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Pa. scores 'victory,' gets portion of tobacco settlement restored

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By Bobby Kerlik
Thursday, April 10, 2014, 11:18 p.m.
 

A Philadelphia judge on Thursday restored about $120 million of tobacco settlement money that an arbitration panel struck down, though state officials could not say how it might affect program funding.

The ruling by Common Pleas Judge Patricia McInerney means Pennsylvania's portion of tobacco settlement money will shrink by about $60 million, from about $335 million annually to about $275 million, the state Attorney General's Office said. An arbitration panel in September reduced the amount by about $180 million.

McInerney declined the state's request to restore the full portion, instead reducing the severity of the cut.

Since an initial settlement with three top cigarette makers in 1998, companies have made annual payments to help pay tobacco users' medical costs and fund programs to help users quit.

“While we were not able to win the entire amount, 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,” Attorney General Kathleen Kane said in a statement.

Settlement participants Philip Morris USA Inc., R.J. Reynolds Tobacco Co. and Lorillard Tobacco Co. challenged whether the state collected money from sales of products made by competitors that didn't join the pact. The settlement entitles participating companies to cut their payments if they lose market share.

Philip Morris and R.J. Reynolds spokesmen declined to comment. They wouldn't say whether the companies would appeal. A Lorillard spokesman could not be reached.

Spokesmen for Gov. Tom Corbett and Kane credited bipartisan work in winning back a portion of the money. Corbett's spokesman Jay Pagni said it's too early to say how the $60 million drop would affect program funding.

“We view today's ruling as a positive step in continued support of health-related programs funded by the (tobacco settlement),” Pagni said. “We'll be looking for the final disposition and look to restore program funding, as appropriate, upon that final disposition.”

The payment dispute with tobacco companies centers on whether Pennsylvania fully followed the agreement. Specifically, the sides tussled over whether Pennsylvania must collect taxes on products such as roll-your-own cigarette tobacco.

The Tobacco Master Settlement Agreement shields participating manufacturers against state lawsuits. Firms challenged 35 states over their 2003 compliance.

Bobby Kerlik is a Trib Total Media staff writer. Reach him at 412-320-7886 or bkerlik@tribweb.com.

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