Dripping with moral rectitude, Governor Lawton Chiles of Florida has announced an $11 billion settlement of his state’s suit against the tobacco industry. If the goal was to fatten the state’s depleted Medicaid coffers, the governor may be entitled to crow. But for those concerned about the rule of law and due process, the Florida settlement is shameful — not least because it strips a currently unfashionable industry of basic protections the rest of us take for granted. Here’s how the settlement came about.
In more than four decades, despite thousands of claims, no smoker has ever collected one dollar of damages for a smoking-related illness. Juries have understood that we are free to consume whatever legal products we wish, provided we bear the consequences of doing so. Under that basic rule of law — known as “assumption of risk” — states can still sue tobacco companies for Medicaid outlays. But if they do, they must bear the same burden of proof that any smoker would bear — and they must face the same defenses, including assumption of risk.
Unable to prevail in court and unwilling to raise taxes, Florida came up with a creative solution: it simply eliminated assumption of risk as a defense in Medicaid recovery suits and, for good measure, made the new rule retroactive so that it applies to injuries supposedly caused by cigarettes sold decades ago. Even worse, to head off any remaining possibility of an adverse jury verdict, Florida wiped out the requirement for proof of individual causation. Instead of demonstrating that a particular Medicaid recipient’s illness was caused by smoking, all the state has to produce were aggregate statistics showing that certain injuries are more prevalent among smokers than among nonsmokers.
Smokers and tobacco companies should fight out their private disputes in court, applying traditional principles of tort law.
Naturally, the state laughed off the charge that the new law wiped out the industry’s defenses. One of Florida’s lawyers said, for example, “It doesn’t mean that the tobacco industry is defenseless. They [sic] can show that the state has unclean hands, that the state has participated in the activity somehow.” Well, yes, unclean hands is a legitimate defense; but when push came to shove, the state kept that evidence out of court, too. At trial, the state’s attorney bemoaned the “carnage” from smoking, which he predictably laid at the door of the tobacco companies. What he neglected to mention were these embarrassing facts: Ten of Florida’s 23 congressional representatives voted to continue federal tobacco support programs; the state invested $825 million of its pension assets in tobacco stocks; and Florida’s prison system manufactured cigarettes for sale to local jurisdictions and distribution to inmates. When the industry sought to introduce that evidence, the state filed a motion to suppress, and the state judge granted the motion. So much for the unclean hands defense.
Faced with insurmountable legal hurdles — not just in Florida but in dozens of states whose Medicaid suits were patterned after Florida’s — the industry decided to negotiate. Was the settlement consensual? The Florida settlement was no more consensual than the Global Tobacco Settlement now awaiting congressional and administration tinkering. Ask yourself why an industry would agree to disgorge $370 billion, subject itself to regulation by the Food and Drug Administration, overhaul its advertising, eliminate vending machine sales and pay large penalties if targeted reductions in youth smoking were not realized — all in return for partial immunity from litigation that had not cost a single dollar of damages in 40 years. Either tobacco companies could capitulate or they could mount an expensive, time-consuming and ultimately futile challenge to nearly 40 Medicaid suits under a perverted system of law that effectively foreclosed every line of defense. To call this settlement consensual is consummate doublespeak.
Smokers and tobacco companies should fight out their private disputes in court, applying traditional principles of tort law. State Medicaid systems may sue like any other insurance company; but they are subject to the assumption-of-risk defense, and they must prove case-by-case causation and damages. If a plaintiff can show he was defrauded, unaware of the risks and addicted by the industry’s deception, then he should prevail. But the rules must be objective and evenhanded; they must be the same rules applied against any other defendant. Otherwise, we will have bequeathed to our children a message even more pernicious than cigarettes: First, you may change the rules after the game has begun. Second, you can engage in risky behavior because someone else will pay your bills.