Cato Policy Analysis No. 275 June 20, 1997

Policy Analysis

Tobacco Medicaid Litigation:
Snuffing Out the Rule of Law

by Robert A. Levy

Robert A. Levy is senior fellow in constitutional studies at the Cato Institute.


Executive Summary

Tobacco is under siege. No fewer than 39 states are suing the industry to recover Medicaid outlays for smoking-related illnesses. Florida has led that effort with a new statute, allegedly resting on principles of equity, that strips tobacco companies of their traditional rights and puts in their place a shockingly simple rule of law: the state needs money; the industry has money; so the industry shall give and the state shall take.

During the past 40 years, not a single smoker received a single dollar of damages from tobacco companies, as juries repeatedly concluded that smokers are responsible for their own behavior and their own losses. Yet under the new regimen, if a smoker happens to be a Medicaid recipient, individual responsibility is out the window. The same tobacco company selling the same person the same product that results in the same injury is, magically, liable, not to the smoker, but to the state. By legislative fiat, liability hinges on a smoker's Medicaid status, a fortuity totally unrelated to any misdeeds of the industry.

And it gets worse. The state is not even required to show that a particular party was harmed by his use of tobacco. Instead, causation may be proven by statistics alone. One would think that the industry could at least investigate whether patients suffering from "smoking-related illnesses" ever smoked. Wrong. Incredibly, the industry will be allowed to depose only 25 of 400,000 Medicaid claimants.

These lawsuits retroactively eradicate settled doctrine and deny due process to an industry singled out for its deep pockets and public image, not its legal culpability. The mark of a free society is how it treats not its most but its least popular members. The rule of law must be steadfastly upheld today, or none of us will be secure tomorrow.

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