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WASHINGTON-Where there's smoke, there's fire, and product liability reformers don't want to be burned by opponents' attempts to make smoking-related litigation an issue in the reform debate.

That was evident earlier this month as the House Judiciary Committee heard testimony on various aspects of product liability. There is no reform bill in the House, and the Senate reform bill-S. 5-is identical to the measure approved by both houses last year but vetoed by President Clinton. S. 5 is a "placeholder" bill possibly subject to major revision when senators begin marking it up. Mark-up could begin as early as next month.

The possible linkage of smoking litigation with whatever product liability bill ultimately emerges was evident in the testimony of Iowa Attorney General Thomas J. Miller before the Judiciary Committee. Mr. Miller is one of the more than 20 state attorneys general who have sued the tobacco industry to recover billions of state dollars spent to provide health care for people suffering from smoking-related illnesses.

Tobacco companies reportedly are in closed discussions to settle actions against them (see story, page 1). And Liggett Group Inc. already has settled with 22 state attorneys general.

He said any product liability bill should not:

Define its coverage over a product liability action based on a theory of recovery that would preclude states from seeking Medicaid reimbursement, according to his testimony.

Place stringent limits on the time during which a lawsuit could be brought against a manufacturer, he said. Such limits would "unfairly restrict consumers injured by tobacco products," according to Mr. Miller. Tobacco should be "specifically included in any exception" to any statute of repose contained in any product liability reform bill, he said.

Cap punitive damages.

Fix a problem that does not need to be fixed, he said, noting that tort law traditionally has been a state rather than federal responsibility.

Ironically enough, Mr. Miller came under the most fire from a congressman who opposed last year's product liability reform bill, Rep. Howard Coble, R-N.C., who represents a congressional district in which the tobacco industry plays a major industrial role.

Rep. Coble, who said he had opposed previous product liability reform bills because he believes anything that involves insurance should be a state matter, said he sees "an evidence of hypocrisy and greed" in the state attorneys general's suits because states have "warmly embraced" tax receipts raised by the sale of tobacco but now wish to recover even more.

Attempts to link tobacco and product liability reform are nothing less than "McCarthyism," said Larry Fineran, assistant vp and director with the National Assn. of Manufacturers in Washington.

"Tobacco is not affected by the legislation. Certainly the attorneys general's suits are not affected by the legislation," said Mr. Fineran, who pointed out that the state attorneys general's suits are not based on product liability law.

Opponents of the reform are trying to link the people who favor the legislation with tobacco, which is "the reddest of red herrings," he said.

"The bill does not cover the attorneys general's suits. The effective date is the time it becomes law," said Victor E. Schwartz, general counsel for the Arlington, Va.-based Product Liability Coordinating Committee.

"It is an emotional issue, and when you have an emotional issue, facts do not often govern," he said.

"I would hope that the very, very dedicated anti-tobacco people would stick to issues that are relevant to them, and this is not," said Mr. Schwartz.

"There is no connection. It's an effort by the other side to take an emotional issue and try and derail this bill despite the fact that the two have absolutely nothing to do with each other. The reality is that the state attorney general cases are not product liability cases," said Jim Anderson, vp-government relations for the National Assn. of Wholesaler-Distributors in Washington.

He added: "We oppose carving anything out. We don't want to create a multitude of product liability laws."

"Product liability reform as well as any exemptions should be decided on their own merits. The uncertainty of the present tort system is a drag on our economy and should be corrected. Measured, balanced reform is in everyone's interest. The 105th Congress should move quickly to accomplish such reform," said David Farmer, senior vp-federal affairs for the Alliance of American Insurers in Washington.

"I'm concerned about any product exemption because I think that feeds what I think is Sen. Ernest Hollings' best argument against the bill, which is that it will create confusion," said Mr. Schwartz, referring to the Democratic lawmaker from South Carolina.

"It's of concern of anyone who deals in the issue. I don't think it helps the matter at all," said Melissa Shelk, assistant vp of the American Insurance Assn. in Washington.

It "gives opponents another hook and makes people who are normally anti-tobacco take a second look," she said.

Opponents of last year's legislation, though, agreed that a tobacco-product liability reform link is potent political medicine for their position even though any bill that might pass Congress would have no impact on the state tobacco suits.

"We haven't seen definitive legislative language. The other problem is anything that it does effect will be suits that have not yet been filed. Whatever the attorneys general are negotiating right now would not be subject to any bill that they passed," said Rich Vuernick, legislative director of Citizen Action in Washington.

But politically, "as long as tobacco is out there and looked at as a product that would fall under the scope of this bill, the bill could be seen as a tobacco industry relief act" and make it that much harder to pass, he said.

"It does change the dynamics of the lobbying," said Mr. Vuernick.

"There's been a lot of strong feeling against the tobacco industry. I don't think anyone terribly wants to be seen as being loyal to them," agreed Joanne Doroshow, a staff attorney with consumer advocacy group Public Citizen. She noted that last year anti-smoking activists opposed the congressionally approved bill because of its limits on punitive damages in product liability cases.

"They felt very strongly, as do we, that the punitive damages area might cause more difficulty" in people seeking damages for tobacco-related maladies. Any limit on punitive damages "would clearly have an effect on consumers being able to hold these tobacco companies liable," Ms. Doroshow said.