Joe Camel, Meet Joe HMO: Health Care Takes Tobacco To Court
Big Tobacco, accustomed to washing its opponents out of court with a tidal wave of big-money lawyers and legal maneuvers, is sailing toward a formidable adversary: Big Health Care. Blue Cross & Blue Shield of Connecticut will cough up $1 million over the next four years to help finance the mammoth anti-tobacco suit the state filed last month. Connecticut Attorney General Richard Blumenthal asked the Blues for the green after hearing about a similar arrangement in Massachusetts. The Maryland attorney general's office is talking to that state's Blue Cross & Blue Shield plan about a possible contribution; other states will undoubtedly do the same. In Minnesota, Blue Cross & Blue Shield has gone a step beyond financial contributions, joining the state government as a plaintiff in its tobacco suit.The stakes are enormous. Connecticut v. Philip Morris Inc. et al., filed in state Superior Court July 18, is the 10th suit brought by state governments trying to force tobacco companies to pay the cost of Medicaid patients' tobacco-related illnesses. Connecticut alone claims $1 billion in past and future Medicaid costs, state employees' health costs and damages to the "general economy." Health insurers are jumping in because they believe the tobacco industry is finally vulnerable in court, says David Vladeck, director of Public Citizen Litigation Group, a Ralph Nader offshoot in Washington, D.C. "And that's big news. Companies like Blue Cross & Blue Shield do not invest money unless they think they're going to get a return on it. This is really a partnership in the fullest sense of the word." By investing, insurers will help fulfill their belief that the tobacco litigation tide is turning, Vladeck says. "The contributions that are being talked about are more than symbolic. They're quite substantial. That will help level what has historically been a completely uneven playing field between tobacco companies and people who believe they've been injured. The ability of tobacco companies to simply swamp plaintiffs has, I think, been a big factor" in their decades of legal invincibility.Look for more insurers to plunge into the tobacco-suit sea, says Richard Daynard, a law professor at Northeastern University and chairman of the Tobacco Products Liability Project. "You're talking about huge amounts of money. It's hard to imagine that these big players aren't sitting around saying, 'How do we do it? How do we jump in?'" The current spate of suits by state governments, along with a sweeping class action by private plaintiffs, represent the "third wave" of litigation against tobacco companies, Daynard says. The first two -Ñ from the late Õ50s into the Õ60s, and then in the 1980s -Ñ crashed on the shoals of industry delay tactics. Of 800 suits filed since 1954, only 23 have made it to court.Those that did go to trial foundered on the notion that smokers, not cigarette makers, are responsible for people's decisions to start and continue smoking even when they know it's bad for them. Or the dying smokers couldn't prove that it was cigarettes alone that made them sick. This third wave will succeed, Daynard confidently predicts. Connecticut and the other states are steering away from the failed personal-injury claims of the past, in which individual smokers blamed cigarette companies for their illness. Instead, the states are trying new legal arguments based on theories of fraud. The Connecticut suit, for example, charges the tobacco industry with a widespread and long-running conspiracy to hide evidence about the harm of tobacco and the addictiveness of nicotine. For more than 40 years, the industry has promised the public that it will diligently research the health effects of smoking. It has done research -Ñ and then suppressed damning results, disbanding laboratories and spiking research papers, the suit charges, drawing on a wealth of internal documents and testimony of former industry employees that have come out in other suits and in Congressional hearings. All the while, the industry spent millions on public relations, aimed at persuading people that cigarettes' danger is still an open question. The Connecticut suit also charges the industry with targeting kids and then lying about it. In addition to Philip Morris, the defendants are six other cigarette companies; Greenwich-based United States Tobacco Co., which makes smokeless tobacco products like Skoal; two industry groups; and the powerhouse New York-Washington PR firm of Hill and Knowlton."Every year, more than 5,000 Connecticut residents die from smoking-related diseases -Ñ 5,000 people whose lives were cut short, leaving behind countless friends and families," Attorney General Blumenthal said in a press release when he announced the suit. "Every year, Connecticut taxpayers spend $100 million to treat the diseases that result from the tobacco industry's relentless effort to addict our residents to their products."The tobacco industry's response to all these claims hasn't changed since the 1950s: It denies everything. People smoke because they want to, industry flacks insist. It's all a question of choice. The scientific evidence -Ñ that's not conclusive. We're still studying it. We've never tried to fool anyone. And of course we don't want kids to smoke. Ask about Blue Cross & Blue Shield's growing role in tobacco suits, and you get the same response: denial. "I don't think I'd be ready to label it a growing role quite yet," says R.J. Reynolds spokeswoman Peggy Carter. "I don't think with 10 lawsuits out there" -Ñ and Blue Cross only involved with three -Ñ "I wouldn't call that a growing role."She's equally dismissive about a Minnesota Supreme Court ruling last month that allows Blue Cross & Blue Shield to press its fraud claims against Big Tobacco. The tobacco industry challenged Blue Cross' legal right to bring suit. The court allowed eight claims to go forward. Carter talks about the one the court threw out. If Blue Cross wins the Minnesota case, it could gain tens of millions of dollars per year in reimbursement for smoking-related health care -Ñ many times what it will spend on the litigation. The Connecticut and Massachusetts Blues plans don't stand to reap those immediate cash gains. If the states win, the insurers are expected -Ñ but not guaranteed -Ñ to get back what they put in. Other than that, the insurers' payoff would come in the form of future savings. The Connecticut suit asks, in addition to money, for a court order halting the tobacco industry's deceptive advertising practices and forcing it to disclose its secret research. Those orders, Blumenthal hopes, would cut the smoking rate.Blue Cross & Blue Shield "knows that successful lawsuits will raise the price of tobacco, reduce the use of tobacco and reduce health care costs," says Raynard, the Tobacco Products Liability Project chairman. "This represents the kind of long-term thinking that I thought had gone out of style in the American corporate world." Insurance "investors" in a successful suit would also contribute to a legal precedent that could help them win money damages in their own suits later on.That's all if the states win. "We strongly believe that neither the facts nor the law is in the corner of the attorneys general," says R.J. Reynolds' Carter. "Why would we settle? They're going to have to go through a long, protracted, expensive legal process. And in the end we believe we will prevail."That promise of protracted and expensive litigation is exactly why states are turning to private funders. "No one is saying that this litigation is going to be a slam-dunk for the states or the insurers," says Vladeck, of Public Citizen Litigation Group. "But the fact that the insurers have entered the game means that it's not going to be a slam-dunk for the tobacco companies either." While Blue Cross & Blue Shield is the first private funder, it's not the last. Since its initial contribution in December 1995, the Massachusetts plan has made additional donations contingent on a dollar-for-dollar match from other corporations and foundations, according to George Weber, chief of consumer protection and antitrust in the Massachusetts attorney general's office. He won't specify how much Blue Cross has spent, but says it's in the "hundreds of thousands." Connecticut, too, is actively raising more money. Blumenthal says he'll announce additional commitments in the next few weeks. Along with money, Massachusetts has received offers of volunteer help from doctors, lawyers, a legal printing company and others, Weber says. Harvard Law School Professor Laurence Tribe, a nationally known constitutional law scholar, is the "architect" of much of the state's legal strategy and has argued both hearings held so farÑall for free. Blumenthal's not ready to name-drop yet, but his office has likewise heard from lawyers and scientists who want to volunteer their time and expertise, he says. "We anticipate that we will put them to work."