Judge Kessler Reaffirms Dismissal of Two Counts in DOJ-Tobacco Suit

U.S. District Judge Gladys Kessler has rejected attempts by the Department of Justice to have two counts of its lawsuit against Philip Morris USA and other tobacco companies reinstated.

“After reviewing her earlier decision and the government’s motions, Judge Kessler has made it very clear that the Department of Justice has no legal basis on which to seek recovery of the medical costs it claims in this case,” said William S. Ohlemeyer, Philip Morris vice president and associate general counsel.

Last September Judge Kessler dismissed government allegations against the tobacco companies involving the Medical Care Recovery (MCRA) and the Medicare Secondary Payer (MSP) statutes, leaving allegations involving the Racketeer Influenced and Corrupt Organizations Act as the only issues remaining in the case.

As a result of the ruling, the DOJ asked the Court to reinstate the MCRA complaint as it related to medical cost recovery for two federal agencies, and amended the MSP complaint in an effort to have it reinstated.

Judge Kessler, in handing the government a double loss, said neither of today’s rulings “changes the current posture of the case. The parties are proceeding with extensive discovery and are preparing for trial.”

Ohlemeyer said the company believes the RICO allegations also have no legal merit, and will take further action at the appropriate time to have those claims also rejected.

Judge Kessler, in her opinion, found that, “as the existence of legally injured persons is a prerequisite for and an essential element of the government’s MCRA claim, it must be pleaded in the complaint.

“Given that the government has not identified in its complaint the injured persons on whose behalf it seeks to recover under MCRA, the Court concludes that the MCRA Count was properly dismissed in its entirety.”

In the amended MSP claim, the government contended that the tobacco companies served as “self-insurers” and therefore could be sued on behalf of sick smokers who had received medical treatment through the Medicare program.

However, Judge Kessler rejected that argument in its entirety and dismissed the amended complaint with prejudice.

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• Department of Justice (DOJ) Case Overview