TUE, DAY 113: DOJ Slashes National Cessation Plan Costs

June 8, 2005 7:12 am by Gene Borio

The nice thing about the Prettyman Federal Courthouse press room that virtually everyone there is sharp, alert, hard-working, fun-loving and cooperative. It’s a pretty lively place to work, and the professionals there seem to have accepted the uncredentialed blogger in their midst with the utmost grace and charm.

They certainly had their own feelings at the end the first day of Closing Arguments, but you’d never see it in their stories. They facts were there, sure, but not what they felt. And that was, to put it bluntly and in the words of one reporter as we entered the press room: “This case is f–!”. (On a blog that calls everyone by their proper gender-specific appellation, I don’t even want to indicate the word with fill-in-the-asterisks. Suffice to say that, though some were rooting for the DOJ, they all felt the case had just spiralled irretrievably down the drain.)

While there had been some decent-to-good work done by the DOJ team in the courtroom that day, the focus of the reporters’ consternation was what occurred at the very end of the court session. DOJ attorney Stephen Brody had attacked the bias and substance of the Defense’s remedies witnesses, and had just discussed Dr. Fiore’s National Cessation Program. He was in the middle of discussing Dr. Bazerman’s testimony on how requiring defendants to fund cessation programs and counter-marketing programs was a remedy “designed to take away the incentive to engage in future violations.”

“How can a cessation program, no matter how desirable it may be, ‘prevent and restrain’ future RICO violations?” Judge Kessler asked.

Mr. Brody responded that the defendants will continue to act fraudulently in the future unless the court deprives the industry of the benefit of that activity (ie, customers, through a cessation program).

No one in the press room, though, felt Mr. Brody’s reply had given Judge Kessler what she seemed to be asking for: a clean, clear legally airtight reason to impose such a remedy, a reason that would effectively meet the “prevent and restrain” stricture set by the Appeals Court.

But for You, $9.95 Billion

But as disturbing as this was, it seemed overshadowed in reporters’ minds by Mr. Brody’s next bombshell: DOJ had made a 90% cut in Dr. Fiore’s cost estimate of his National Cessation Plan. From a comprehensive national cessation plan of $5.2 billion/year for the next 25 years–a $130 billion program–the DOJ was asking for one that would cost $2 billion/year for the next 5 years–a $10 billion program.

Mr. Brody said it was expected and hoped that, combined with other requested remedies–the prohibition on deceptive marketing practices and on descriptors–the program would no longer be needed after 5 years. But if it were, the court-appointed officer could assess matters and if necessary, based on Defendants’ continuing fraudulent conduct, renew the program for another 5 years.

What struck the press was this precipitous drop in funding.

Not to mention Judge Kessler’s next comments, in which she seemed to be throwing up her hands at the whole prospect of riding herd on a batch of runaway tobacco companies by becoming a monitor or a guardian or a de-facto CEO or something not clear in the DOJ’s plan.

Judge Kessler extensively questioned the practicality of DOJ remedies, especially the function of court-appointed monitors, wondering specifically “how all this is going to work.” Mr. Brody compared the monitoring situation to the creation of FAMRI out of Florida’s Broin settlement. He said FAMRI had been created to oversee research grants and distribution of funds, and could be seen as a basis and a precedent for accomplishing tasks applicable to the question of youth marketing. But WHO is going to be doing all this, Judge Kessler asked, I, the court??

No, said Mr. Brody, the court-appointed officers would be tasked with enforcing the final order, and would make recommendations to the court if changes were needed. The process, he said, would be similar — if not identical — to the oversight of labor unions brought to courts on RICO violations.

Judge Kessler seemed to be resentfully shying away from the enormous amount of prospective work involved in administering the DOJ remedies.

She said the FAMRI situation was different, that came out of a settlement.

“AND ANYTHING CAN HAPPEN IN A SETTLEMENT,” she said, ” . . . as I tried to suggest…” her voice seemed to fade in and out with exasperation, so I missed some of what she said, but the import was clear–why didn’t you people work to settle this case before unloading all these astoundingly complex yet vitally important issues on me–and without even giving me a clear road map to work with?

The press room gang felt that perhaps the DOJ, seeing it did not have a compelling (to say the least) “prevent and restrain” rationale for the cessation program, slashed its cost to make the remedy more palatable– but this explanation is unsatisfactory too, since if the program can’t meet the bar at $130 Billion, it can’t meet the bar at a nickel.

Perhaps the lowering of costs reflects Mr. Wells’ strong attack on Dr. Fiore’s figures during his cross a few weeks ago. Dr. Fiore had based his cost projections on the utilization rate found in a study of a group health plan’s enrollees, 8%. In the discussions which resulted in his 2003 National Action Plan, participants had decided the projected rate of a well-funded, comprehensive national cessation program with aggressive publicity should be double the 8% figure, ie, 16%. Yet the group health plan’s enrollees were a well-educated, middle-class group, not representative of the at-large population. In addition, regular state-run quitlines tend to have a 2% utilization rate, if that. The DOJ’s $2 billion/year cost seems to reflect a toned-down utilization rate closer to the health group’s 8%.
A Political Decision?

Upset at the slashing of the national cessation program’s cost, Campaign for Tobacco-Free Kids’ Bill Corr told reporters outside the courthouse, “the question now is if the government is making a political, and not a legal decision.”

Carol Leonnig’s Washington Post article this morning seems to bear out this theory, and the LA Times’ Myron Levin, a pioneer in modern day coverage of tobacco issues, points out the RJR connection to Associate Atty. Gen. Robert McCallum, who oversees the civil division and who made a rare appearance in the courtroom Tuesday:

Before his appointment in the Justice Department in 2001, McCallum had been a partner at Alston & Bird, an Atlanta-based firm that has done trademark and patent work for R.J. Reynolds Tobacco. In 2002, McCallum signed a friend-of-the-court brief by the administration urging the Supreme Court not to consider an appeal by the government of Canada to reinstate a cigarette smuggling case against R.J. Reynolds that had been dismissed. The department’s ethics office had cleared McCallum to take part in that case.

U.S. Eases Demands on Tobacco Companies

Also outside, Philip Morris USA attorney Ted Wells told reporters that “the case is on life support and we’ll put it to bed tomorrow.” (Mr. Wells does not make use of metaphors in court, thank goodness.)

A DOJ spokesperson said the mysteries will be addressed during DOJ’s rebuttal Thursday.

Leave a Reply

The primary purpose of this site is to provide information in a timely manner. Postings should be informative. The usual rules apply: No libel, no profanity, no personal abuse, keep it on topic, and short.

If you are scheduled as a court witness, CHECK with your lawyer before posting anything here!