Lobbying Group Picks up Costs of Florida’s Health-Care Legal Challenge

By Charles Elmore

Florida has paid less than $6,000 for its landmark challenge to President Obama’s health care law largely because a business lobbying group is picking up an undisclosed share of the remaining legal costs.

While Florida, joined by 25 other states, won a favorable ruling last month from a federal district judge, the cost the states have split so far amounts to $46,000.

Florida Attorney General Pam Bondi told a state House committee this month that most of the rest is being covered by the National Federation of Independent Business, a group that opposes the law because of what it considers unconstitutional costs and regulations on firms and people.

“They have dedicated a tremendous amount of resources to the lawsuit,” Bondi said Feb. 10. “We’re thrilled, because that’s saving our state money. That’s saving the 25 other states money as well.”

Not so thrilled: Advocacy groups supporting the health care law that aims to cover more than 30 million uninsured.

“I’m not sure most voters understand that a lawsuit by their states is being funded by an ideological organization with an issue ax to grind,” said Ethan Rome, executive director of Health Care for America Now, a Washington-based group whose contributors include unions and others who support the act. “In this case there appears to a serious perversion of the process.”

Role raises red flags

U.S. District Court Judge Roger Vinson in Pensacola ruled in favor of the states in January in a case that eventually could wind up before the U.S. Supreme Court. Florida officials declined to disclose how much NFIB is spending.

“I would think the answer would be millions of dollars that would be spent by the complainants in this case,” said Joseph W. Little, law professor emeritus at the University of Florida. “Millions of dollars and probably tens of millions of dollars.”

Some legislators said they were troubled that a business group with its own agenda is playing such a prominent financial role.

“My concern is if it’s a lawsuit on behalf of the people of Florida, then I would believe it should be the people of Florida footing the bill,” said state Rep. Mark Pafford, D-West Palm Beach, a member of the House Health and Human Services Committee. “When you have an outside party paying, then every aspect of the AG’s office might be up for sale. This type of thing raises all kind of red flags.”

NFIB officials declined to say how much the group is spending.

“Not gonna, no,” said Bill Herrle, NFIB’s Florida executive director. “Good luck.”

NFIB is a plaintiff in the case and is using both in-house lawyers and outside counsel, and certainly it would be fair to say the group is paying its own way, Herrle said. “I think it would be incorrect to say NFIB is paying for all the costs of this,” Herrle said.

The Nashville-based organization says it represents 350,000 small businesses, 10,000 of them in Florida, and IRS records show it has an annual budget of more than $80 million. Its affiliated NFIB Small Business Legal Center participates in the lawsuit on behalf of the parent organization. On its own, the legal center reported a budget of about $1 million in 2009.

The legal center gets money from donations and also has gotten pro bono legal support, said Executive Director Karen Hamed, in an e-mail. “I can’t speculate on what the costs of prosecuting this case will be, but NFIB is prepared to follow this case through to the Supreme Court.”

Vinson ruled that Congress overstepped its powers by passing a health-care law with an “individual mandate” requiring people to buy health insurance or pay a penalty. The federal government, which won other lower court decisions but lost early rounds in Florida and Virginia, has indicated it will appeal.

The lead outside counsel for the states, David Rivkin, has called the law “in its design, the most profoundly unconstitutional statute in American history; in its execution, one of the most incompetent ones.”

Rivkin is a partner in the Washington law office of Baker & Hostetler, which also represents NFIB in the case. The same firm formerly employed Bill McCollum, Bondi’s predecessor as attorney general and the man who led the multi-state legal challenge last spring. McCollum lost a GOP primary bid for governor to Rick Scott.

In a telephone interview, McCollum said NFIB has a separate relationship and fee arrangement with outside counsel, though it happens to be the same law firm. The states remain in charge of the case, he said.

“I’m not trying to dispute for a minute NFIB is paying for the bulk of the outside counsel,” McCollum said, adding he does not know an amount. “It’s great to have NFIB there in my opinion.”

Having NFIB as well as individual plaintiffs in the lawsuit provides a broader range of parties affected by the law, strengthening the case, McCollum said.

‘Taxpayers can be proud’

Dexter Lehtinen, the former U.S. attorney for South Florida who served during GOP administrations, said he can understand why state legislators and others might raise questions about NFIB’s role. That does not mean anything wrong is happening, he said.

“The question is appropriate but the answer can be appropriate,” said Lehtinen, an adjunct professor of law at the University of Miami.

As long as the NFIB is not paying for the state’s portion of the case, and the state remains in charge, “that’s something taxpayers can be proud of,” Lehtinen said.

As for costs, he estimates private counsel would likely cost “at least $250,000” in a case like this.

The states agreed in a contract signed in March to pay attorneys Rivkin and Lee Casey $250 an hour up to a maximum of $50,000. A new contract signed Jan. 4 commits to spending an additional $50,000.

Florida and the other states have been sent invoices for $46,242.38 by lawyers serving as outside counsel, Kimberly Case, Bondi’s legislative affairs director, wrote in response to an inquiry from Pafford.

So far the state has spent $40,693 and been reimbursed by participating states for $33,529, with $7,164 pending.

That leaves Florida’s portion at $5,549. The figure does not include in-house lawyers already employed by the state.

As for NFIB’s share? “Questions related to NFIB’s expenditures for their legal challenge should be directed to NFIB,” Case wrote.

Last fall, NFIB backed Bondi in her race for attorney general, citing her commitment to continue the legal challenge.

NFIB, its affiliates and employees gave more than $2.3 million to candidates in state races and ballot initiatives around the nation between 2003 and 2010, including more than $65,000 in Florida, according to the National Institute on Money in State Politics.

More than 78 percent of the contributions went to GOP candidates.

State Rep. Elaine Schwartz, D-Hollywood, said she was curious after hearing Bondi bring up NFIB in a Feb. 10 hearing of the House Health and Human Services Committee. She asked who the group was. Then she asked if the group was “basically funding” the lawsuit by the states. Bondi answered yes.

Schwartz said later, “I’m thinking, ‘Can a group promoting profit-making interests decide to use the AG’s stationery and have the state be the instrument to carry out their wishes because they’re funding it?’ ”

In introductory remarks to the House committee, Bondi praised NFIB. “Bill Herrle and the national folks have been so actively involved in the lawsuit, which has been a great, great help to Florida and the other states,” Bondi said.