Robert Reich recently wrote in USA Today that "The era of big government may be over, but the era of regulation through litigation has just begun." He advocated that courts should be the regulators of society, deciding whether certain products or services should be available and at what price.

Mr. Reich is referring to the new phenomenon of governments entering into partnerships with private contingency fee attorneys to bring lawsuits against entire industries. Manufacturers of tobacco products and firearms have already been targets of litigation at the State and local levels. At the federal level, President Clinton announced in his 1999 State of the Union address that he has directed the Department of Justice to prepare a litigation plan to sue tobacco companies to recover federal funds allegedly paid out under Medicare.

Future targets of federal and/or state or local cost recovery, or "recoupment," litigations could include producers of beer and wine and other adult beverages, and manufacturers of pharmaceuticals, chemicals, and automobiles. Even Internet providers, the gaming industry, the entertainment industry, and fast food restaurants could be targeted.

Under traditional tort law rules, third party payors (e.g., employers, insurers, and governments) have long enjoyed subrogation rights to recover costs for healthcare and other expenses that they are obligated to pay on behalf of individuals.

For example, if a worker is injured in the workplace as a result of a defective machine tool, tort law permits the worker’s employer to recover the cost of worker compensation and other medical expenses paid on behalf of the employee. Through the process of subrogation, the employer can join in the employee’s tort claim against the manufacturer of the machine tool or put a lien on the employee’s recovery, but the employer cannot bring a direct action on its own.

Governmental cost recovery actions seek to radically change the traditional subrogation rule. In the State tobacco cases, the attorneys general argued that the States could bring an "independent" cause of action against the tobacco companies. Furthermore, the attorneys general argued, because the States’ claims were "independent" of the claims of individual smokers, the States were not subject to the defenses that could be raised against individual plaintiffs, especially with respect to assumption of risk.

Despite the current unpopularity of the tobacco companies, most courts have followed basic principles of law and dismissed cost recovery claims against the tobacco companies. One federal district court, however, bent the rules and partially sustained a healthcare reimbursement suit in Texas based on a unique expansion of the "quasi-sovereign" doctrine. Before the Texas federal court’s decision, the quasi-sovereign doctrine had been limited to suits for injunctive relief; it did not extend to suits seeking monetary damages. Even the "pro-plaintiff" Minnesota Supreme Court recognized this fact in a tobacco case. The Texas decision produced an avalanche of claims that were ultimately settled out of court.

Another characteristic of the new "era of regulation through litigation" is the partnering of governmental entities and private contingency fee attorneys. This new partnership raises a number of serious ethical and "good government" issues:

• Contingent fee retainers were designed to give less-affluent persons (who could generally ill-afford hourly rates and up-front retainers) access to the courthouse. Governmental entities have their own in-house legal staff; taxpayers should not have to pay excessive fees for legal work that could be done by the government itself.
• In the State tobacco litigation, it seemed that many of the cases were awarded to private attorneys who had been former law partners or campaign supporters of the elected official. Furthermore, there appears to have been a lack of competitive bidding in the attorney selection process. As a result, experts estimate that some plaintiffs’ attorneys were paid in excess of $100,000 per hour.
• Should the prosecutorial power of government be brought against lawful, though controversial, industries? "As the Supreme Court cautioned more than 60 years ago in Berger v. United States, an attorney for the state, ‘is the representative not of an ordinary party to a controversy, but of a sovereignty whose obligation to govern impartially is as compelling as its obligation to govern at all.’"

To date, recoupment lawsuits have been filed against politically disfavored industries because plaintiff attorneys know that if courts bend the rules for controversial products, those precedents will apply equally to other industries.

In fact, some contingency fee lawyers have already publicly stated that tobacco and firearms are just the first of many industries likely to be sued in the new era of regulation by litigation. As stated, future targets of litigation could include producers of beer and wine and other adult beverages, manufacturers of pharmaceuticals, chemicals, and automobiles, Internet providers, the gaming industry, the entertainment industry, and fast food restaurants.

Legislating public policy in the courtroom violates the "separation of powers doctrine" -- the fundamental rule upon which this country’s entire system of government is based. The job of legislatures is to legislate; the job of courts is to interpret the law. This bedrock principle of government should not be eroded for the sake of political expediency and political theater.