TCS Daily

The 'Ruinous Sport', Round 2

By Duane D. Freese - July 28, 2004 12:00 AM

The juxtaposition couldn't be more ironic. On the same day that the U.S. Senate finally moved to have tobacco regulated by the Food and Drug Administration and tobacco farmers bought out by the tobacco industry, Health and Human Services Secretary Tommy Thompson announces Medicare will pay for obesity treatments.

Once Medicare pays for treatment, can Medicaid be far behind? And then lawsuits by states attorneys general to reimburse their states' costs as happened with tobacco?

A lot of attention has been focused on obesity lawsuits. Their dismissal by courts has received a sigh of relief from those who believe individual responsibility plays an important role in what and how much a person eats.

But there were thousands of tobacco lawsuits brought before the tobacco settlement in 1998, and only four ever won any kind of jury award.

The tobacco industry didn't face any real trouble until attorneys general in Mississippi and West Virginia decided to make a case out of their states' Medicaid costs and went after the industry for restitution on the basis it was unjustly enriching itself at state expense. Florida's legislature then took the unique step of stripping the industry of the usual protections a business has against a tort claim -- contributory negligence and assumption of risk -- opening the door to a lawsuit by its attorney general.

This ultimately set the stage for the grand $240 billion settlement, in which 46 states grabbed a pot full of tobacco money for their general treasuries on the notion that smoking had raised their health care costs.

The tobacco industry argued then that this would open the door to other industries facing similar suits in the future. Proponents of the tobacco suits, such as George Washington University Law Professor John Banzhaf pooh-poohed such notions.

"The tobacco industry usually doesn't argue about what we do to them," he said in 1997. "They say, `Wouldn't it be horrible if it spread?' But there's no other industry in the United States that kills anywhere near 500,000 people a year."

Only now, Banzhaf is helping mastermind lawsuits against the fast food industry. If the federal government recognizes claims for obesity treatments, that will provide some solid costs for lawyers to focus upon. And if states follow Medicare's practice, for their workers and Medicaid, what more could any zealous attorney general ask?

And they will have a real incentive to pursue actions, for their states will need new sources of revenue for their treasuries as the tobacco settlement money -- plus money from tobacco taxes -- declines with the decline in smoking.

According to the General Accounting Office, only 19 percent of this year's $11.4 billion tobacco installment will go to health care and smoking cessation. The rest will go for other needs, including a whopping 54 percent to cover state budget shortfalls. Meanwhile, the 300 trial lawyers from 86 firms will continue to draw about $1 billion a year for helping negotiate (some would say extort) the 25-year settlement.

But here's the bad news. This year's allocation is down nearly a billion dollars from 2003, and the Council of State Governments estimates a decline in smoking will lower settlement returns $14 billion over its life.

Where to make up the difference? As Victor Schwartz, a leading expert on tort law, has warned, the great danger to the food industry is state attorneys general filing lawsuits demanding compensation for Medicaid expenses, as they did with tobacco.

You already have the spade work pretty much done. Kelly Brownell of Yale University compares Ronald McDonald to Joe Camel, and a movie by Morgan Spurlock, Super Size Me, is filled with all the junk science you'd want to vilify the food industry, including the addictive qualities of cheese and fat.

Most of all, though, you have a change in attitude about personal responsibility and freedom.

As George McGovern lamented in the New York Times at the time of the tobacco settlement talks in 1997, "[W]e are becoming less tolerant and more mean-spirited in everyday social interactions. We have become less forgiving. Suing institutions as well as each other for perceived harms has become a ruinous sport."

The tobacco wars are over. The food wars have just begun. Just follow the money.


TCS Daily Archives