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Missouri State Supreme Court to hear arguments in tobacco settlement case

September 05, 2000
By: Kate Miller
State Capital Bureau

JEFFERSON CITY - The Missouri State Supreme Court will hear arguments tomorrow in a case that has blocked Missouri from getting its estimated $6.7 billion share of the national tobacco settlement.

At issue is the state's efforts to drop its lawsuit against the tobacco industry. The national settlement requires a state to drop any pending lawsuits against the tobacco industry before the state can get any of the settlement money.

But several outside parties, including several medical facilities, claim they have an interest in the state's lawsuit and have asked the courts to block the state from dropping its suit.

In March 1999, a St. Louis circuit court ruled the state could drop its tobacco lawsuit -- a decision subsequently upheld by the appeals court and now on appeal to the state's highest court.

Appealing to the Supreme Court are a Roman Catholic organization operating long-term care facilities; St. Louis City on behalf of its hospital; and private parties representing Missouri taxpayers and tobacco consumers.

In an ironic twist, the state and major tobacco companies are on the same side in this case, both arguing to keep outside interests out of the state's case.

If the state is prevented from dropping its case, the issue returns to the circuit court level where the parties must start from scratch. This could put all of the anticipated $6.7 billion in jeopardy because of the deadline imposed by the national settlement.

"If we do not achieve final resolution of the Missouri case by December 31, 2001, then the whole deal is off the board and Missouri would officially be out of this tobacco settlement," said Scott Holste, spokesman for the Attorney General's office.

Meanwhile, money has already begun to flow into an escrow account set up under the national settlement to hold money due Missouri.

So far, that account holds $190 million with another payment due in January that could reach as high as $250 based on earlier estimates by legislative staff.

The money is part of the $206 billion settlement by the major U.S. tobacco companies in a class action suit brought by states seeking reimbursement for the cost of treating smoking related illnesses.

The Missouri legislature has not approved a spending plan for the anticipated windfall, but there has been much debate.

Some lawmakers argue the settlement money is covered by the state's Hancock revenue lid and, thus, could trigger tax refunds for Missouri taxpayers.

A bill that would have sent the issue to voters was stymied in May over arguments about abortion, whether Planned Parenthood could get any of the money and whether the ballot issue should include an alternative to put the money under the Hancock lid.