TOBACCO VICTORY=up day tomorrow
Tobacco industry wins Iowa Supreme Court decision
NEW YORK, April 22 (Reuters) - The Iowa Supreme Court has affirmed a trial court's dismissal of Medicaid reimbursement claims brought by the state's attorney general against the tobacco industry, Philip Morris Cos. Inc.<MO.N> said on Wednesday.
But Iowa Attorney General Tom Miller told Reuters in a telephone interview that the state has other legal grounds on which to proceed.
"This is one chapter," Miller said, referring to Wednesday's high-court decision. "Tobacco has not escaped by any means today."
Philip Morris said the court held that the state's claims for damages were derivative and too remote because they arose from alleged injuries to smokers and not to the state.
Philip Morris, which makes Marlboro cigarettes, said it was the first time that a state's highest court had considered the validity of the legal theories underlying claims for reimbursement of Medicaid funds spent to treat sick smokers.
"In no uncertain terms, the Iowa Supreme Court opinion reaffirms the industry's consistent position that these so-called reimbursement lawsuits are wholly without merit," said Steven B. Rissman, Philip Morris senior counsel, said in a statement.
In a separate release, RJR Nabisco Holdings Corp. <RN.N> said the Iowa court rejected key elements of the legal theory underlying lawsuits filed by 41 state attorneys general against the industry.
The industry agreed last June to settle all the suits, but that proposed $368.5 billion settlement has to be approved by Congress.
Federal lawmakers are instead considering a Senate Commerce Committee bill that would cost the industry more than $500 billion and deny it the legal protections from future lawsuits. The industry has vowed to oppose the Commerce Committee bill.
Despite Wednesday's ruling, Miller said that Iowa still could proceed legally against the industry on the basis of the state's Ongoing Criminal Conduct law and on the grounds of consumer fraud.
Brown & Williamson, the tobacco company owned by Britain's B.A.T Industries Plc <BATS.L>, said the Iowa decision also would apply to recent actions against the tobacco industry by health-care funds.
"We are delighted by the Supreme Court's action because it is consistent with other court rulings that states have no independent right to recover Medicaid payments made on behalf of individual smokers," Brown & Williamson said.
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