States, tobacco companies reach agreement in principle

Dec. 19, 2012 @ 06:50 PM

North Carolina along with 16 other states, the District of Columbia and Puerto Rico reached an agreement in principle with several tobacco companies to settle claims related to settlement agreement payments to the states.

North Carolina will receive $108 million along with continued annual payments, Attorney General Roy Cooper said in a news release Wednesday.

The agreement resolves a dispute over payments owed by the companies under the 1998 Master Settlement Agreement. Complete terms of the settlement, along with required approvals, remain to be finalized.

In 1998, Philip Morris, R.J. Reynolds, Brown & Williamson and Lorillard agreed to pay states more than $200 billion across more than 25 years to settle lawsuits over health care costs related to smoking. Several other tobacco companies later joined the agreement. For 10 years, the tobacco companies and the states have had a dispute over portions of the payments.

According to a news release from R.J. Reynolds, the settlement announced Wednesday addresses claims relating to a downward adjustment to the company’s annual MSA payment obligations known as the Non-Participating Manufacturer Adjustment. It resolves claims pertaining to payment years from 2003 through 2012, and puts a new method in place to determine future adjustments from 2013 onward as to states that join the agreement.

 “This settlement is a win-win proposition for both the joining states and R.J. Reynolds, and we hope that additional states will choose to participate,” said Martin L. Holton III, executive vice president and general counsel for R.J. Reynolds, in a prepared statement in the release. “The company is able to receive significant value for injury its brands have suffered in the marketplace at the hands of manufacturers who are not subject to the obligations of the MSA.”