---
title: Court Rules Tobacco Companies Cannot Offset Payments to Maryland, Brown Says
canonical: https://marylandfeed.com/court-rules-tobacco-companies-cannot-offset-payments-to-maryland-brown-says/
published: '2026-11-02T12:31:26-05:00'
updated: '2026-11-02T12:31:26-05:00'
author: MarylandFeed Staff
section: Attorney General
places:
- Baltimore City
tags:
- Settlements
- Attorney General
- Lawsuits
- Medicaid
source: Office of the Attorney General of Maryland
source_url: https://oag.maryland.gov/News/pages/attorney-general-brown-secures-first-in-the-nation-ruling-protecting-maryland%e2%80%99s-tobacco-settlement-funds.aspx
publisher: MarylandFeed
attribution: Copyright MarylandFeed. Quote with credit to MarylandFeed and a link to the canonical URL above.
---

# Court Rules Tobacco Companies Cannot Offset Payments to Maryland, Brown Says

On November 2, 2026, the Circuit Court for Baltimore City ruled that tobacco companies cannot reduce their payments to Maryland under the 1998 national Master Settlement Agreement to cover costs from a separate lawsuit filed by Baltimore City. Attorney General Anthony G. Brown announced that the ruling protects funding for healthcare related to smoking-related diseases and allows Baltimore City’s lawsuit against the tobacco companies to proceed.

The court found that [the Master Settlement Agreement](https://www.naag.org/our-work/naag-center-for-tobacco-and-public-health/the-master-settlement-agreement/) does not cover local government claims for environmental damage caused by tobacco products, according to Brown's office. The ruling means the companies are not entitled to an offset against Maryland’s settlement payments for any damages awarded in the Baltimore City case.

---

### Press Release: Office of the Attorney General of Maryland

*Published November 2, 2026. Reproduced in full from the [Office of the Attorney General of Maryland](https://oag.maryland.gov/News/pages/attorney-general-brown-secures-first-in-the-nation-ruling-protecting-maryland%e2%80%99s-tobacco-settlement-funds.aspx).*

#### Attorney General Brown Secures First-in-the-Nation Ruling Protecting Maryland’s Tobacco Settlement Funds

***Court Rejects Tobacco Companies’ Attempt to Shift Costs of Environmental Lawsuit onto State Public Health Funding***

**BALTIMORE, MD**: Attorney General Anthony G. Brown today announced that the Circuit Court for Baltimore City ruled that tobacco companies cannot reduce the payments they owe Maryland under the 1998 national Master Settlement Agreement to cover any money they may owe Baltimore City in a separate lawsuit. The ruling protects the millions of dollars Maryland receives each year to pay for healthcare for people with smoking-related diseases and for other public health programs. It also allows Baltimore City’s lawsuit against the tobacco companies to move forward.

In 1998, Maryland and 51 other states and territories reached [the Master Settlement Agreement](https://www.naag.org/our-work/naag-center-for-tobacco-and-public-health/the-master-settlement-agreement/) with the nation’s largest tobacco companies. The agreement resolved the states’ claims to recover Medicaid costs for treating smoking-related diseases. It requires the companies to stop certain marketing practices and to make payments to the states every year, with no end date.

Several years ago, Baltimore City sued the tobacco companies, including Philip Morris USA and R.J. Reynolds Tobacco Company, over environmental damage from discarded cigarette filters. In that lawsuit, the companies argued that the Master Settlement Agreement allowed them to subtract any money they might owe the city from their settlement payments to Maryland. The Office of the Attorney General (OAG) joined the case to protect the settlement funds. The court granted the OAG’s motion for summary judgment and ruled that the environmental claims are not covered by the Master Settlement Agreement.

The decision is the first in the nation to address whether the Master Settlement Agreement covers a local government’s claims against tobacco companies for environmental damage caused by their products. The court found that the agreement is limited to youth smoking and the public health problems caused by smoking. Thus, Baltimore City’s claims that disposed cigarette butts have caused environmental damages are outside the scope of the agreement and, accordingly, the tobacco companies “are not entitled to an offset” against Maryland’s settlement payments for any damages awarded in the Baltimore City case.

Source: [Office of the Attorney General of Maryland](https://oag.maryland.gov/News/pages/attorney-general-brown-secures-first-in-the-nation-ruling-protecting-maryland%e2%80%99s-tobacco-settlement-funds.aspx)