabama, Arizona, Arkansas, California, Georgia, Kansas, Louisiana, Michigan, Nebraska, Nevada, New Hampshire, New Jersey, North Carolina, Tennessee, Virginia, West Virginia and Wyoming as well as Puerto Rico and the District of Columbia.
"This settlement is important for Alabama and essential to the future of our public health funding from the Alabama 21st Century Fund," said Luther Strange, Alabama's AG. "The Legislature has utilized the state's MSA funds by funding incentives for economic development and supporting health care programs for children and seniors. Our office is focused on maintaining the integrity of that fund.
"Under the terms of the settlement, we avoid the significant uncertainty of costly litigation and the potential loss of one or more entire annual MSA payments."
In 1998, the major tobacco companies agreed to pay states more than $200 billion over 25 years to settle lawsuits over the health care costs related to smoking.
For example, since 2003, Strange said Alabama has received nearly $1 billion from the MSA. For each of those years, $14 million in payments would be at risk by continued arbitration.