Sick smokers in Florida have until mid-June to line up for a piece of a $580 million mound of cash set aside unconditionally by cigarette makers, and prospects for claiming a share are heating up.
Coral Gables, Fla., attorney Miles McGrane was appointed the fund's trustee last week, and claims administrator Garden City Group has produced the one-page Web site EngleTrustFund.com to begin the process. No attorneys are needed to file claims.
But the Fort Lauderdale, Fla., personal injury firm Kelley Uustal, which is not associated with the court-administered fund, launched a Web site with a similar address -- EngleTrustFundClaim.com -- and ran a full-page newspaper ad Tuesday offering help. The site switches users to another site called TobaccoCompensation.com.
"Once you link to that, it's very obvious it's a law firm," said Todd McPharlin, a partner with the firm. "I don't think there should be any confusion." When asked whether he thought smokers might end up at the law firm's site by mistake, McPharlin said they're in the right spot for legal help.
Lawyers involved with the fund expect new issues to bubble to the surface as word gets out about the trust fund and eligibility rules.
"This is a Pandora's box," McGrane said before learning of the Kelley Uustal sites. He joked at a hearing Friday that the new post would dominate his law practice for the next year, but he may not have been exaggerating.
The June 16 deadline has focused attention on filing claims, but the framework for handing out the money still hasn't been formalized by Miami-Dade Circuit Judge David C. Miller.
Plaintiffs lawyers from across the state are offering myriad proposals to Miller for doling out the fund created in 2001 in a case named for Miami Beach pediatrician Howard Engle, the lead plaintiff in the class action lawsuit.
First of all, the money is not an appeal bond. Philip Morris, Lorillard and Liggett created the fund to avoid a constitutional challenge to a law drastically lowering the appeal bond needed to challenge a landmark $145 billion jury award won by plaintiffs lawyers Stanley and Susan Rosenblatt. Under Florida law at the time of the 2000 verdict, cigarette makers were faced with paying 115 percent of the verdict to take the case to the 3rd District Court of Appeal.
The amount was lowered to $709 million under a joint stipulation between tobacco companies and smokers' attorneys Stanley and Susan Rosenblatt.
Miller already has set aside $218 million for legal fees due to the Rosenblatts for pursuing the 1994 complaint through a two-year trial that produced a record-setting punitive damage award that was overturned on appeal.
The class was disbanded, leaving it up to Miller to decide how to split the unique pot of money set aside unconditionally by cigarette makers to pursue the appeal. Industry leader Philip Morris shelled out $500 million, Lorillard paid $100 million and Liggett put up the rest.
But the companies agreed they had no right to recover the money regardless of how their appeal turned out, and the agreement set no standards for distributing the money afterward. Miller is in uncharted waters. For now, he is applying a claims process similar to ones seen in class action settlements.
Claimants must prove they suffer from one of 16 illnesses that the trial jury blamed on smoking. There is no starting date for a diagnosis to be eligible for a share of the fund, but smokers must be able to prove they were Florida residents and had documented symptoms of a smoking-related disease before November 1996. The trust fund is independent from about 8,000 so-called Engle progeny cases filed by individual smokers seeking compensatory damages from cigarette makers under the framework of that litigation. The smokers and their survivors can ask for money from the trust fund, but they would have to file a claim separate from their lawsuits by June 16.
Tobacco companies aren't involved with the fund and aren't part of the fund administration hearings after Miller ruled last week they had no standing. The Rosenblatts are mostly out of the picture as well, because they aren't handling Engle progeny cases, but they are voicing their opinions to Miller on the framework for claims.
Originally, the Rosenblatts supported a per-smoker share system to give each ill smoker an equal cut of the trust fund. They started coming around to a point system that would link awards to the severity of illnesses and joined a vehement group of attorneys arguing for a scaled award system. Miller ruled from the bench Friday that the money would be divided on a per-smoker basis awarding an equal share on all proven claims, but the decision frustrated several claimants with visions of fat checks. Fort Lauderdale resident Carl Grant, for instance, lost his father to emphysema and heart disease. After Miller made his decision, Grant argued to the judge that his father's estate deserved a slice of about $1 million. As the hearing wore on, issues like payments for unpaid medical liens, the possibility of Medicaid and Medicare seeking compensation for costs to treat sick smokers, and the tax implications of payouts came up.
"Medicare is going to be coming in and the people who have the worst illnesses are going to have the biggest liens," said Hendrik Uiterwyk, with Abrahamson Uiterwyk & Barnes in Tampa, Fla. Brenda Fulmer with Alley Clark Greiwe & Fulmer in Tampa warned, "I don't want anyone to be cut off from their oxygen, and that's what will happen if we don't negotiate with Medicare."
Some lawyers argued Miller should set aside a fixed percentage of the fund to settle the class's outstanding liens. Some lawyers said this wasn't fair to claimants who had squared their bills already. No one could say unequivocally whether Medicare would have standing to press claims. Ditto for what role the Internal Revenue Service could have in claiming a slice of the Engle pie. Lawyers debated whether the fund represents a "taxable event," but there was no clear consensus. Miller made it clear that for the sake of expediency that he intends to treat the projected 8,000 to 20,000 people with valid claims as a single entity, and he intends to make it hard on everybody to prove claims as a way of reducing fraud. "I believe that the class will be limited by proof problems," he said. "If they can't prove it, it's not going to happen. ... Otherwise it will open the door to fraud of every kind."
While the proof requirements and per-smoker division of the fund seem fixed for now, other rules like the time frame for eligibility are in a state of flux.
The original Engle lawsuit was estimated to cover 700,000 Florida smokers, who were fighting Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard and Liggett. The 3rd District Court of Appeal overturned the verdict in 2003, and the Florida Supreme Court broke up the class but allowed plaintiffs to bring compensatory suit individually armed with the liability findings of the Miami jury.
"This is a story of legal heroism," John C. Coffee Jr., a professor at Columbia University's law school wrote in an affidavit supporting the Rosenblatts' fee award. "To be sure, it may not have the drama or sex appeal of Erin Brockovich, but far more was accomplished in this case and against far greater odds."
