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Using technology to maximum advantage, a lawyer for Empire Blue Cross and Blue Shield pressed the health care insurer’s $800 million fraud claim against the United States’ largest cigarette makers in a nearly three-hour opening statement Monday. The industry fired back Tuesday morning with Philip Morris’ lawyer, Peter K. Bleakley, contending that there had been no deception or fraud because the American public has been well informed about the dangers of smoking. Speaking evenly and for the most part softly, the insurer’s lawyer, Paul J. Bschorr, a senior litigation partner at Dewey Ballantine, delivered a searing indictment of the tobacco industry’s behavior. The industry has “intentionally perpetrated a massive fraud on the American public,” he charged. Since the 1950s, he added, tobacco company officials have repeatedly asserted that smoking “does not cause disease and is not addictive, when documents from their own files show that those statements were false and they knew they were false.” Bschorr’s words may have been softly spoken, but through the use of technology, the companies’ own words thundered in the courtroom. By casting company documents on a roughly 10-foot high screen and blowing up the most damaging remarks, Bschorr brought to life what could otherwise have been a deadly dull stack of documents. Bleakley, in an animated and engaging presentation, proved himself an effective counterpuncher. The deception that lies at the heart of Empire Blue Cross’ claim to recover funds spent treating smoking-related illnesses does not exist, he asserted. A “relentless and unprecedented campaign” by the government and public health groups has succeeded in persuading 50 million Americans to quit smoking. In 1965, 50 percent of Americans were smokers, but today less than 25 percent are, he added. To underscore his point, Bleakley also flashed a graph on the large screen showing a sharp downward trend in the number of smokers since the U.S. Surgeon General first warned the public that smoking causes cancer in 1964. Bleakley spoke for 90 minutes, using half the time allotted to the industry. Opening Tuesday for four other cigarette makers on trial were: Aaron H. Marks, of Kasowitz, Benson, Torres & Friedman, for the Ligget Group; William L. Allinder, of Shook Hardy & Bacon in Kansas City, Mo., for Lorillard Tobacco Co.; Joseph M. McLaughlin, of Simpson Thacher & Bartlett, for B.A.T. Industries; and John Williams, of Collier, Shannon & Scott in Washington, D.C., for R.J. Reynolds Tobacco Co. FIRST OF 21 PLANS The Blue Cross suit is the second of eight major cases against the tobacco industry pending before Judge Jack B. Weinstein in the Eastern District of New York. In January, a mistrial was declared in the first case after two jurors almost came to blows. In that case, a trust fund established in the Johns Manville bankruptcy sought to recover from the tobacco industry funds it paid out to treat asbestos-related ailments. Empire Blue Cross, which is the Blue Cross plan in New York State, is the first of 21 plans to bring its case to trial. Altogether, 21 Blue Cross plans have consolidated their claims against the tobacco industry before Judge Weinstein under the caption, Blue Cross and Blue Shield of New Jersey v. Philip Morris, 98 � 3267. THIRD-PARTY CLAIMS To date, claims of third parties to recover from the tobacco industry funds that they spent for the medical treatment of smokers have not fared well in the federal courts. Six federal appeals courts, including the 2nd U.S. Circuit Court of Appeals, have rejected those claims as too remote. Two of those cases involved lawsuits brought by other groups of Blue Cross plans in the 7th and 9th Circuits. However, in November 1998, the tobacco industry agreed to pay $206 billion settle claims brought by 46 states to recover funds spent on smoking-related illnesses by Medicaid, a federal-state program that pays for the medical care of the indigent. Several months later, in April 1999, the 2nd Circuit rejected a bid by employee health plans to recover funds spent for the treatment of their members’ smoking-related illnesses in Laborers Local 17 Health and Benefit Fund v. Philip Morris, 98-7944. Judge Weinstein, however, let Empire’s case go to trial on the strength of the argument that it takes a more active role in dealing with hospitals than does a union fund, which merely pays the bills. Empire also contended that it raised a subrogation claim on behalf of its members, a theory that was not at issue in the Laborers Local 17 case. CONFLICTS HIGHLIGHTED During his opening for Empire, Bschorr displayed dozens of documents on the large screen to illustrate purported discrepancies between what that industry told the public and statements in its own internal files. One of the most powerful was a chart that laid out side-by-side conflicting public and private statements. In one column was a 1996 assertion that the industry “will never conceal” information about the dangers of smoking, and that there is “no evidence” that smoking causes cancer. In the opposing column were the following statements from internal industry documents: in 1958, experts asserted that smoking causes lung cancer; in 1962, smoking is called a habit of addiction; and in 1963, nicotine is labeled addictive. Bleakley took several tacks in trying to take the sting out of Empire’s documentary evidence. First, he conceded that some in the industry may have been “obstinate” in continuing to resist the medical evidence that smoking causes cancer. He also asked the jury to understand that with thousands of employees in the industry, it should hardly be a surprise that someone might have written something that “sounds sort of dumb” in the last 50 years. He implored the jury to approach the “snippets” of documents that “fly” across the screen with “a healthy dose of skepticism.” For instance, he pointed Bschorr’s highlighting of an industry statement that a cigarette is a “dispenser of nicotine.” That quotation, he pointed out, did not include the statement that immediately followed it, which drew analogies to tea as “a dispenser of caffeine” and money as “a dispenser for lots of things.” There was no concession in that statement that nicotine was addictive, he asserted, only a listing of nicotine as one of several reasons why people like to smoke. There has been no deception, Bleakley added, because the industry has shared its scientific evidence with the government and others. Further, the dangers of smoking have become well known through “a tidal wave of anti-smoking messages.” In 1989, he pointed out, the U.S. Surgeon General declared that anti-smoking campaign “a major public health success.” And polls conducted by the Gallup group over the years showed that the number of Americans who believe that smoking causes lung cancer have risen from 71 percent in 1969 to 94 percent in 1990. “You can’t get 94 percent [of Americans] to identify the vice-president,” he quipped. The trial is expected to last eight weeks.

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