Lawyers Will Win States' 'Tort Lotto'
Wagner, David, Insight on the News
Private lawyers stand to make fortunes as `special attorneys' representing state governments against big tobacco, under new rules designed to guarantee that defendants can't win.
What would you say to a fee of $7,700 per hour? That's how much certain plaintiffs' attorneys stand to make in Florida's lawsuit against the tobacco industry to recoup Medicaid costs, as calculated by a free-market policy analyst. Similar jackpots are on tap in other states.
Robert Levy, a senior fellow in constitutional law at the Cato Institute in Washington, notes that this figure assumes 24-hour workdays and seven-day workweeks during a 42-month period. If we assume the lawyers occasionally ate, slept and visited the necessary during those 42 months, the hourly rate goes even higher.
Evidently, say critics, some members of the plaintiffs' bar believe allegedly obscene profits should be redirected from the tobacco industry to their own.
The exorbitant hourly rates, if achieved, would not be the fruit of ordinary tort lawsuits by individuals against the tobacco giants. Instead, it would come from lawsuits brought by states seeking to recover their Medicaid funds from the industry.
Florida amended its Medicaid Third-Party Liability Act in 1990 and again in 1994, creating a virtual can't lose situation for the state when it sues an industry to recoup Medicaid expenses. According to Levy, these amendments altered several traditional rules of the common law of torts:
* They abolished the "assumption of risk" defense, i.e. the argument that the plaintiff knowingly took the risk and therefore cannot recover damages;
* Causation need no longer be specific. Whereas in an ordinary tort case the plaintiff has to show that the defendant directly caused the plaintiff harm, in Florida Medicaid cases the state, as plaintiff, can substitute "statistical analysis" for particular causation;
* The state need no longer identify individual Medicaid recipients whose costs it supposedly is trying to recoup;
* The court may apportion liability among different companies based on "market share";
* No statute of limitations now is valid in Medicaid cases;
* If the state wins (and under these rules, it can hardly lose), it is authorized to recover "reasonable" attorney fees for outside counsel.
Florida enacted these changes by statute. The Legislature eventually voted to repeal them, but Democratic Gov. Lawton Chiles vetoed the repeal bill. Meanwhile, similar changes are working their way through the legislative process in Iowa, Maryland, Massachusetts and Vermont, and have been put into effect by judicial decision in Texas.
It is the rule allowing fees for outside counsel that represents the jackpot for the trial attorneys. The states that are bringing Medicaid lawsuits against the tobacco industry argue that their limited staffs of state-salaried lawyers are no match for the armies of blue-chip law firms, staffed by phalanxes of former Harvard Law Review editors, that the industry can afford to throw at them. So the states need to hire crack tort lawyers from the private bar. And, for the same budgetary reasons that prevent the states from handling these cases solely with state-salaried attorneys, the private attorneys brought in to help must be recompensed on a contingency-fee basis: that is, they get a percentage of any monetary verdict or settlement.
In Levy's view, this sets up a very problematic relationship between the state and the private bar. "These new rules have the effect of punishing the industry," he tells Insight, "and the private `special attorneys' are in effect auxiliary prosecutors.
"But is it proper for the state to use the private bar on a contingency-fee basis? Prosecutors -- unlike private attorneys -- are supposed to balance the needs of the legal system against zeal for courtroom victory. They have to protect all parties, including the defendant. …