Florida May Kick The Tar Out Of Tobacco

John French points out the titles lining the desk in his Tallahassee (Fla.) office: Julius Caesar, The Art of War, The Prince, to name a few. A Viking helmet rests on his coat tree. This is a man of war, a lobbyist who does battle for companies with big problems. Philip Morris Cos. is one of French's biggest clients--and now, the one with the biggest problem.

On Apr. 8, in the waning hours of the spring legislative session, Florida Governor Lawton Chiles slipped through the toughest legislation ever aimed at the tobacco industry, a law that authorizes the state to sue cigarette makers for reimbursement of about $300 million a year in Medicaid expenses for smoking-related illnesses.

BLOODY FRAY. It's a precedent that even French admits could knock mighty tobacco to its knees. Several states are exploring similar legislation. Buoyed by his victory, moreover, legislators in the U.S. House and Senate are considering copycat federal bills. The upshot? The industry that has never paid a penny in damages is staring into an abyss of virtually automatic multibillion-dollar payouts. "The [legislation] we have goes to the heart of really taking tobacco down," crows Chiles.

The stealth amendment, slyly attached to an innocuous Medicaid bill, was a shocking comeuppance for the tobacco gang. "It really screwed up my golf game," French laments. But his legions are back in the trenches now. French has mustered as allies the Associated Industries of Florida Inc., the state's 6,000-member business-lobby behemoth, which worries that the law may affect its nontobacco members. In addition, at least a dozen fresh tobacco lobbyists have blanketed the state to meet with legislators and editorial boards, hoping to win support in condemning the new law as antibusiness.

This promises to get ugly. The governor claims the industry has offered to suffer a new tobacco tax in exchange for the Medicaid law's repeal. Tobacco lobbyists deny that--and their explicit strategy is considerably tougher. They hope to attach a repeal of the antitobacco amendment to Chiles's dearly sought health-care-reform legislation, which would subsidize health benefits for the working poor--effectively parrying two of his pet proposals in what promises to be a bloody election-year battle for the incumbent.

If that doesn't do the trick, tobacco industry attorneys may challenge the law's constitutionality. They claim the law is vulnerable because it strips the industry of many of its legal defenses and incorrectly assumes a statistical link between smoking and illness. Moreover, they say, it would assess damages based on companies' market share in the state, rather than tying individuals' medical costs to the brands they smoked. AIF, funded in part by PM and other tobacco makers, is making that argument in frequent full-page newspaper ads.

`FOREST FIRE.' But many think it is already too late for such strategies. "My intuitive feeling is, we've got the start of a runaway forest fire here for the tobacco industry," says Robert Mc-

Knight, executive vice-president of the Florida Chamber of Commerce. Chiles has instructed the state's lawyers to sue tobacco companies upon the law's July 1 effective date. Florida is consulting with Harvard University law professor Laurence H. Tribe to fend off legal strikes from the tobacco industry. And Chiles has said he will entertain proposals to restrict the new law to tobacco, in an effort to appease general industry. That could weaken Associated Industries' support for its tobacco brethren.

More important, Florida's tobacco team increasingly appears to be losing control of what has become a national issue. Democrats on Capitol Hill view Chiles's health-care proposal as a precursor to the Clinton plan; they could pressure Florida Democratic legislators to oppose the cigarette makers' repeal stratagem. More damaging, Senators Frank R. Lautenberg (D-N.J.) and Tom Harkin (D-Iowa) on June 23 introduced a federal bill based on the Florida law. Representative Henry A. Waxman (D-Calif.), the industry's longtime foe, plans to follow suit. Tobacco lobbyists have vowed to stand tough. But in the political swampland of Florida, they may have little ground left to stand on.

Before it's here, it's on the Bloomberg Terminal.