2014-05-03 P-D: “Judge rules Missouri should receive millions more in tobacco funds”

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Kay Young was good enough to draw this to my attention. It was published in today’s St. Louis Post-Dispatch on page A2 below the fold. After reading it I exchanged the following e-mails with Kay:

“Once again, it’s all about money, not about devoting any of the settlement funds to fighting the high smoking rate in Missouri.

“I know and I don’t think it will ever change. Sad, isn’t it?

Judge rules Missouri should receive millions more in tobacco funds
By Robert Patrick rpatrick@post-dispatch.com 314-621-51548

ST. LOUIS • A St. Louis judge ruled on Friday that because of arbitration errors, Missouri should receive up to $50 million that had been withheld from tobacco settlement funds.
         St. Louis Circuit Court Judge Jimmie Edwards ruled that the arbitrator’s method of allocating funds from the settlement was “clearly erroneous” as it violated a 1998 master settlement agreement between the major tobacco companies and 46 states.
         Last fall, an arbitration panel ruled that Missouri should lose $70 million of the $130 million that the state had expected to receive from the settlement this year. State officials were planning to use the money for Medicaid, early childhood education and other services.
         Edwards’ ruling would mean nearly $50 million of that money would be returned, Missouri Attorney General Chris Koster’s office said Friday.
         Koster’s office sent a copy of Edwards’ ruling to the auditor that calculates and doles out the payments, “along with a letter demanding that Missouri’s payment be revised to comply with the court’s ruling,” according to a news release.
         The disputed money is at risk in the first place because of Missouri’s failure to be “diligent” in ensuring an even playing field between the major tobacco companies that signed the settlement and smaller companies that did not.
         Because of that failure, “value brand” cigarettes such as Edgefield or Decade are about 60 cents per pack cheaper than other low-price brands belonging to the major tobacco companies.
         The three judges on the arbitration panel ruled that the shares of Missouri and five other states should be reduced twice, first because of their failure to act and second, to reflect the shares of 22 states that had settled.
         But Koster’s office disagreed, and filed suit, claiming that reallocating the shares of the states that settled to the states that didn’t settle violated the terms of the master settlement.
         Edwards ruled that all states must authorize any amendment of the agreement.
         Koster’s office was less successful in arguing that the panel engaged in misconduct by relying on “ex parte” evidence heard in other arbitrations outside the presence of Missouri officials or lawyers, saying that lawyers failed to show that the panel was “unduly influenced” by any of that evidence. Edwards also rejected Missouri’s attempt to compel arbitration on a state-by-state basis, rather than in a nationwide arbitration.
         Lawyers contacted by the Post-Dispatch expected an appeal.
         Brian May, a spokesman for Philip Morris USA owner Altria, said, “We are reviewing the court’s decision and considering our options,” both with regard to the St. Louis ruling and a similar ruling last month in Pennsylvania. That ruling could return $120 million to that state.
         Missouri officials said earlier this year that the state could lose as much as $2 billion over the next decade because of the arbitrator’s ruling.
         Legislation is pending that would eliminate the cigarette pricing disparities, although that bill has been sought unsuccessfully by the attorney general’s office for the last 12 years and the prospects this year appear no better.

Virginia Young of the Post-Dispatch contributed to this report.

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