Sue 'Em if You Got 'Em
Smokers eventually wither and die, but in Minnesota tobacco litigation seems to go on forever. In May Attorney General Skip Humphrey announced the jaw-dropping $6.1-billion settlement against the tobacco industry, four years after the state filed suit. Co-plaintiffs Blue Cross and Blue Shield of Minnesota pocketed $469 million. But resolution of that case only cleared the way for a new round of court filings.
Within a week of Humphrey's victory, Blue Cross subscribers sued the health-service plan, arguing that the nonprofit should turn its winnings over to its members. (That suit was dismissed this month, but the decision may be appealed.) In July a crew of litigious smokers who received medical assistance from the state filed a class-action lawsuit against the state, arguing that they're entitled to recover the difference between Minnesota's settlement and what the state actually spent to treat them. And in August, Northfield Republican Sen. Tom Neuville and another individual filed suit to prevent the Minneapolis-based law firm of Robins Kaplan Miller & Ciresi, who represented the plaintiffs, from receiving its $440-million cut of the action. In the wake of the Minnesota settlement, those set to be showered in gold are quickly finding themselves dragged back into court, by anyone and their lawyer who figure they, too, deserve a share of the spoils.
Who's next in line for these secondhand smoke suits?
Hennepin County, it seems--the big cigar among local governments around the state who've begun to huff and puff about recouping their own tobacco-related health-care costs. Its Board of Commissioners--which governs and sets policy for the county--soon may independently sue the industry, and the board has already explicitly directed its lobbyists to press the state for a piece of the settlement.
Board chair Randy Johnson has never smoked cigarettes, but he's faced his share of tobacco-inflicted indignities. "I had a pipe for a while in college," he recalls with a chuckle. "I enjoyed the aroma, but it kept burning holes in my pants." These days Johnson figures it's the tobacco industry that's been leaving burn holes in the county's back pocket: Health-care costs have surpassed social services as the number-one expense in Hennepin County's budget, accounting for roughly $425 million--about 32 percent--of its more than $1.3 billion in expenditures in 1997. (The county gets roughly 23 percent of its revenue from state and federal sources.) According to Hennepin County Medical Center administrator John Bluford, smoking-related costs for inpatient health care at the hospital topped $54.2 million in the past year alone.
But the best yardstick for claims the county might seek are its costs for what Bluford calls "uncompensated care"--that is, services provided by the county that no one ever paid for, whether it was bad debt or charity care. Between 1970 (when the county started keeping track) and 1997, total costs for uncompensated care had reached more than $419 million. Working on the assumption that roughly 15 percent of those costs are tobacco-related, Bluford floats the figure of $63 million as a foundation for figuring the county's potential claims. "That's one kind of starting point," Johnson says of those estimates. "And probably a low one." But the numbers at least give a sense of the scale this next-in-line suit could eventually amount to.
Johnson first touted the idea of suing the tobacco industry in his State of the County Address in April--just after a national settlement had collapsed, and just prior to the climax of Minnesota's case--when the self-described "pretty conservative corporate lawyer Republican" demonized tobacco companies as "greedy, cynical corporate merchants of death." At the time, he also promised to ask County Attorney Mike Freeman to advise the board on "our best legal strategy in promptly filing suit."
Since then, things have proceeded quietly. The seven-member board, along with County Administrator Jeff Spartz, Deputy County Attorney Pat Diamond, and county health officials, met in a closed-door session on May 28 to discuss potential litigation strategies. Behind the scenes, they've been trying to calculate the size of the county's potential claims. Johnson stresses that it's still "very early" in the trajectory of the board's plans, but says the suit could be filed by year's end.
Although talks have so far focused on another courtroom face-off with the tobacco industry, the county clearly appears willing to sift through any number of pockets for spare change. On June 2 the board unanimously passed a resolution directing staff to "identify and assess the county's legal position and potential claims against any appropriate party." Separate resolutions directed the Minneapolis-based law firm of Lockridge Grindal Nauen & Holstein to track tobacco legislation on the federal level, and to lobby on behalf of the county for proceeds from the state's settlement.
But Doug Blanke, consumer policy director with the state Attorney General's office, says unequivocally that Minnesota's settlement wasn't meant to include counties: "Their expenses would not have been covered in our state lawsuit." He also points out that, during negotiations, the state adamantly refused to cut a deal with the industry that would have precluded further litigation in Minnesota--leaving the door open for counties and other local governments to file their own suits, at their own expense.
Tammy Lee, spokesperson for the Humphrey campaign, says the state settlement should go to "health, education, and tax cuts for working families," and that local governments "have their own battles to wage in the courtroom." Humphrey, who handily won the September 15 primary (beating out DFL-endorsed Freeman), has enjoyed a 98-percent name recognition rating with voters, but Lee thinks his courtroom win was also a factor: "I think tobacco was a metaphor for leadership in the voters' minds."
From his seat on the sidelines, Johnson (who happens to be up for uncontested re-election this fall) doesn't think the issue carries much political currency: "I don't think Skip picked up 20 votes in the whole state because of tobacco." The real war will likely be fought in the trenches of the next legislature, which is set to divvy up the bulk of the state's settlement. As for the two candidates currently running for the Hennepin County Attorney's seat, both Democrat Amy Klobuchar and Republican Sheryl Ramstad Hvass say they are committed to pursuing any claims the county might have.
Should the county board press forward in its pursuit of anti-tobacco reimbursement, the likelihood of co-plaintiffs joining up or copycatting is strong. Jim Mulder, executive director of the Association of Minnesota Counties, notes that 19 of the state's 87 counties are home to county hospitals. Mulder says the association is now weighing whether it will become party to any litigation against the tobacco industry, but does plan to lobby the state for a chunk of its settlement. "Some of what they've recovered we believe they should share with the counties," he argues, noting that substantial local dollars have been expended on health care. "We're doing some waiting for Hennepin County to figure out where they're at."
Ramsey County Attorney Susan Gaertner confirms that her office, too, is reviewing its health-care costs related to smoking, and says that litigation is under "active consideration." She adds, "We're certainly talking to Hennepin County on a regular basis. I think there are certainly advantages in a joint, consistent posture." Neither Mulder nor Gaertner is yet willing to put a dollar value on their potential claims.
On the national front, San Francisco became the first city in the country to sue the tobacco industry in June 1996; Los Angeles, San Jose, and 15 California counties quickly followed suit. So far, the original case is still in the discovery phase, but an agreement between the counties and the state of California calls for any proceeds to be split 50-50, a precedent that local governments everywhere likely envy.
For his part, Johnson says it's possible for the county to stay out of court if a national tobacco deal including monies for local governments surfaces. Although he professes a desire to recoup property-tax dollars spent on tobacco-related health care, he doesn't foresee a tax refund emerging from any recovery of funds. "I don't know how we would do that, because some of the people who paid the taxes are dead, others have sold their property and moved," he says. "What I would envision is any money recovered would go into the county general fund, or the health fund, and offset property taxes over the next few years."
Johnson concedes that if Hennepin County succeeds in winning on any front, it could easily become the next moving target for yet another round of tobacco lawsuits--brought by taxpayers or anyone else willing to pay the filing fee. In other words, don't spend your cigarette money until everyone's kicked the litigation habit.
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