U.S. Tobacco Industry
WASHINGTON, Sept. 22— The Justice Department closed the book today on a criminal investigation of the tobacco industry and instead filed a far-reaching civil lawsuit that accuses the largest cigarette companies of conspiring since the 1950's to defraud and mislead the public about the health effects of smoking.
The lawsuit seeks to recover billions of dollars the Federal Government spent on smoking-related health care for elderly Medicare patients, military veterans and Federal employees, expenses not covered by the $246 billion in settlements that the industry reached last year with the states over smoking-related Medicaid costs for the poor and disabled.
President Clinton, who first announced in his State of the Union Message last January that the Justice Department would pursue such a lawsuit, told reporters at the White House today that, ''The tobacco companies should answer to the taxpayers for their actions.''
Relying heavily on documents unearthed in the state claims, the lawsuit accuses the tobacco industry of promoting biased research, wrongly asserting that nicotine was not addictive and falsely denying that they were targeting their products to children.
Along with monetary damages, which the suit says exceed $20 billion a year, the suit seeks to tap into what it calls the tobacco industry's ''ill-gotten gains'' and force the industry to finance education programs about the health effects of smoking.
''For the past 45 years, '' Attorney General Janet Reno said at a news conference, ''the companies that manufacture and sell tobacco have waged an intentional, coordinated campaign of fraud and deceit. As we allege in the complaint, it has been a campaign designed to preserve their enormous profits whatever the cost in human lives, human suffering and medical resources. The consequences have been staggering.''
The defendants are Philip Morris, a division of the Philip Morris Companies; R.J. Reynolds Tobacco Company; the American Tobacco Company; the Brown & Williamson Tobacco Corporation, a division of B.A.T. Industries P.L.C.; British-American Tobacco P.L.C.; British-American Tobacco (Investments) Ltd., Lorillard Tobacco Company, a division of Loews; the Liggett Group, a division of the Brooke Group; the Council for Tobacco Research U.S.A. Inc., and the Tobacco Institute Inc.
The tobacco companies named in the suit sell more than 98 percent of the cigarettes in the United States.
Condemning the suit as politically motivated, tobacco executives vowed to seek its immediate dismissal. ''We will not succumb to politically correct extortion, '' said Greg Little, associate general counsel for Philip Morris. ''We will not settle this lawsuit. We're right on the law. We're right on the facts. We will prevail in this lawsuit.''
Criticism also came from the United States Chamber of Commerce, which accused the Clinton Administration of pursuing the lawsuit because Congress last year failed to act on legislation that would have tightened the regulation of tobacco.
Bruce Josten, the chamber's executive vice president, said in a statement: ''No business can feel secure in the United States when the enormous power of the Justice Department can be unleashed against them for the purpose of raising revenue and scoring political points. This is nothing more than taxation through litigation.''
Asked about statements from the companies calling the suit politically motivated, Mr. Clinton said, ''We did our best to work with them and with the Congress to resolve many of these matters legislatively, and they declined.''
This development has elements that are both good and bad for the tobacco industry. It escapes a criminal investigation that has been lingering for years but instead faces a potentially costly civil lawsuit. The Federal Government, if it enters into settlement talks with the industry would likely try to get the industry to agree to increased regulation.
Industry critics praised the Justice Department for keeping the makers and marketers of cigarettes on their heels. ''When the Justice Department wins, it will be a great victory by the American taxpayers, '' said Representative Henry A. Waxman, a Democrat from Los Angeles who has fought for tighter regulation of the tobacco industry. ''The tobacco companies have perpetrated a fraud on the American people for decades. When it comes to a matter of law, all their campaign contributions won't matter.''