The government reduced the "asking price" of the monetary compensation because they have 0.1% chance to win this case. In order to win a RICO type lawsuit (I know there are lawyers on the board who would have way more info on this than I) they have to first prove that the tobacco companies willfully with-held information about the dangers of smoking in the past, currently are doing so, and would be likely to do so in the future.
Even if they could prove that Big Tobacco did mislead the public in the 1940's and 1950's, there is no way they can win this case due in large part to the way that companies like Philip Morris currently do business.
For example, after the Master's Settlement Agreement (MSA), tobacco companies have severe limitation on advertising. This is why you don't see magazine and billboard ads. Also why Joe Camel has gone the way of the dodo.
PMUSA spends tons of cash funding Youth Prevention Programs, and even partially funds those crappy TRUTH.com ads you see on tv. There is also a program smokers can enroll in to help them stop smoking.
Oh yeah, the government was collecting tax on cigarettes way back then too. In fact, the very product they claim was used to mislead the public, they made a ton of money on. Strange you don't hear about that isn't it?