USA gets tobacco payment
The 1998 nationwide settlement with cigarette-makers paid its first dividend for the University of South Alabama when Alabama Gov. Don Siegelman presented USA President Gordon Moulton with a $2 million check earlier this month.
There's more cash to come, with $2.5 million pledged for the next year, and another $15.5 million due from the state to USA within the next 10 years.
"The main thing people need to understand is, we're definitely going to use these funds for the benefit of this community," Moulton said Friday.
"We're going to use the money, number one, to try to prevent and diagnose disease; number two, to support research for disease; and number three, to treat disease, with a major emphasis on tobacco-related disease," Moulton said.
Under the terms of a December 1999 agreement between USA and the state, the Siegelman administration committed the state to pay the university $20 million within 10 years. The money is essentially a reward for the university's role in the legal battle against so-called Big Tobacco, state and university officials say.
In spring 1997, the university sued cigarette-makers in Mobile County Circuit Court, seeking to hold the industry responsible for tens of millions of dollars spent by USA hospitals treating indigent patients suffering from tobacco-related diseases. That lawsuit was among numerous government-related lawsuits filed throughout the country against the industry, most of which were filed by states.
Alabama Attorney General Bill Pryor, who then as now was philosophically opposed to government lawsuits against cigarette-makers, refused to file suit on Alabama's behalf, and sought to stop USA from pursuing the case. In May 1997, Pryor addressed the university trustees, and then-university president Fred Whiddon, but failed to persuade them to drop the suit.
In November 1998, cigarette-makers settled with the states, and agreed to pay about $248 bil lion over the 25 years. Alabama's portion will be about $3 billion. Moulton said that because Alabama didn't file it's own suit, USA's 1997 lawsuit bolstered the state's claim to receive its share of the settlement money.
Because of an ongoing legal dispute between the university and the USA Foundation, which Whiddon directs, there's bad blood between Whiddon and the current university administration, including Moulton. On Friday, though, Moulton praised Whiddon as the man most responsible for the $20 million headed USA's way.
"No question, Fred Whiddon was the person who initiated this lawsuit and asked our board to approve it, so it's very much to his credit and vision that we were involved in the lawsuit," Moulton said.
Whiddon could not be reached for comment Friday.
According to Moulton, the university could conceivably have continued to pursue the lawsuit, even after the 1998 settlement with the states. Under the terms of the national settlement, any judgment or settlement won by a government entity in a state would be deducted from the tobacco money due that state. For that reason, and others, it was in the state's best interest to agree to the settlement, Moulton said.
Siegelman was more than a little familiar with the case. In March 1997, Siegelman was Alabama's lieutenant governor, and a member of the Mobile-based law firm of Cherry, Givens, Peters, Lockett & Diaz that filed the suit on the university's behalf. The complaint listed Siegelman as one of the plaintiffs' lawyers.
At the time, USA said it would pay the attorneys a percentage of any money won for the university.
Since receiving the first $2 million from the state on Nov. 3, USA has paid $280,000 to Siegelman's old law firm, now called Peters, Redditt, Willoughby, Zoghby & Carbo, university officials said. That's equal to 14 percent of the $2 million.
Additional legal fees will be paid to the firm as the money arrives from the state. Assuming the university receives the entire $20 million, then the firm would be paid $2.8 million, according to figures provided by USA.
Siegelman, who is no longer associated with the firm, has repeatedly said that he won't receive any legal fees for the USA case or other tobacco cases he participated in while lieutenant governor.
Moulton said Friday that some of $20 million will be used to help build and fund activities at the university's planned cancer center. Under a recent agreement, though, the Alabama Public School and College Authority - an arm of the state - has committed to provide $2.5 million to help USA pay for construction of the Children's Rehabilitation Services building. That money will be credited against the state's $20 million tobacco-money pledge to USA.
The Alabama Public School and College Authority will pay the $2.5 million as the university submits construction invoices to the authority, USA officials said.