AG Fox sues tobacco companies for $43M

Montana Attorney General Tim Fox announced his office is suing a number of major tobacco companies to recover a total of $43 million owed to the state of Montana.

At a press conference call on Monday, Fox said he is seeking the money from companies, including Philip Morris and R.J. Reynolds, that entered into the 1998 Tobacco Master Settlement Agreement. The settlement required the companies make annual payments to 46 states in exchange for the states dropping their lawsuits against the industry.

The Attorney General’s office filed the lawsuit on Friday.

Fox said the state discovered in 2018 the companies have been withholding millions of dollars owed to Montana under the settlement agreement.

He said the companies had “developed a highly sophisticated joint strategy of improperly invoking certain provisions in the Master Settlement Agreement” to “oppressively” force the state to introduce new lawsuits over each year’s payments. But Fox said “we would do this no more in a piecemeal way” and instead his office would try to recover the money in “a large lump litigation.”

The lawsuit accuses the companies of breaking Montana’s good faith laws and a set of statutes called the False Claims Act, which the attorney general said “provides for stiff penalties for companies who try to avoid paying money they owe the state.”

“The tobacco companies have violated these laws, and we will not let them get away with it,” Fox said.

The money is designed to go to tobacco prevention programs or programs such as CHIP (Children’s Health Insurance Program), Montana Medicaid and communicable disease programs. Fox said legislators could decide to use the money to address fallout from the COVID-19 pandemic.

“These wrongfully withheld funds could have been used to prevent Montanans from developing lung diseases that now make them potentially more susceptible to COVID-19. More children could’ve been insured earlier, and longer,” he said.

Fox said the annual payment “is due in just two days,” and he said the companies “will once again withhold millions” from the state.

When asked about the timing of the lawsuit, Fox said “this attorney general decided not to do it [the lawsuit] the way that previous attorneys general did it,” while the state learned in most recent litigation that the companies “had no basis in fact through which to withhold these payments.”

Fox is currently running for the Republican nomination for governor.

The attorney general said he did not have a timeline for how the lawsuit will proceed, but he does not expect it to go to trial or be settled until his term is over early next year. He said he hopes his successor will follow through with the lawsuit.

“Fortunately, we are in state District Court and I think our judicial system is somewhat fed up with these companies,” Fox said.

Reporter Colin Gaiser may be reached at 758-4439 or cgaiser@dailyinterlake.com.