PASCAGOULA, Miss. (Legal Newsline) - A county judge heard Monday a claim by Mississippi Attorney General Jim Hood that the State has received "substantially less" than it should have under a settlement agreement with tobacco company R.J. Reynolds.

According to the Mississippi Press, Jackson County Chancery Judge Jaye Bradley presided over the non-jury trial, which is expected to last two days.

Hood filed the lawsuit in February 2010. He alleges that R.J. Reynolds Tobacco Co. "overstated" its 1997 base-year profit and has failed to report shipments of "free," "continuity," and lost or stolen cigarettes.

The tobacco company was part of a master settlement agreement in 1997 that included 46 states and was led by then-Mississippi Attorney General Mike Moore.

Mississippi, which was represented by now-jailed attorney Richard "Dickie" Scruggs, had a separate agreement from the 46-state settlement.

"When it shipped these cigarettes, R.J. Reynolds necessarily anticipated that they would be consumed by smokers in the United States and all or virtually all of them were in fact consumed in the United States, thus contributing to Medicaid and other costs that the Mississippi Settlement payment amounts were intended to offset," Hood wrote in the lawsuit.

"Under any plausible meaning of the term, these cigarettes were 'shipped for domestic consumption,' and they should have been included in the Actual Volume figures reported by R.J. Reynolds."

The attorney general says R.J. Reynolds should be required to report the actual number of cigarettes it shipped for domestic consumption in each year beginning in 1997 and to include in such figure the promotional, free, "continuity incentive," and lost or stolen cigarettes it failed to report.

Then the correct amount the State is entitled to receive under the settlement can be calculated, Hood says.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.