BEFORE THE
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE

SEPTEMBER 5, 2001

Mr. Chairman, I appreciate the opportunity to appear before the Committee today to discuss the Government's suit against the major tobacco companies.

Since 1978, I have served as the Civil Division's senior career official. As I have done on a number of prior occasions, I have served since January 20TH of this year as the Acting Assistant Attorney General. My responsibilities in this interim capacity include supervision of the Division's tobacco litigation team.

As I know that Members of the Committee can appreciate, I am obviously constrained in my ability to discuss the merits of a pending case. At the same time we recognize and appreciate the Committee's interest in this case, and I shall attempt to be as responsive as I can to the Committee's questions without discussing the substance of the case. My understanding is that the Committee is interested principally in discussing the status of funding and staffing of the case.

The tobacco litigation team was formed after President Clinton announced in his 1999 State of the Union address that he was directing the Department of Justice to formulate a plan to take the cigarette companies to Court. The suit was filed in the District Court for the District of Columbia on September 22, 1999. The suit sought recovery under two statutes dealing directly with the recovery of health care costs, the Medical Care Recovery Act (MCRA) and the Medicare Secondary Payer (MSP) provisions of the Social Security Act. Additionally, the complaint sought equitable relief, including monetary disgorgement, under the Racketeer Influenced Corrupt Organizations (RICO) Act.

On September 28, 2000, the Court dismissed the counts pertaining to the two health care cost recovery statutes and denied the defendants' motion to dismiss the RICO counts. In orders entered on July 27th of this year, the Court rejected our attempt to obtain reinstatement of the Medicare Secondary Payer count and portions of the Medical Care Recovery Act count. Intensive discovery is in progress and trial is scheduled for July 2003.

Funding for the current fiscal year did not come into place until the fiscal year was well underway. The current $23.2 million budget for the case is made up of $1.8 million from the Civil Division's base appropriation, $9.4 million in reimbursements from other agencies and $12 million from the Health Care Fraud and Abuse Control Account established by the Health Insurance Portability and Accountability Act of 1996. By the end of this fiscal year, the entire amount budgeted for the case will have been expended or obligated. A larger amount will be required for the next fiscal year. The Department is well into the process of identifying appropriate sources for this funding.

As the demands of the case have increased, so too has staffing, as indicated in the following chart:

Total
Positions Attorney
Positions Other
Positions
February 1, 1999 1 1 0
August 2, 1999 18 13 5
September 27, 1999 23 16 7
March 20, 2000 23 15 8
September 27, 2000 27 20 7
March 19, 2001 31 23 8
July 30, 2001 32 24 8
August 31, 2001 34 26 8
October 1, 2001 (projected) 38 29 9

The numbers do not include additional personnel from other components including the Criminal Division, the FBI, and the Civil Division's Office of Litigation Support.

In summary, the case is proceeding. It is obviously a major undertaking, and the staff attorneys assigned to the case deserve great credit for their dedication and hard work.

Mr. Chairman, that completes my prepared remarks. I would be pleased at this time to attempt to respond to any questions that you or other Members of the Committee may have.