By Robert A. Levy
Shakedown tells a two-part story of government-sponsored extortion utilizing the courts. Levy uncovers the worst of the abuses and advises to lawmakers what to do approximately them.
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Additional info for Shakedown: How Corporations, Government, and Trial Lawyers Abuse the Judicial Process
Both state and private insurers sometimes pay for treatment that arguably would not have been necessary but for the misconduct of a third party. Yet in determining whether such misconduct has occurred, why should the state alone be allowed to bypass the usual subrogation process and hold an outsider liable even when a victim assumes the risk of his own injury? Why should Florida’s Medicaid system, but not a private insurance company, be able to impose its costs upon a tobacco company that would have been exculpated but for the happenstance that a particular smoker qualified for public assistance?
By smoking, the deceased Medicaid recipient imposed certain costs upon the public, but he also enabled the public to avoid other outlays. From the taxpayers’ perspective, the year-by-year comparison of these costs and benefits looks like this: Year Costs & (Benefits) Present Value at 3% Present Value at 5% 0 1 2 3 4 5 5 $20,000 (2,500) (2,500) (2,500) (2,500) (2,500) (8,000) $20,000 (2,427) (2,356) (2,288) (2,221) (2,157) (6,901) $20,000 (2,381) (2,268) (2,160) (2,057) (1,959) (6,268) $1,650 $2,907 Medical costs Social Security Social Security Social Security Social Security Social Security Medical costs Totals ($500) Although our smoker died prematurely and the Medicaid fund expended $20,000 as a result of his lung cancer, the government avoided $20,500 of other expenses—$8,000 in medical costs that would have been incurred if he had survived another five years, and $12,500 in Social Security benefits that would have been paid over that time.
That two-faced application of the law should convince anyone that the state has no moral or equitable claim against the tobacco industry. Not only did Florida reject obvious remedies that would 27 81345$$CH2 08-09-04 06:30:56 CATO SHAKEDOWN have reduced tobacco consumption and abated the associated Medicaid outlays, but it also nurtured cigarette manufacturers with its investment capital and its approval of federal giveaway programs. Indeed, the state was itself a cigarette manufacturer for almost a decade.