Big Tobacco loses in NY
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June 4, 2001: 5:00 p.m. ET
Brooklyn jury order firms to pay $17.8M to help pay for smoker healthcare
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NEW YORK (CNNfn) - A Brooklyn jury on Monday found tobacco companies liable for deceptive business practices, ordering them to pay $17.8 million to help cover the costs of treating ailing New York smokers.
But according to Philip Morris (MO: Research, Estimates), the jury was given "incorrect instructions" and the verdict should be overturned.
Monday's verdict followed a two-month trial in U.S. District Court pitting New York's largest insurer, Empire Blue Cross and Blue Shield, against Philip Morris, R.J. Reynolds Co. (RJR: Research, Estimates) and other cigarette makers.
The jury found Empire failed to prove fraud and conspiracy allegations.
In a lawsuit filed in Brooklyn, Empire had accused tobacco companies of minimizing the threat of lung disease -- thus driving up health care costs -- during a decades-long campaign of deception. The insurer had sought $800 million in damages.
"Had the jury been given the correct legal instructions, we believe we should have won this case outright," William S. Ohlemeyer, Philip Morris associate general counsel, said in a statement. "In any event, the jury's verdict can only be seen as an almost total rejection of Empire's essential claim that the companies' actions caused insurance subscribers to smoke or not to quit smoking."
"The idea that Empire, a highly sophisticated insurance company, never recouped the cost of paying smokers' claims by charging higher insurance premiums simply defies logic and what we all know about the way insurance companies conduct their business," Ohlemeyer said.
Philip Morris, R.J. Reynolds, Brown & Williamson and Lorillard Tobacco, said they plan to appeal the verdict.
Cigarette makers "lied to the American public," Empire attorney Vincent Fitzpatrick said in closing arguments. "More Empire members smoked. There was more disease and Empire had to pay more."
The defendants denied plotting to deceive the public.
"The fact of the matter is that the evidence has shown that the American people at large and Empire subscribers were aware that cigarette smoking is dangerous and that it can kill and have been aware of it for decades," attorney Peter Bleakley told jurors.
Shares of Philip Morris fell 11 cents to $51.16 on the New York Stock Exchange on Monday, while RJR Tobacco Holdings fell 2 cents to $59.72.
from staff and wire reports
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