A federal arbitration panel has ordered tobacco companies that were party to a nationwide 1998 legal settlement to pay New York $92 million, stemming from sales of untaxed cigarettes from Indian reservations in 2003.
“This ruling is a huge victory for all New Yorkers, and I applaud the panel for denying Big Tobacco’s efforts to avoid responsibility for illnesses caused by cigarettes — and paid for by taxpayers,” Attorney General Schneiderman said Wednesday.
The nation’s four largest cigarette makers and the states reached a “Master Settlement Agreement” to end lawsuits over the public health costs borne by Medicaid in treating smoking-related illnesses.
In exchange for protection from other suits, the major cigarette companies at the time — Philip Morris Inc., R. J. Reynolds, Brown & Williamson and Lorillard— agreed to make payments to the states, with the original plan calling for $206 billion nationwide over the agreement’s first 25 years.
But tobacco firms have maintained that cigarettes sold in New York for which excise taxes weren’t collected were not covered under the payment plan.
Due to legal technicalities, the dispute narrowed to cigarettes sold in 2003, but Schneiderman said tobacco companies still maintain they can withhold other monies.
The state had argued New York had for decades exempted cigarettes sold in Native American land from the excise taxes.
Schneiderman spokeswoman Liz DeBold said the tobacco companies could appeal the award.
Philip Morris noted the decision involved several states and it is expecting to get a credit next year from some states.
DeBold added the timetable for when the $92 million might materialize remains uncertain.
The money would be split between the state and counties, which in New York help fund Medicaid.
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