The News Keeps Breaking Big Tobacco’s Way

Last week, Big Tobacco players Altria ,Lorillard , and Reynolds American  closed out a 13-year legal battle with a victory.

These tobacco companies and others were sued by the city of St. Louis and 37 area hospitals for nearly $455 million in a bid to recover costs from 1993 to 2010 of treating smoking-related illnesses for patients who were unable to pay. The hospitals claimed that the industry had purposely produced an “unreasonably dangerous” product, a move that had increased spending for unreimbursed tobacco-related health care.

Cigarettes smoking

Cigarettes smoking

The verdict was a win for investors in tobacco companies, which have ultimately prevailed in the three health-care recovery cases that have come to trial. In the two prior cases, one resulted in the jury siding with the defense in a 1999 Ohio case, and the other awarded limited damages in New York in 2001 — a decision that was reversed on appeal in 2004. According to Altria, 17 state and federal appellate courts have rejected claims to recover health-care costs from smokers.

Altria has also been busy in the Sunshine State, too. Litigation of thousands of Florida cases is ongoing following the decertification of a class action lawsuit in 2006. In March, Altria revealed that in 11 of 17 follow-on trials, it had either won or had a mistrial and was still busy appealing the remainder.

Altria and Lorillard scored operating margins around 40% over the last four quarters, while Reynolds was no slouch either, coming in at 31%.

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