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States, tobacco firms talk
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July 10, 1998: 9:50 a.m. ET
Cigarette makers have been seeking settlement over state Medicaid suits
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NEW YORK (CNNfn) - The major tobacco companies have been negotiating a new settlement of the remaining state Medicaid lawsuits that could cost the industry roughly $200 billion.
But a source familiar with the negotiations told CNN late Thursday that the talks, which took place in New York over the past two weeks, broke down Wednesday over how much money the industry would pay.
Following last month's defeat of the anti-tobacco bill in the Senate, the cigarette companies have been meeting with "a small number of attorneys general" to resolve their most costly civil litigation: the remaining 36 states suing them to receive compensation for the Medicaid cost of treating smoking-related illnesses.
In the past year, the industry has settled with Mississippi, Florida, Texas and Minnesota for more than $36 billion.
The source told CNN tobacco company negotiators had been discussing the possibility of a payment of $180 billion to $200 billion, which would mean a price increase of about 35 cents per pack of cigarettes.
The latest talks also proposed the industry would adopt a host of advertising and marketing restrictions, the Wall Street Journal reported Friday.
Tobacco companies may also have a new worry as Attorney General Janet Reno last week tapped the Justice Department's most senior troubleshooter, John Keeney, to help steer the sprawling criminal investigation of the nation's biggest cigarette makers.
Sources close to the investigation told the Journal Keeney's involvement is a signal that the four-year-old investigation is moving into a critical phase.
Shares of the major tobacco companies were up in Thursday trading.
Philip Morris Cos. Inc. (MO) climbed 1 to close at 39-1/4. Shares of RJR Nabisco Holding Corp. (RN), the parent company of R.J. Reynolds Tobacco, gained 1-3/16 to finish at 23-15/16. B.A.T. Industries (BTI) , parent company of Brown & Williamson Tobacco Corp., closed at 21-1/2, up 1/16. 
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