By Noreen Marcus, FloridaBulldog.org
Money from a $300 million fund meant to help flight attendants sickened by secondhand smoke has gone to research clean air for pets, a hospital in Israel and allies of the fund’s managers, according to court documents.
Those expenditures haven’t been officially confirmed — or denied — by the Flight Attendant Medical Research Institute (FAMRI), the foundation that runs the fund. FAMRI does practically everything in its power to avoid transparency, a Florida Bulldog investigation revealed.
A combination of no transparency and no court oversight means that Miami-based FAMRI answers to no one, not even the flight attendants, about how it spends money. The fund controlled for two decades by attorneys Stanley and Susan Rosenblatt is down to $75 million in assets, according to FAMRI’s 990 form for 2016, its most recent publicly available tax filing.
Attorney Philip Gerson, representing hundreds of flight attendants, tried and failed to get FAMRI to open its books, asserting in a court petition that “substantial FAMRI funds were spent outside the United States for purposes unrelated to [flight attendants].”
Instead of examining his claims, however, the courts disqualified Gerson on conflict of interest grounds because a handful of his flight attendant clients had opposed suing FAMRI. The Florida Supreme Court relied on the same rationale when it suspended Gerson from practicing law for a month earlier this year.
Gerson wasn’t the only one who criticized FAMRI. The nonprofit employs “a strategy to stop any possible scrutiny of its spending policies. Such behavior invites the scrutiny it seeks to avoid,” attorney Martin Khoury wrote. Khoury investigated ethics complaints to the Florida Bar against Gerson and Steven Hunter, another lawyer for the flight attendants.
They faced off against the Rosenblatts, the Miami couple celebrated for their $144.8 billion win on behalf of Florida smokers in Engle v. Liggett Group in 2000, for their decades-long war against the tobacco industry, and for their philanthropy.
In the end it was the Rosenblatts and FAMRI: 1, Gerson/Hunter and their flight attendant clients: 0.
Settling for a research institute
Tobacco companies agreed to endow the $300 million fund in 1998 to settle another case, Broin v. Philip Morris. It was the payoff for the Rosenblatts’ clients, U.S.-based, nonsmoking flight attendants who were the first to reach trial with a tobacco class action.
The Rosenblatts reaped a $46 million fee, plus $3 million for costs, from the controversial Broin settlement. An estimated 60,000 flight attendants would be allowed to file individual lawsuits, but had to give up their right to seek high-dollar damages.
They didn’t mind, as long as they got their research institute, retired flight attendant Suzette Janoff, of Scottsdale, AZ, said recently. “It wasn’t about us becoming wealthy. It was about doing something good for people subjected to toxic secondhand smoke,” she said.
None of them got rich through their lawsuits. The Rosenblatts recruited lawyers to represent more than 3,000 flight attendants, but the effort stalled after 11 trials produced 10 losses. One flight attendant even had to pay the tobacco company’s fees and costs.
In the 20 years since the Broin settlement, a chorus of flight attendants has lamented that FAMRI does nothing to help them detect or cope with illnesses such as chronic sinusitis, COPD and lung cancer. FAMRI funds screening facilities and research into respiratory diseases, but doesn’t notify or include the Broin flight attendants, several of them said in recent interviews.
“A lot of them died sick and poor,” said Louise Caro, a Miami lawyer who tried unsuccessfully to sue FAMRI on behalf of 39 flight attendants seven years ago. “Their point was that they were not smokers. People who actually picked up a cigarette were getting better treatment than they were.”
Khoury, the Florida Bar investigator, found that FAMRI never set up a database to keep track of the flight attendants. “There is no evidence of any outreach of any kind by FAMRI to class members,” he wrote in a 2012 report. “Without a registry it appears FAMRI is not aware of the names, locations or health concerns of any of the class members it was created to benefit, and apparently provides no direct benefits to them.”
Money for pet wellness
Meanwhile, FAMRI funded widespread research into the early detection and cure of diseases associated with cigarette smoke. Some studies built upon earlier research that helped secure the Engle verdict, and they are available to support smokers’ lawyers in ongoing Engle-related litigation.
FAMRI published a voluminous list of research grants–with no dollar amounts–on its website. Without an accounting, the expenditures cannot be independently verified.
Caro’s complaint, based on publicly available sources, alleges that FAMRI also underwrote these items: $321,000 for research into and education about clean air for pets. Another $8 million went to a hospital in Israel.
Former U.S. Surgeon General Dr. Julius Richmond, an expert witness for the Rosenblatts in the Broin and Engle trials, got a $3 million grant, and his namesake institute for children received three grants totaling $5 million.
John Banzhaf, a George Washington University law professor who filed a brief supporting the Rosenblatts’ $46 million fee request, received $600,000 from FAMRI, according to Caro’s complaint. Banzhaf is the founder of Action on Smoking, an anti-smoking advocacy group.
The Rosenblatts declined an interview request. But John Kozyak, who with other influential attorneys represented FAMRI through years of courtroom battles, said in an email that the litigation “was painful and expensive and we are not going to relive it.” The Rosenblatts, the FAMRI board and Kozyak himself “just want to move on,” he added.
In a separate response on behalf of a FAMRI board member, Kozyak wrote to a Florida Bulldog reporter, “I caution you not to impugn people who have done so much good.”
Kozyak offered that neither the Rosenblatts nor anyone else from FAMRI filed ethics complaints against Philip Gerson and Steven Hunter. The complaints were filed by the Florida Bar; two Broin flight attendants, one of whom works on FAMRI-funded research; and a doctor who testified for flight attendants in a few individual lawsuits.
In 2010, a year before Caro’s class action, Gerson and Hunter were the first to drag FAMRI into court. They wanted an accounting of the foundation’s spending or for the court to dissolve FAMRI and give the money to their clients.
They said FAMRI had strayed from its original mission, as authorized by Miami-Dade Circuit Judge Robert Kaye. Kaye retired in 2001 and died in 2016.
His 1998 order approving the Broin settlement said the foundation would “sponsor scientific research for the early detection and cure of diseases of flight attendants.” It would be governed by a “trust instrument” and be monitored by the court.
Nothing about treating sick flight attendants
Nothing was written into the settlement about treating sick flight attendants. But John Ostrow, the attorney tapped to represent their interests, described for a court “individualized clinical treatment plans and counseling, free of charge.” Miami-Dade Circuit Judge Michael Hanzman wrote in a related 2017 report: “Apparently this contemplated plan never came to fruition.”
Ostrow, a FAMRI board member, referred a request for comment about the treatment plan to Kozyak, who did not address it.
Most FAMRI board members receive $60,000 a year and attend monthly meetings. FAMRI pays their travel expenses. Stanley Rosenblatt is chairman of the seven-member board, which includes Susan Rosenblatt, Ostrow and four former flight attendants. The Rosenblatts are unpaid volunteers.
The rating service Charity Navigator, which downgrades nonprofits that devote a high percentage of their funds to expenses, does not rate FAMRI. It’s classified as “a private, non-operating foundation that is not publicly funded.”
Soon after the Broin settlement was approved, FAMRI set up a nonprofit, limited liability corporation, without members, to run the foundation, according to Caro’s complaint. These “early decisions … would set FAMRI off course from the court mandate,” she wrote.
A corporation with members can be sued by them, Caro explained. A corporation without members is controlled solely by its board, with no internal oversight.
Apparently neither Kaye nor his successor in the Broin case, Judge Jerald Bagley, signed off on FAMRI’s “no members” choice. Kozyak declined a request to explain how FAMRI settled on its corporate structure.
At an Aug. 9, 2012 hearing on Kozyak’s motion to dismiss Caro’s complaint, he argued that corporations like FAMRI’s can be regulated and sued only by the Attorney General’s office and the IRS.
Kozyak said the flight attendants, like any other “private citizens,” had no right to sue FAMRI. (The Attorney General’s office has received no complaints about FAMRI, spokeswoman Kylie Mason said last week.)
If Kozyak won with that argument, Caro responded, it would be “an absurd conclusion to this whole entire process,” according to a transcript of the hearing. A week later Bagley dismissed Caro’s complaint “with prejudice,” meaning it couldn’t be resubmitted.
Bagley left the bench and started a mediation service this year. He did not reply to a detailed email message seeking comment.
Gerson and Hunter, the lawyers who ignited the FAMRI litigation, were disqualified on conflict of interest grounds. The conflict consisted of their taking a position contrary to a handful of Broin flight attendants who opposed challenging FAMRI. Then the Florida Supreme Court suspended the two lawyers for a month early this year as punishment for pursuing the matter in the first place.
Judge Hanzman, the referee in their ethics case, released a 57-page report in January 2017 that was more critical of FAMRI than of Gerson and Hunter. He recommended admonishment, the lightest punishment, but the Florida Supreme Court toughened the discipline without explaining why.
The court did not address this statement from Hanzman’s report: Gerson and Hunter “raised legitimate concerns over whether FAMRI had spent its funds for the benefit of flight attendant class members, and why this Foundation had never been subjected to court supervision.”
Margaret / September 21, 2018 3:38 am
Where exactly did the $225. million go–did it actually go to “charity”? These poor flight attendants have been suffering for decades without a dime from their settlement, while their lawyers are spending their money on an Israeli hospital and pet wellness research–anything but health care for their actual clients.
An excellent expose’ and behind the scenes look into a so-called “nonprofit foundation” run by people who shafted the clients they promised to protect.