JUSTICE CLAIMS TOBACCO CONSPIRACY

WASHINGTON - Smoke and fire rise over the Justice Department's tobacco
lawsuit.

Government attorneys call it ``the Enterprise.''

They are referring to an association of the nation's major cigarette
manufacturers, an ``Enterprise'' that the Justice Department alleges
maintained a conspiracy for at least 45 years ``to preserve and enhance the
market for cigarettes regardless of the truth, the law, or the health
consequences of the American people.''

In its groundbreaking suit filed last week, the department is using the
same laws against the tobacco industry that it uses against organized
crime. And while no one will go to prison if the government wins, the
industry could lose hundreds of billions of dollars and its freedom to
operate as it has.

``Each defendant agreed that at least two acts of racketeering activity
would be committed by a member of the conspiracy in furtherance of the
conduct of the Enterprise,'' the Justice Department alleges.

Industry lawyers say they will move within three weeks to dismiss the
charges. The government can't use racketeering laws to pursue what is
essentially a personal injury case, they say.

But the Justice Department begins with some advantages.

It was able to select the federal district judge to hear the case, Gladys
Kessler, a Clinton appointee who was the founder of the first
public-interest law firm in Washington and an expert on mass tort litigation.

Kessler is probably not someone the industry would have selected, said Mary
Aronson, an attorney who has been following tobacco litigation for 16 years.

The government also has hired as its outside attorney Michael Ciresi, the
lead attorney for Minnesota in its suit against the industry and the only
attorney who has taken a state tobacco case through a trial.

``He scares people he's up against,'' Aronson said. But the tobacco
companies also have advantages. There's the question of political support.

Senate Republicans in 1998 killed tobacco legislation that would have
accomplished what this suit seeks to do: secure billions of dollars for the
federal government and regulate tobacco.

An attempt by Sen. Judd Gregg, R-N.H., to prohibit Justice from using any
money to pursue this suit was stopped. But Congress might not appropriate
the $20 million Justice requested this year for the suit.

That would mean Justice would have to take money from other priorities to
continue the litigation.

And the tobacco industry can easily draw out the litigation until after the
next president is elected. And the next president's Justice Department
might not be as energetic in pursuing the litigation.

The leading Republican contender, Texas Gov. George W. Bush, criticized the
suit last month.

``I would wonder out loud how many lawsuits do we need,'' he said in
Raleigh, N.C.

The government is using three basic laws in this case:

- -- The Medical Care Recovery Act, which says the government has an
independent right to recover medical costs from a third party that had
caused an injury to someone whose medical bills are covered by the government.

- -- The Medicare Secondary Payer Act, which allows the government to recover
Medicare payments from third parties who are required or responsible to pay
for it.

- -- The Racketeer Influenced and Corrupt Organizations (RICO) Act, which
gives the government the right to recover a share of the past profits of
any corporation that was part of a conspiracy to defraud or injure people.

Never before has the government used those laws to try to recover money for
injuries to a large number of people, and the industry contends the Justice
Department is twisting the law because the Clinton administration has been
frustrated in its attempts to pass tobacco legislation.

In layman's terms, the government is alleging that since 1954 the tobacco
companies conspired to hide the addictive nature and the health risks of
smoking. As a result, the government was slow to require health warnings on
cigarettes.

The federal government has paid about $20 billion annually to treat
smoking-related illnesses, the Justice Department says, and it wants not
only to recover those costs but also to take a portion of the tobacco
companies' profits for the last 45 years and to determine new regulations
on cigarette sales.

Philip Morris attorney Gregory Little insisted the Medical Care Recovery
Act was designed for the military to recoup the costs of medical care to
individual servicemen injured by third parties.

``It has never been used for Medicare, and it has never been used in the
aggregate for large numbers of people,'' he said. ``In essence, they are
trying to file a class-action suit without having to prove it on a
case-by-case basis.''

But some independent legal analysts say the Medical Care Recovery Act has
been waiting for this kind of case.

David Vladeck, a Georgetown University law professor, says it ``gives the
government a powerful tool to recoup health care expenditures incurred as
the result of someone else's negligence.''