Nova Scotia is netting $12.4 million as part of a recent $550-million legal settlement with two tobacco companies related to contraband cigarettes in the 1990s.

Maureen MacDonald, the minister of Health Promotion and Protection, said Thursday that she didn’t know if the province had yet received the payout.

“We certainly are looking forward to it arriving,” MacDonald said at Province House.

North Carolina-based R.J. Reynolds Tobacco Co. will pay the Canadian, provincial and territorial governments $325 million as part of a settlement last week to deal with claims related to cigarette smuggling. A Reynolds subsidiary, Northern Brands International Inc., has been fined $75 million after pleading guilty under the Criminal Code to one count of conspiracy for helping others sell contraband smokes.

And the Canadian tobacco manufacturer JTI-Macdonald Corp. has been fined $150 million after pleading guilty under the Excise Act to helping people sell and possess contraband tobacco.

The provinces will share $491 million of this, with Nova Scotia getting about 2.5 per cent.

Liberal Health Promotion critic Diana Whalen said the money should be invested into marketing programs at the district health authorities that are aimed at stopping people from smoking.

“Money invested in smoking cessation programs has had a tremendous impact on our province,” Whalen said.

“We have actually had a decrease in the number of Nova Scotians smoking and it has had results.”

She pointed out that the U.S. Centres for Disease Control recommended that a province the size of Nova Scotia should spend about $4.7 million on tobacco control strategies, which is $2.3 million more than the amount currently spent.

Ottawa sued major tobacco companies in 1999 but that case was dismissed by a U.S. court.

In 2003, the federal government sued the tobacco companies again for $1.5 billion, alleging they avoided paying taxes while conspiring in what police called the largest corporate fraud in Canadian history.

Canadian companies apparently shipped cigarettes to American subsidiaries. The smokes were then sold to smugglers and brought illegally into Canada through native reserves and border checkpoints. Once back in the country, the cigarettes were sold to consumers at a discount, sometimes for about half the price of those legally purchased.

Meanwhile, tobacco companies were lobbying governments to lower cigarette taxes.

The recent legal settlement brings the amount that tobacco-makers have paid governments in fines or legal settlements to $1.7 billion. Settlements were already reached in 2008 with Imperial Tobacco Canada Ltd. and Rothmans Benson & Hedges

The nation’s two largest cigarette companies said yesterday that they made their annual payments as part of a legal settlement with states over smoking-related health costs.

However, both companies say they do not owe a portion of the payments and will attempt to recover the money through arbitration.

The nation’s largest cigarette maker, Henrico County-based Philip Morris USA, said it made its full payment of about $3.6 billion, which will be distributed among states that were part of the national tobacco settlement, including Virginia. The payment includes a disputed amount that the company would not disclose.

Separately, Winston-Salem, N.C.-based R.J. Reynolds Tobacco Co., which is owned by Reynolds-American Inc., said it made a payment of $2 billion, including $448 million that was deposited into a disputed payments account.

The disputed payments concern a provision in the 1998 legal settlement between the companies and the states. Under the settlement, the cigarette makers that agreed to the deal may reduce their payments if they lose market share to competitors that did not sign the settlement.

Philip Morris USA said it has paid more than $51 billion since 1997 to the states as part of the settlement. A spokesman for Reynolds said the company has paid about $24 billion into the settlement, including about $1.65 billion that the company disputes it owes.

After ten days of testimony, the case brought by the widow of a Gainesville-area man against the tobacco corporation R.J. Reynolds went to the jury at about 3:30 p.m. Thursday.

A panel of eight jurors are asked to decided whether Arthur Lamar Hall was addicted to cigarettes containing nicotine and if that was the cause of his death from lung cancer in 1995.

Also key to the case is the question of whether the tobacco company concealed or omitted information regarding the dangerous health effects of cigarettes.

Attorney Mark Avera, speaking for Hall’s widow, Amanda Jean Hall, said that she takes some responsibility for her husband’s lifelong smoking habit.

He asked the jury to award her $15 million in compensatory damages, saying the award should be equal to the amount of pain and suffering she has gone through at the time of his death and in the 15 years since.

The plaintiff’s attorneys are also seeking punitive damages.

“I say there is no question that R.J. Reynolds should be held accountable for its poor choices,” Avera said.

Speaking for the tobacco company, attorney Dennis Murphy said the case was indeed about choices but should focus on the personal choices made by Lamar Hall, who began smoking at 14 and continued for 38 years.

“Mr. Hall’s death could not be proven to be caused by smoking,” Murphy said in his closing statement, noting that Hall was aware of the risks, he could have quit smoking and nothing R.J. Reynolds did had any effect on his behavior.

He also suggested that Hall’s lung cancer could be a result of the 30 years he spent working as a carpenter.
The evidence, Murphy contends, shows that Hall was 100 percent responsible for his actions, and the tobacco company had no such responsibility.

Hall died in 1995; his death certificate lists the cause of death as lung cancer.

The case is the first to be heard in North Central Florida after a landmark ruling by the Florida Supreme Court in 2006. The high court upheld a jury verdict finding tobacco companies liable for smoking-related injuries and deaths, but it said smokers and their family members must bring individual suits to prove that smoking harmed them.

In the class-action suit known as the Engle case, a jury awarded $145 billion in punitive damages against the tobacco industry. The Florida Supreme Court reversed that award but opened the door to individual suits such as Jean Hall’s.

In closing, attorney Rod Smith said, “The defendents say this is about Mr. Hall, but it is R.J. Reynolds’ conduct that has brought us to this courtroom today.”

He asked the jury of eight to consider the value to be placed on Jean Hall’s losing “the most valuable thing in her life – the love of her life – forever.

“Lamar Hall was the perfect victim of the biggest conspiracy you will ever hear about,” Smith concluded, saying that tobacco companies had lied to American families for the past 50 years about the dangers of smoking and the risk of lung cancer.

“”His widow sits in this courtroom today seeking justice, not sympathy,” Smith said.

By Diane Chun, Gainesville

RICHMOND, Va. — The Food and Drug Administration is saying in letters to two tobacco companies that flavored, dissolvable tobacco products — that the agency compares with candy and says contain a lot of nicotine — could be particularly appealing to kids and young adults.

The FDA’s Center for Tobacco Products wrote to R.J. Reynolds Tobacco Co., maker of Camel cigarettes, and the smaller Star Scientific Inc. on Feb. 1 voicing concern over smokeless products that are consumed like breath mints but made from finely milled tobacco.

“CTP is concerned that children and adolescents may find dissolvable tobacco products particularly appealing, given the brightly colored packaging, candy-like appearance and easily concealable size of many of these products,” Dr. Lawrence Deyton, director of the Center for Tobacco Products, told the companies.

Deyton said regulators are worried the products’ nicotine content and rapid dissolution could cause nicotine dependence and addiction and be especially dangerous to children and young adults.

He asked the two best known makers of dissolvable tobacco products to provide their research and marketing information on how people under age 26 perceive and use the products.

Exercising new power to regulate tobacco that the FDA was granted in June, Deyton also requested research on misuse of the products, including potential accidental nicotine poisoning.

Regulators also want a summary of user demographics, including at what age “tobacco-naive consumers” start using the products.

The products are available in few markets and account for a small share of the tobacco industry.

Star Scientific, based in Petersburg, Va., markets its Ariva and Stonewall tablets in wintergreen, coffee and tobacco flavors. The first versions appeared about nine years ago.

R.J. Reynolds, which is owned by Reynolds American Inc. in Winston-Salem, N.C., is test-marketing dissolvable tablets, strips and a toothpick shape under the names Camel Orbs, Camel Strips and Camel Sticks in mint and other flavors.

The Orbs last about 15 minutes, the strips dissolve in five minutes or less and the sticks, which are slightly bigger than toothpicks, last 15 to 20 minutes.

The FDA is seeking the information as its Tobacco Products Scientific Advisory Committee prepares to study the issue later this year.

Reynolds spokesman David Howard said that company is reviewing the FDA’s request and plans to help regulators evaluate the products.

“Our products are made for, and marketed to, adult tobacco consumers,” Howard said. He said dissolvable items are sold on the same shelves as other tobacco products and carry the same warnings and age restrictions.

Star Scientific, which has been involved in a patent dispute over some of the technology behind its dissolvable products, disagrees with the FDA’s characterization of them and looks forward to speaking with regulators, spokeswoman Sara Troy Machir said.

“The challenge that we have faced in attempting to meet the needs of adult smokers … is to develop a product that is palatable to the customer while at the same time not making it attractive to the non-tobacco user,” she said

Machir said flavors are added to the products to make them taste less harsh.

Tobacco companies are focusing on cigarette alternatives — such as cigars, snuff and chewing tobacco, as well as other forms of nicotine replacement — for future sales growth as demand for cigarettes continue to decline.

By MICHAEL FELBERBAUM