We Don’t Need American-Style Litigation
Politicians in this country love to take advantage of Canadians’ knee-jerk antipathy to all things American—witness their frequent references to “American-style health care” when they’re trying to vilify private medicine or “the American-style gun lobby” when they’re responding to critics of the gun registry.
Strangely, however, many Canadian
politicians have chosen to
welcome with open arms the one American import they should vigorously
resist: American-style litigation. They were jubilant last week after the B.C.
Court of Appeal upheld the constitutionality of the Tobacco Damages and
Care Costs Recovery Act. The law will
allow the province to sue “big tobacco” for billions, as
Maybe now that the cheering has died down, Canadians will be able to give this legislation sober second thought. Many Americans, having witnessed the damage and corruption it has caused to their legal system, have begun to express their misgivings about it.
The B.C. legislation follows a pattern
In fact, the legislation sets up an elaborate charade, to be played out in a courtroom, to disguise what is really just a new tax. Boiled down to its essence, it says:
1. When the government sues the tobacco industry to recover health care costs, the government shall win.
2. Whatever amount the government says its health care costs have been or will be in future is the amount the tobacco industry shall pay.
The tobacco companies are deprived of most
defences and are reduced to arguing among themselves over their
shares of the damages.
B.C. hopes to grab $10 billion from its
trifle ambitious, since the
But what of the taxes the province already receives from the tobacco industry? In fiscal 2000-2001, this was $460 million, not counting income tax paid by tobacco companies. The province’s total health expenditures that year—for everything, not just for tobacco-related illnesses—were $8.3 billion. So tobacco taxes already funded more than 5 percent of the province’s total health care budget. If that’s not enough to satisfy it, the province could simply raise the existing tobacco tax. Why waste millions on legal fees while destroying traditional legal rules and precedents into the bargain?
In fact, numerous studies have concluded
that excise taxes
on tobacco already contribute more to government coffers than the cost
treating tobacco-related illnesses. This becomes very credible when one examines
what has actually happened to the multi-billion dollar windfalls
Although the states originally claimed the
money would be
used to defray Medicaid costs or to fund stop-smoking programs, much of
now used simply as part of states’ general budgets, in some instances
budget deficits. The U.S. Centers for
Disease Control and Prevention had recommended that 20 to 25 percent of
settlement money be used on smoking prevention.
A 2002 survey showed only five percent of the money being
used that way. At least seven states are
investing a portion
of their settlement money in tobacco stocks.
In The Rule of
Lawyers—How the New Litigation Elite Threatens
But the most revealing and most repugnant statement of all was that of the chief justice of the West Virginia Supreme Court, who wrote: “As long as I am allowed to redistribute wealth from out-of-state companies to injured in-state plaintiffs, I shall continue to do so. Not only is my sleep enhanced when I give someone else’s money away, but so is my job security, because the in-state plaintiffs, their families, and their friends will reelect me.”
This kind of blatant political manipulation is one American import Canadians can certainly do without.