Judge Hears Both Sides of Story on Tobacco Initiative

After weeks of bitter rhetoric, lawyers for Ventura County and Community Memorial Hospital squared off in court Monday, arguing why each side should get $260 million in tobacco settlement money.

During the hearing, Superior Court Judge Henry Walsh urged both sides to refrain from political speeches and to lay out the facts as succinctly as possible. Walsh routinely asked pointed questions leading both sides to think he might be leaning their way.

But no matter how he rules, the case will probably be appealed by the losing side, he said. Judges tend to allow initiatives to be placed on the ballot, he added.

“I’m not interested in whether this is good or bad legislation,” he said. “It’s whether it’s legal or illegal.”

The county has refused to place on the November ballot a Community Memorial Hospital-sponsored initiative that seeks to transfer control of the tobacco settlement revenue from the county to seven private area hospitals.

The county says the measure, if approved, would amount to unlawful interference with its budgeting practices, be an illegal gift of public cash to the private hospitals and encourage other private-interest groups to raid public treasuries.

Walsh noted that the county has already spent $3.5 million of the settlement money and the initiative would require that it be paid back. To do that, Walsh said, would interfere with the budget process.

Richard Martland, attorney for Community Memorial, said the amount spent was “minuscule.”

“Is $3.5 million minuscule?” Walsh asked.

“For a county budget, it’s a small amount,” Martland said, arguing that it should not be a stumbling block in deciding the legality of the initiative.

William Moritz, assistant county counsel, interpreted the exchange as a good sign for the county, but then Walsh told him not to paint “gloom and doom” scenarios if the initiative were allowed on the ballot.

“Proposition 13 was going to be the end of local government, but we are still here,” Walsh said, referring to the landmark 1978 law that placed strict limits on property taxes.

Both sides have promised that if they get the tobacco money it will all be used for health care. But Walsh noted that nothing in the tobacco settlement agreement requires any of the money to go toward health programs.

Then Martland stunned county representatives by saying the issue had nothing to do with health care and everything to do with reimbursing private hospitals for what they spend on the indigent and the uninsured.

“It’s just a claims bill,” he said. “We are just reimbursing hospitals.”

If that’s true, Moritz said, then the initiative amounts to an illegal gift to the private hospitals. It would be unfair, he said, to pay them for indigent care while the county hospital would get nothing for doing the same thing.

Moritz said the county was entrusted with the money from the state and that the proposed Community Memorial initiative would wreak havoc on the budgetary process.

Martland countered by saying many initiatives and propositions that affect local budgets have passed in California and have been declared legal.

The tobacco money comes from a multibillion-dollar settlement between the U.S. government and tobacco companies. The money has been distributed to local governments to be spent how they wish.

After Monday’s hearing, Martland said he was confident the judge would let the initiative be placed on the ballot.

Moritz said he believed the judge’s questions “were good for our side.”

A decision is expected within 10 days.