| PHILADELPHIA, April 10
PHILADELPHIA, April 10 A Philadelphia judge on
Thursday set aside most of an arbitration ruling that could have
cost the state of Pennsylvania some $180 million from a landmark
1998 settlement with the nation's tobacco companies.
The decision restores $120 million of the $180 million in
payments from tobacco companies that Pennsylvania was set to
lose when a September 2013 arbitration found that it and five
other states failed to enforce part of an agreement that was
part of the settlement.
Under that agreement, states were required to pass laws to
stop companies that had declined to settle from gaining an
economic advantage over their competitors.
In a statement hailing the decision by Pennsylvania Court of
Common Pleas Judge Patricia McInerney, Pennsylvania Attorney
General Kathleen Kane said the ruling showed "what can happen
when government works together for the people".
"While we were not able to win the entire amount," Kane
said, "we are excited for this victory and what it means for the
future of important smoking cessation, medical research and
health programs that depend on this money."
A spokesman for the tobacco companies could not immediately
be reached for comment on Thursday evening.
Under the 1998 settlement, the nation's four largest
tobacco companies promised to pay nearly $200 billion over 25
years to 46 states to settle lawsuits that claimed
cigarette-related public health costs.
The major tobacco companies worried that they would have to
raise prices on their brands in order to fund the settlement. So
the 1998 agreement required states to pass laws that prevented
cigarette companies that did not sign the agreement from gaining
an unfair economic advantage.
In 2004, after losing market share for previous years, the
tobacco companies notified the states' attorneys general that
they planned to sue. By 2010, the tobacco companies entered
arbitration with all but 15 states, saying they failed to
enforce their tobacco laws.
Twenty states settled with the tobacco companies in 2013
rather than risk an arbitration award. Those states received
lump sum payments from tobacco companies.
In addition to Pennsylvania, the other states named in the
arbitration ruling are Indiana, Kentucky, Missouri, New Mexico,
and Maryland. In a report on the arbitration award last year,
the National Association of State Budget Officers said that the
six states stood to lose a combined $500 million.
The Pennsylvania case could have national ramifications
because the arbitration only dealt with 2003. Payments for 2004
to 2012 are still in dispute.
Pennsylvania's lawyers worried that if tobacco companies seek
to claw back payments for later years, it could cost the state
billions and lead to litigation for other years and involve
(Editing by Dan Whitcomb; Editing by Ken Wills)