The U.S. Supreme Court refused on Monday to step into the tobacco industry's fight against a Florida law that could cost cigarettemakers more than a billion dollars.
The Florida law, thought to be unique in the nation, strips tobacco companies of many traditional legal defenses against liability involving Medicaid patients. The state is using it in efforts to recover $1.4-billion in tax money spent to treat smoking-related illnesses among the poor and elderly.
The Supreme Court's refusal to consider the industry's contention that the law is unfair means that the state's lawsuit against tobacco, scheduled for trial in August, can move forward.
"It was a good day," Gov. Lawton Chiles said at an impromptu press conference at the Governor's Mansion. "I think this is the last constitutional hurdle that Big Tobacco is going to try to put in our way. So I think we're getting closer to the day of tobacco justice."
Tobacco stocks dipped after the announcement, then rallied somewhat, but were down at the close of trading.
Monday's announcement also means that the Florida Legislature becomes the battleground where the tobacco industry will fight to kill the potentially costly law.
"It just means we'll have to proceed on with what we have to do in the Legislature," said Tobacco Institute lobbyist Guy Spearman.
Florida is one of 22 states that have sued tobacco companies in attempts to get reimbursed for Medicaid funds spent to treat smokers. Mississippi's claim is scheduled to go to trial in June.
Outside Florida, the ruling may have limited impact. It could be difficult for the other 21 states with Medicaid lawsuits to now pass laws modeled on Florida's statute to buttress cases they have already filed.
Simply put, it is tough to change the rules in the middle of the game.
Moreover, it is difficult to draw broader significance from the court's decision not to hear the Florida case. The justices decline to accept cases for all kinds of reasons. Often they turn away cases on narrow legal or factual grounds until a "cleaner" case comes along.
Philip Morris lawyer Gregory G. Little noted that the court's action was not a ruling on the merits of the law and said his company could renew its challenge after the trial if necessary.
Even with the Florida law, "we do not believe the state can carry its burden of proof" to force Philip Morris to pay the Medicaid cost of treating smokers' illnesses, Little said.
Chiles quietly slipped the 1994 law through the Legislature. Many lawmakers were outraged once they realized what they had voted for, and so tobacco lobbyists managed to get the law repealed in 1995. But Chiles vetoed the repeal, and legislators failed to override the veto in 1996.
Tobacco lobbyists were confident of winning an override last year. But the Senate decided not to take a vote after Sen. Ginny Brown-Waite, R-Spring Hill, announced she was changing her vote because several family members died from smoking-related illnesses.
Still, another battle for a repeal is heating up this year. In order to succeed, not only will tobacco forces have to win in the House and Senate, they also will have to muster the two-thirds vote that would be required to override Chiles' inevitable veto.
Sen. Charles Williams, D-Tallahassee, the sponsor of the bill in the Senate, said he hopes to move the bill quickly through the Legislature so it can be vetoed and returned for an override vote before this year's session ends May 2.
The governor said he doesn't think the effort will get far. Chiles said he believes that public opinion is on his side and that legislators are unlikely to cooperate with the lobbyists.
"Every time a new disclosure comes out and we see something the tobacco companies have been hiding, it all contributes toward public opinion," Chiles said.
In the case denied review Monday, lawyers for Philip Morris and Associated Industries said the law violates the constitutional right of due process by giving the state rights an ordinary plaintiff would not have.
The state's lawyers said the law was a reasonable effort to force tobacco companies to pay the social cost of their behavior.
In trading Monday on the New York Stock Exchange, tobacco-related stocks were off. Philip Morris shares fell as much as 6 to a low of 123\ after the Supreme Court announcement, carving as much as $4.8-billion off the market value of the world's biggest cigarette maker. Philip Morris shares rebounded, and were down 2[ at 127 by the end of trading. Among other cigarettemakers, RJR Nabisco Holdings Corp. shares fell 1[ to 32}. B.A.T Industries Plc's American depository receipts fell ] to 17\.
John French, a lobbyist for Philip Morris, downplayed the importance of Monday's announcement. The U.S. Supreme Court rarely intercedes in a case that has yet to go to trial, he said.
But health lobbyists who long have been on the losing end of political wars with tobacco seized on it as a victory.
"It reinforces what we've been saying," said Beth Labasky, lobbyist for the American Lung Association. "The courts have said Florida has a sound law and people deserve to be heard in court. It's a victory for all the people who have suffered and died."
_ Information from staff writer David Barstow, the Associated Press and Bloomberg News was used in this report.