Bracing for the possibility of big verdicts in nearly 9,000 lawsuits in Florida brought by sick smokers, Big Tobacco is backing legislation that sets a $100 million cap on the collective amount of bonds that would have to be posted to file appeals.
Sen. Mike Haridopolos, a Melbourne Republican, said he sponsored the bill because of concerns that large verdicts could threaten tobacco companies’ ability to pay hundreds of millions to Florida each year under a landmark settlement reached in 1997. “If they have all these verdicts against them, they could be forced to file for bankruptcy and we wouldn’t get any of those settlement dollars,’’ Haridopolos said.
Losing parties that appeal a judgment are required to post a bond to cover the full amount of damages plus interest. The bond, usually purchased from an insurance company, guarantees the judgment will be paid if the appeals fail. Haridopolos’ bill would eliminate the requirement that tobacco companies post a bond in each case once the value of the bonds reaches $100 million. The limit applies to tobacco companies collectively, not individually.
Lawyers for smokers or their survivors contend the tobacco companies face no financial threat because the premium on an appeal bond is generally a fraction of the damages.
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“They basically get a free appeal’’ after the $100 million is reached, said Stephen Barnes, a Tampa lawyer whose firm is handling more than 450 cases. “This is an extraordinary handout and gift.’’
Lawyers expect it won’t take many cases to reach the $100 million cap. The first of the nearly 9,000 cases went to trial last month in Broward Circuit Court, where a jury returned an $8 million verdict against Philip Morris USA. If enough verdicts of that size happen, Haridopolos said, it will jeopardize Florida’s 1997 settlement with Big Tobacco.
The state sued the tobacco industry in 1995 to recover the cost of treating Medicaid patients suffering from cancer or other smoking-related illnesses. The settling companies agreed to pay the state billions. So far, the state has collected about $6 billion. Big Tobacco passed on the cost, about 50 cents a pack, to customers.
Robert Loehr, a Pensacola lawyer whose firm is handling about 45 cases, doesn’t buy Haridopolos’ reasoning for the bill.
“It sounds as if the legislation is opting for the health of the cigarette industry as opposed to the health of the citizens of Florida,’’ Loehr said. “They are saying they want to make sure they stay solvent to sell deadly products so they can keep paying the settlement.’’
The nearly 9,000 cases are an offshoot of a 1994 class-action suit brought by Dr. Howard Engle, a Miami Beach pediatrician who claimed the tobacco companies intentionally addicted smokers.
In 2000, a Miami-Dade jury awarded the class, estimated to have some 750,000 members, more than $145 billion in damages. The Florida Supreme Court overturned the award, ruling smokers must prove in individual cases that cigarettes caused their illnesses.
During the trial, Florida lawmakers adopted a law that capped the amount of the appeal bond at $100 million.
The cap should apply to the nearly 9,000 ‘’Engle-progeny’’ cases because they pose the same risk to the state’s continued receipt of the tobacco settlement payments as the original Engle verdict, said David Sutton, a Philip Morris USA spokesman. ‘’It is more critical than ever to protect the hundreds of millions of dollars Florida receives from the tobacco settlement agreement each year,’’ Sutton said.