Following Suit


When Attorney General Janet Reno testified before the Senate Judiciary Committee in April 1997, Massachusetts Senator Ted Kennedy noted that four of his colleagues had written a letter urging her to imitate the states that were suing the tobacco companies. He asked her about the possibility of recovering money spent on smoking-related medical expenses under Medicare and other federal programs.

"What we have determined," Reno replied, "was that it was the state's cause of action and that we needed to work with the states, that the federal government does not have an independent cause of action." Similarly, a Justice Department spokesman told the Bergen County Record that "right now, it would seem we don't have the authority to sue."

In August 1998, the Los Angeles Times reported that "the idea of filing a Medicare recovery lawsuit…was rejected, in part because Justice attorneys were concerned that the government lacked legal standing to bring such a suit." The article quoted an outside attorney (presumably a plaintiff's lawyer) who dismissed the skeptics as "nervous Nellies" for worrying about such a minor issue.

President Clinton seems to have a similiar attitude. Though he said in his State of the Union address that he plans to sue after all, the Justice Department still isn't sure exactly why. Janet Reno is assembling a task force to come up with a justification.

That may be hard. Long after the hazards of smoking received wide attention, the federal government continued to profit from the tobacco trade through taxes and actively participate in it by distributing cigarettes to servicemen. For decades, it has forced taxpayers to subsidize other people's health care, knowing that some of those people would smoke and get sick as a result.

Now the administration wants to blame the tobacco companies for that policy. It wants to allocate the blame based on statistical models and market share, and it doesn't want to be inconvenienced by the fact that people know smoking is risky but choose to do it anyway.

Two years ago, the Justice Department apparently concluded that federal law did not permit such a money grab. Last year, there was talk of seeking legislation to authorize it. Suddenly, that's not necessary anymore.

"I'm convinced the decision to file suit was a legal one, not a political one," Matthew Myers, vice president of the Campaign for Tobacco-Free Kids, told USA Today.

Myers probably also believes that Clinton and Monica Lewinsky were just good friends.

For the rest of us, though, it's clear that the relevant laws have not changed since the spring of 1997. To explain the administration's reversal, we have to look elsewhere.

By agreeing to settle the state lawsuits for $246 billion, Philip Morris et al. showed that you don't need a persuasive legal theory to squeeze money out of the tobacco industry. You just need staying power, coupled with the possibility of a catastrophic damage award. The Clinton administration is expected to seek more in damages than all the states combined.

Meanwhile, the failure of tobacco legislation in the summer of 1997, along with a federal appeals court ruling that the Food and Drug Administration does not have jurisdiction over cigarettes, has led anti-smoking activists to seek policy changes through litigation. Emboldened by last fall's settlement with the states, which included restrictions on advertising and promotion, they want more concessions.

A federal settlement would also impose what amounts to yet another regressive tax hike on smokers, who are already reeling from recent increases in state levies and the price jump that followed the industry's settlement with the states. Add the 15-cent increase approved by Congress in 1997 and the 55-cent hike Clinton is seeking, and the average price of cigarettes could rise to $4 or $5 a pack, compared to about $2 in 1997.

This burden falls disproportionately on people of modest means, and it far exceeds any credible estimate of the cost that smoking imposes on taxpayers. In fact, it increasingly looks like smokers are actually saving taxpayers money because they do not live as long as the rest of us.

That may be true even without considering demands on Social Security: A 1997 study in The New England Journal of Medicine found that, if everyone stopped smoking, total medical spending would go up rather than down. If anything, smokers deserve a rebate.