By C. David Fonvielle, Firm Partner

In 1995, a combination of 11 law firms accepted Governor Lawton Chiles’ challenge to join him in an effort to make tobacco companies pay for the damages their years of lying and deception had caused to the health of Floridians. It was a huge gamble. The tobacco companies had never paid out one cent in damages as a result of a liability lawsuit. But when it was over, Florida had defied the odds and won a historic victory worth more than $13 billion. Here’s how it happened.

Now that all the hype surrounding the Florida Tobacco case has settled down, the time seems right to tell the true story behind this historic litigation and settlement. If you followed the press since the settlement occurred, and believe what you read, you may be in for some surprises. First of all, I believe we should “give due credit where credit is due.” The case of the State of Florida vs. Big Tobacco was the result of one man’s vision and concern for Florida’s citizens: the late Governor Lawton Chiles.

 

One Man's Vision and Concern: “In 1994, we started a grueling four-year fight against a well-financed, shrewd and calculating industry. It was a long and sometimes lonely battle. Hard to imagine now, but back then, this was not a sure thing. Those times were much different.” — The Late Governor Lawton Chiles

A Major Health Problem for Florida –
An Innovative Solution

During his deposition in the case, taken in our conference room, Governor Chiles explained in detail that in 1993 he began asking why Florida’s Medicaid costs were constantly increasing and amounting to such a huge part of the annual budget. Research was done at Governor Chiles’ direction and the results revealed that in 1994, the treatment of smoking related diseases made up $400 million of Florida’s Medicaid budget. The next question was whether or not there was any way to control and reduce this huge expense to Florida’s citizens. The answer was equally alarming to the Governor because research verified that the expense was directly related to the number of smokers in the State of Florida. Perhaps, Governor Chiles thought, if we could reduce the number of smokers, we could ultimately reduce the expense to Florida’s Medicaid budget. Further research revealed, however, that it was unlikely that smoking would decline in the State, and it was virtually guaranteed that the number of smokers would remain constant, if not increase. The controlling factor seemed to be the fact that the number of teenage smokers was increasing, thereby providing a replacement market for the Tobacco Industry as older smokers died.

Was it a coincidence that Joe Camel was as well recognized by our youth as Mickey Mouse, or was there some effort being made by the Tobacco Industry to target our children to replenish their market? What about the Marlboro Man, that big, healthy looking guy riding his horse into the sunset, or that gorgeous Virginia Slims lady? Were the ads intended to mislead the public into thinking that smoking was healthy and would make you look and feel better? It seemed likely that something was very wrong with this picture.

For the Tobacco Industry, it could be a simple and profitable equation: manufacture and market a very profitable but deadly product and pass the consequential expenses, in the form of predictable medical treatment, onto someone else.Resolve the concern that your product was killing off your customers by creating a perpetual market through promoting tobacco to teenagers and otherwise convincing certain segments of the public that by smoking they would be seen by others as healthy, athletic, or beautiful people. What if your product was addictive, and you could hook your users for life at an early age? What was going on?

It was easy to see that Florida’s equation was just as simple: never-ending Medicaid costs were created by the Tobacco Industry’s promotion and marketing of a legal, but lethal product – tobacco. As Florida’s population continued to increase, the cost to the State for smoking related medical care would follow. Meanwhile, these same factors, which resulted in increased Medicaid costs to Florida, guaranteed continued profitability for the Tobacco Industry. Someone had to be laughing all the way to the bank and it certainly wasn’t Florida’s citizens.

Why should the citizens of Florida pay for this medical care while a huge industry profited from promoting and selling the very product which was causing the disease and resulting medical expense? Governor Chiles pursued this theory of industrial irresponsibility with several of his closest advisors, and the historic lawsuit of The State of Florida vs. Big Tobacco began to take shape.

Governor Chiles turned to his longtime friend, Pensacola attorney Fred Levin, for advice and assistance regarding the potential lawsuit. Could the State of Florida hire a private trial team on a contingent fee basis? If so, was there a sufficient number of capable and successful personal injury attorneys in Florida who would agree to pursue the Tobacco Industry on a contingent fee and at their own financial risk? It was obvious that the case would be defended by the Tobacco Industry like no other in the history of America’s judicial system, and the extent of the commitment by any law firm to take on this Industry on a contingent fee was difficult to comprehend. The legal community was fully aware of the Cippolone case, where a verdict was rendered against the Tobacco Industry for $400,000 but was overturned on appeal. It was estimated that the Tobacco Industry spent $75 million defending that case. Heaven only knew how much the Industry would be willing to spend to defend a case that would include claims amounting to billions of dollars. It was also well known within the Plaintiff’s bar that at the point Governor Chiles was contemplating this lawsuit, the Tobacco Industry had never paid a dime in any one of the approximately 800 lawsuits previously litigated against them. As the case ultimately proceeded and we prevailed in our attempts to uncover the Tobacco Industry’s “confidential” files, we discovered that Governor Chiles’ initial fears were well founded. In a 1988 memo from one of the R.J. Reynolds Tobacco attorneys to his client, the attorney set out the strategy for defending cases against the Tobacco Industry: “To paraphrase General Patton, the way we won these cases was not by spending all of Reynolds’ money, but by making that other son of a bitch spend all his.” If forewarned is forearmed, we should have been well equipped for the battle.

Fortunately for Governor Chiles, Florida had a law that had been on its books since 1978 which made provision for the State of Florida to recover Medicaid funds expended as the result of a third party’s negligence. Known as the Medicaid Third Party Liability Act, this statute permitted the State of Florida to hire private attorneys on a contingent fee basis for this purpose. Governor Chiles realized it was highly unlikely that the Legislature would allocate the millions of dollars necessary to take on this industrial giant, nor would it allow him to divert the State of Florida’s legal staffs to this project. With no alternative, the decision was made to utilize the Medicaid Third Party Liability Act and hire private, contingent fee lawyers to represent the State, advance the costs, and assume the total risk of this litigation. It turned out that the “He Coon” (a nickname the Governor was known by among his friends) was exactly right in his assumption that the Florida Legislature would never fund such a battle. Once the case was filed, our legislators wanted no part of this high-risk venture and promptly passed a resolution prohibiting the State from allocating any funds or resources to the litigation.

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