Dismissal of Group Health Plan Lawsuit by Federal Court Continues Trend, says R.J. Reynolds Tobacco Company

Feb 01, 2002, 00:00 ET from R.J. Reynolds Tobacco Comapny.

    WINSTON-SALEM, N.C., Feb. 1 /PRNewswire-FirstCall/ -- In a continuing
 trend, another third-party-payer lawsuit against the tobacco industry has been
 dismissed by a federal district court judge.
     In dismissing the suit filed by Group Health Plan, Inc. and
 HealthPartners, Inc., two Minnesota health-maintenance organizations (HMOs),
 Judge Paul A. Magnuson, of the U.S. District Court for the District of
 Minnesota, noted that the plaintiffs had failed to show that there was any
 cause-and-effect link between the tobacco industry's conduct and the damages
 claimed by the HMOs.
     In particular, the court noted that testimony by Dr. Jeffrey Harris, the
 plaintiffs' expert witness, was "speculative, inconsistent, and therefore
 unreliable."
     The Jan. 31 dismissal of the suit is consistent with a growing number of
 federal and state court decisions dismissing third-party payer claims against
 the tobacco industry.  These claims seek to recover money allegedly spent by
 union health-and-welfare funds, HMOs, hospitals and others to treat
 smoking-related diseases among patients or members.
     "The courts continue to find that third-party payers have no legitimate
 claims against the tobacco industry," said Daniel W. Donahue, senior vice
 president and deputy general counsel for R.J. Reynolds Tobacco Company.
     "Most courts have rejected these types of health-care cost-recovery
 claims, holding that plaintiffs lack standing to sue because claims by
 third-party payers are too remote from any alleged injuries," Donahue said.
     Donahue noted that every federal appellate court that has addressed this
 issue (the 2nd, 3rd, 5th, 7th, 8th, 9th, 11th and D.C. circuits) has confirmed
 that these types of cases are not legally appropriate.
     Donahue said that one exception in this trend is the Empire Blue Cross
 Blue Shield case, which was tried last year in a court in Brooklyn, N.Y.  On
 June 4, 2001, the jury in that case returned a verdict in favor of the tobacco
 defendants on Racketeer Influenced and Corrupt Organizations (RICO) Act and
 common-law fraud claims.  However, the jury ruled against the tobacco
 defendants on N.Y. Deceptive Business Practices Act claims.
     That verdict is currently on appeal to the Second Circuit Court of Appeals
 and, Donahue said, "In light of the fact that there was no evidence of
 causation or reliance in that case, we believe the Second Circuit Court of
 Appeals will abide by its own precedent and will ultimately dismiss the Blue
 Cross Blue Shield case."
 
     R.J. Reynolds Tobacco Company (RJRT) is a wholly owned subsidiary of R.J.
 Reynolds Tobacco Holdings, Inc. (NYSE:    RJR).  R.J. Reynolds Tobacco Company
 is the second-largest tobacco company in the United States, manufacturing
 about one of every four cigarettes sold in the United States.  Reynolds
 Tobacco's product line includes four of the nation's 10 best-selling cigarette
 brands:  Camel, Winston, Salem and Doral.  Reynolds Tobacco has been
 recognized by FORTUNE Magazine as one of the "100 Best Companies to Work For."
 For more information about RJRT, visit the company's web site at www.rjrt.com.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X76016373
 
 

SOURCE R.J. Reynolds Tobacco Comapny.
    WINSTON-SALEM, N.C., Feb. 1 /PRNewswire-FirstCall/ -- In a continuing
 trend, another third-party-payer lawsuit against the tobacco industry has been
 dismissed by a federal district court judge.
     In dismissing the suit filed by Group Health Plan, Inc. and
 HealthPartners, Inc., two Minnesota health-maintenance organizations (HMOs),
 Judge Paul A. Magnuson, of the U.S. District Court for the District of
 Minnesota, noted that the plaintiffs had failed to show that there was any
 cause-and-effect link between the tobacco industry's conduct and the damages
 claimed by the HMOs.
     In particular, the court noted that testimony by Dr. Jeffrey Harris, the
 plaintiffs' expert witness, was "speculative, inconsistent, and therefore
 unreliable."
     The Jan. 31 dismissal of the suit is consistent with a growing number of
 federal and state court decisions dismissing third-party payer claims against
 the tobacco industry.  These claims seek to recover money allegedly spent by
 union health-and-welfare funds, HMOs, hospitals and others to treat
 smoking-related diseases among patients or members.
     "The courts continue to find that third-party payers have no legitimate
 claims against the tobacco industry," said Daniel W. Donahue, senior vice
 president and deputy general counsel for R.J. Reynolds Tobacco Company.
     "Most courts have rejected these types of health-care cost-recovery
 claims, holding that plaintiffs lack standing to sue because claims by
 third-party payers are too remote from any alleged injuries," Donahue said.
     Donahue noted that every federal appellate court that has addressed this
 issue (the 2nd, 3rd, 5th, 7th, 8th, 9th, 11th and D.C. circuits) has confirmed
 that these types of cases are not legally appropriate.
     Donahue said that one exception in this trend is the Empire Blue Cross
 Blue Shield case, which was tried last year in a court in Brooklyn, N.Y.  On
 June 4, 2001, the jury in that case returned a verdict in favor of the tobacco
 defendants on Racketeer Influenced and Corrupt Organizations (RICO) Act and
 common-law fraud claims.  However, the jury ruled against the tobacco
 defendants on N.Y. Deceptive Business Practices Act claims.
     That verdict is currently on appeal to the Second Circuit Court of Appeals
 and, Donahue said, "In light of the fact that there was no evidence of
 causation or reliance in that case, we believe the Second Circuit Court of
 Appeals will abide by its own precedent and will ultimately dismiss the Blue
 Cross Blue Shield case."
 
     R.J. Reynolds Tobacco Company (RJRT) is a wholly owned subsidiary of R.J.
 Reynolds Tobacco Holdings, Inc. (NYSE:    RJR).  R.J. Reynolds Tobacco Company
 is the second-largest tobacco company in the United States, manufacturing
 about one of every four cigarettes sold in the United States.  Reynolds
 Tobacco's product line includes four of the nation's 10 best-selling cigarette
 brands:  Camel, Winston, Salem and Doral.  Reynolds Tobacco has been
 recognized by FORTUNE Magazine as one of the "100 Best Companies to Work For."
 For more information about RJRT, visit the company's web site at www.rjrt.com.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X76016373
 
 SOURCE  R.J. Reynolds Tobacco Comapny.