California Included In Settlement

California will be included in the Liggett Group’s settlement of lawsuits by 22 other states that seek reimbursement for tobacco-related Medicaid expenses.

The agreement Thursday clears the way for California to obtain Liggett documents if it sues other tobacco companies.

Without having to sue Liggett, California would also receive part of whatever Liggett pays into a settlement fund. Liggett has agreed to pay 25 percent of its pretax income over the next 25 years. But the actual payments may end up being negligible, because the company is on the edge of bankruptcy.

Under a separate agreement, also announced Thursday, Liggett will pay no money to settle Medicaid claims in suits that San Francisco and 12 California counties have filed. The accord will provide those governments with the same documents that are being sent to California and other states.

California accounts for 20 percent of all Medicaid spending. State Attorney General Daniel Lungren had repeatedly rebuffed demands by anti-tobacco groups that he join in the Medicaid suits, asserting that California would be blocked from pursuing such claims by a 1987 law that limited the tobacco industry’s liability.

Last week, Democrats in the state Assembly introduced legislation to make it clear that such a suit would be allowed, and Lungren pledged to file a suit if the bill passed.

By reaching agreement with California, Liggett and its parent, the Brooke Group Ltd., have disposed of 70 percent of the potential Medicaid liabilities. Liggett makes Chesterfield, Eve and L&M cigarettes, and the company accounts for 2 percent of industry sales.

The new agreements may open new fronts in the battles in other states over how many documents Liggett can hand over without the permission of the other tobacco companies. Lawyers who are fighting the industry say they believe that many of the most damaging papers are reports that date from the 1950s about meetings of lawyers from all the companies.

Philip Morris, R.J. Reynolds Tobacco and other rivals contend that many Liggett documents cannot be released without violating rules that protect the confidentiality of legal discussions.

Opposing lawyers argue that none of the documents are privileged, because the lawyers’ meetings were not normal legal activities, but rather part of a long-running plot to deceive consumers and the government.

In Mississippi on Thursday, a state court put off ruling on whether to release Liggett documents and postponed a trial set for a Medicaid case by a month, to July 7.