UPDATE: Jury Finds Tobacco Cos Not Responsible For Smokers' Health Costs

Altria Group Inc.'s (MO) Philip Morris USA said a St. Louis state-court jury has returned a verdict for a number of tobacco companies, agreeing that 37 Missouri hospitals couldn't recover costs for treating sick smokers.

Lorillard Inc. (LO), Reynolds American Inc.'s (RAI) R.J. Reynolds Tobacco Co. and others were also named in the suit.

Tobacco companies face frequent legal challenges, though this was just the third health-care cost recovery case to go to trial. The industry has been busy with thousands of cases in Florida following the decertification of a class action complaint in 2006. Philip Morris USA said last month it had won seven of the last 10 so-called Engle progeny cases tried in the state.

The city of St. Louis and a number of area hospitals sued the tobacco companies in 1998, alleging they misrepresented the dangers of smoking. The city and hospitals sought $455 million in compensatory damages to cover the costs of treating smoking-related conditions for patients who couldn't cover their own health-care costs. The trial began Jan. 10.

"The jury agreed with Philip Morris USA that ordinary cigarettes are not negligently designed or defective," said Murray Garnick, Altria Client Services associate general counsel.

To date, the company said, 17 state and federal appellate courts have rejected health-care recovery cost claims.

"The jury's verdict confirms this was a misguided legal theory that hospitals somehow lost money from treating individuals who smoked," said Lorillard General Counsel Ronald Milstein.

A representative from Reynolds American wasn't immediately available for comment.

-By Melissa Korn, Dow Jones Newswires; 212-416-2271; melissa.korn@dowjones.com

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