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Company Press Release

Judge Strikes Down Indiana Medicaid Suit

WINSTON-SALEM, N.C., July 24 /PRNewswire/ -- The following statement was issued today by Thomas McKim, assistant general counsel for R.J. Reynolds Tobacco Co., after Judge Gerald Zore of the Marion Superior Court struck down in its entirety the state of Indiana's attorney general lawsuit against the tobacco industry for Medicaid recoupment:

``Judge Zore's sweeping ruling is clear and concise and strikes at the heart of similar suits around the nation. It confirms our position that the suits brought by attorneys general to recoup their states' Medicaid costs are simply without legal or factual merit and should never have been filed.

``The judge's brief two-page order dismisses each and every claim brought against the tobacco industry by the state. The Court ruled that the state's exclusive remedy to recover alleged excess Medicaid payments is via subrogation - which requires individual proof with respect to the damages purportedly suffered by each Medicaid recipient. The Court also found that any claims the state has are derivative of claims held by individual smokers, not the state itself, and that the state stands at too remote a distance to recover damages

``With respect to the state's antitrust claim, the Court ruled that the state could not claim any injury of the type intended to be addressed by existing antitrust laws. The Court ruled that the state is neither a competitor of the tobacco manufacturers nor a consumer of tobacco products.

``The Court also dismissed the state's conspiracy, unjust enrichment, indemnity and public nuisance claims and ruled that the state lacked the authority to assert the common law claims contained in its complaint. Finally, the Court dismissed the state's claim for intentional breach of assumed duty and for criminal mischief and deception.

``The citizens and businesses of the state of Indiana should be pleased that the rule of law still has meaning in their state. We believe Judge Zore's rulings are correct and will be of substantial interest to other courts across the country that still have similar cases pending before them.

``The simple fact is that the judge got it right. These cases, based on novel and strained contortions of existing legal principles, conceived by entrepreneurial plaintiffs lawyers working closely with ambitious politicians, are without merit. Instead, they simply target unfairly a politically unpopular industry.''

SOURCE: R.J. Reynolds Tobacco Company