The government announced yesterday that it will further scale back its demands for penalties on the tobacco industry in a landmark civil racketeering case, saying it is no longer seeking to help 45 million American smokers quit their habit.
In the surprising final day of an eight-month trial, the Justice Department's lead attorney said the government now wants tobacco companies to pay only for smoking cessation programs for an unspecified number of future smokers who may become addicted to cigarettes in the first year after the trial concludes.
Justice Department officials refused to say how many people that may be, but the Department of Health and Human Services estimates that each year about 1.3 million people become daily smokers.
On Tuesday, the government stunned anti-smoking activists and some industry lawyers by requesting that tobacco companies pay $10 billion for a smoking cessation program, rather than the $130 billion a government expert had testified was necessary to aid all current smokers. Yesterday, Associate Attorney General Robert D. McCallum Jr. said the government's last-minute penalty reduction came after it concluded it could seek funds to cover cessation programs only for people who become addicted to tobacco in the near future.
Anti-smoking activists and industry lawyers ridiculed the government's description of its new cessation proposal. They said Justice officials seemed unable to answer basic questions about how many people it would cover, how the government would verify which smokers became addicted in the first year and who would be barred from getting help.
"In 48 hours we've heard three different plans from the government about its proposed cessation program," said Philip Morris attorney Ted Wells. "And it's almost comical to listen to the government try to explain it."
William V. Corr, executive director of the Campaign for Tobacco-Free Kids, said the last-minute changes suggest political interference by the Bush administration to soften the blow for the tobacco companies.
"It appears senior Justice officials decided on an amount of money and are now trying to justify that amount by describing a cessation program that doesn't make sense and won't work," Corr said. "They are changing the cessation program to protect the financial interests of the industry rather than 45 million addicted adults."
During six years of litigation, the government has argued that the six largest American tobacco companies conspired for 50 years to conceal the dangers and addictiveness of smoking from the public and lied about efforts to lure young people to tobacco use. When the trial opened in September, it was the largest civil racketeering case in U.S. history.
But in February, an appeals court ruled that the government could not legally force the tobacco industry to pay $280 billion for allegedly ill-gotten past profits from tobacco sales, leaving the cessation program as the most expensive penalty facing the industry.
McCallum said in an interview yesterday that the government is trying to comply with the February appellate court ruling. He said the government now believes, based on the ruling, that it can demand money only for remedies that prevent future wrongdoing by the industry and can seek money only for people who become addicted in the future.
Reps. Henry A. Waxman (D-Calif.) and Martin T. Meehan (D-Mass.), who asked the Justice Department's inspector general on Wednesday to investigate possible political interference in the case, asked yesterday that he expand that investigation to include the government's request that two witnesses alter their testimony, as reported in The Washington Post yesterday. They also asked Inspector General Glenn A. Fine to look into the changes announced by the government yesterday.
McCallum said he was not backing away from government expert Michael Fiore's estimate that it would cost $130 billion over 25 years to help 45 million Americans quit smoking.
"We do think Dr. Fiore's estimates are accurate. We disagree with the Court of Appeals," McCallum said. "We definitely care about helping American smokers quit . . . but the judges ruled against us."
McCallum said current smokers could apply for cessation benefits, but there would clearly be limits on how many.
Several legal experts said the government's new theory is too generous to the industry, because it concedes legal points that might be successfully argued. Some sources involved in the case think the government is trying to settle it by proposing lower penalties that it hopes the tobacco industry might accept. Government spokesmen have declined to comment on whether it is trying to settle the case.
U.S. District Judge Gladys Kessler, who will decide the case and whether to order penalties against the tobacco industry, has the power to reject government sanction recommendations and select measures she considers appropriate. The two sides could settle anytime before Kessler issues a ruling.
Dan Webb, lead tobacco attorney in the case, complained to Kessler that the government is recommending changes in penalties for the industry "too late in the game."
"The government keeps changing its remedies on a day-to-day basis," Webb said. "It's a moving target."
The defendants in the case are Philip Morris, R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp., Loews Corp.'s Lorillard Tobacco Co., British American Tobacco and Vector Group Ltd.'s Liggett Group.