Maryland's attorney general yesterday sued lawyer and Orioles owner Peter G. Angelos over how he should be paid for handling the state's case against cigarette makers, asking the court to order him to seek his money from a fund set up by the tobacco industry.
Most, if not all, of the other attorneys for states in the national lawsuit have gone to the tobacco industry to recoup their fees, state officials said. Angelos has refused, and until the issue is resolved, the state cannot know how much of its $4.2 billion share of the national settlement will be available for state programs.
Maryland is scheduled to receive its first installment from the settlement Tuesday. The legal dispute--Angelos could be owed as much as $1 billion--comes as Gov. Parris N. Glendening (D) attempts to draw up his proposed budget for the coming year and present it to the General Assembly on Jan. 19.
With the dispute escalating, Angelos himself yesterday filed a lien on a portion of Tuesday's payment of $54 million and, in an interview, accused the state of "welshing" on its fee to him.
The governor has earmarked $1 billion of the settlement for cancer research and anti-smoking programs during the next decade. Not knowing how much the state will have to pay Angelos "creates a level of uncertainty as we attempt to fight cancer," Budget Secretary Fred Puddester said.
Glendening spokesman Michael Morrill said that Angelos met with Glendening two weeks ago about his fee and that the governor told him that he must negotiate with Attorney General J. Joseph Curran. Morrill said Glendening supports Curran's efforts to have Angelos's fees paid from the national arbitration fund.
Angelos said state officials were being "disingenuous" about the dispute over the tobacco money threatening the budget. He noted that the state has a budget surplus and reserve exceeding $700 million.
"We have no obligation to go to the arbitration panel. We have a bona fide contract with the state of Maryland," Angelos said. "We're not going to be shunted off to the tobacco boys to be paid."
Angelos, one of the nation's most prominent plaintiff's attorneys and a major contributor to the state and national Democratic Party, won a contract in 1996 to represent Maryland in its lawsuit to recoup money from cigarette makers for Medicaid payments for smoking-related illnesses. His contract called for a fee of 25 percent of whatever was recovered, which would amount to $1 billion of Maryland's approximately $4 billion share of the national settlement.
But before the settlement was reached, the legislature voted to cut the fee to 12.5 percent as part of a deal to change state law to make Angelos's case against the cigarette makers stronger.
The case never went to trial and Angelos has been embroiled in fee negotiations since the national settlement in November 1998.
The lawsuit said that Angelos has refused to seek any compensation from a national arbitration panel established as part of the settlement to pay legal fees. Tobacco companies have set aside a separate pool of money for the legal fees that would not affect the awards the states have received.
Lawyers representing Mississippi, Florida, Minnesota and Texas--the states that sued and settled with the tobacco industry before the nationwide settlement--received hundreds of millions of dollars in fees. A Florida judge, however, refused to approve a 25 percent fee that would have amounted to a $2.8 billion payment, saying such a fee "shocks the conscience of the court."
The lawyers' payments approved by the arbitration panel have been much smaller. Attorneys in Pennsylvania received $50 million--less than 1 percent of the state's $11.3 billion share of the settlement.
"Some people haven't been pleased with the results. But no one to my knowledge has refused to go to the national arbitration panel," said James E. Tierney, the former attorney general of Maine who has been a consultant to the states in the tobacco litigation. "Basically, Angelos is out there by himself with this."
Angelos said he has about $7 million in expenses from the case, not including office overhead salaries for lawyers and support staff.
In its lawsuit, the state maintains that Angelos likely would receive a "substantial fee" from the arbitration panel because Maryland was the eighth state to file against the tobacco industry at a time when the success of such litigation was questionable and because the state's case was scheduled for trial only five months after the national settlement was reached.
"The Attorney General would strongly support a generous fee award to [Angelos]," the lawsuit said. The state doesn't dispute that Angelos "performed well in preparing Maryland's case for trial and devoted considerable effort to that preparation."
In the interview, Angelos said that the state should pay him and seek reimbursement from the arbitration panel and that he'd represent the state in those negotiations--free.