Florida Recovers $11.3 Billion from Tobacco Industry in Landmark Medicaid Settlement

For decades, Florida's Medicaid program bore the cost of treating hundreds of thousands of residents for lung cancer, emphysema, heart disease, and other illnesses tied directly to cigarette use. By the mid-1990s, state officials calculated the cumulative bill ran into the billions, paid out by taxpayers while the tobacco companies that profited from the addiction faced no corresponding liability.

In February 1995, Florida retained a consortium of private law firms to pursue the tobacco industry on the state's behalf. The group, operating under the name 'Peoples' Trial Advocates,' agreed to fund litigation expenses and absorb the financial risk of an unsuccessful outcome. Wayne Hogan of Brown, Terrell, Hogan, Ellis, McClamma and Yegelwel in Jacksonville was among the attorneys representing the Peoples' Trial Advocates in the litigation.

The lawsuit named the major cigarette manufacturers as defendants and alleged that they had knowingly concealed nicotine's addictive properties while deliberately targeting young smokers. Internal industry documents, many of which had been surfacing through parallel litigation in other states, supported the allegation that companies had studied adolescent psychology to cultivate lifetime customers. Florida's statute specifically waived certain defenses that had helped the industry defeat plaintiffs in more than 800 prior cases nationally.

Faced with that statutory framework and the weight of accumulated evidence, five tobacco companies agreed in August 1997 to pay Florida $11.3 billion. At the time it was the second state tobacco Medicaid settlement to close, following Mississippi's agreement the month before. Governor Lawton Chiles called the outcome 'the straw that broke Joe Camel's back.' The settlement also prohibited tobacco advertising on billboards, in sports arenas, and on mass transit, and required the removal of cigarette vending machines from locations accessible to minors.

The Florida Supreme Court subsequently addressed fee-dispute appeals arising from the settlement. In its 1998 opinion in State v. American Tobacco Co., 723 So.2d 263 (Fla. 1998), the court confirmed Wayne Hogan's participation as counsel for the Peoples' Trial Advocates and resolved the question of how settlement funds held in the court registry could be disbursed, ruling that those funds flowed exclusively to the State of Florida rather than through private charging liens.