WASHINGTON — President Clinton is expected to rack up a multimillion dollar legal bill defending himself in the Paul Jones sexual harassment case - and may not have to pay penny out of his own pocket. Two insurance companies are picking up the tab.
But a conservative legal organization is now challenging the arrangement.
The Washington-based Judicial Watch, has filed suit against the insurance giant State Farm, charging that the company's pledge to underwrite half of Mr. Clinton's defense costs in the Jones suit amounts to an illegal corporate giveaway.
The suit says that the estimated $1.2 million spent to date by State Farm was paid "for the purpose of winning the gratitude and favor of the president of the United States and creating a favorable regulatory environment for the insurance industry."
The charge is "absurd," says Mary Boone, a State Farm spokeswoman. "We are treating the president as we would any policy holder," she says.
Ms. Boone also says that State Farm is reserving the option of seeking a refund should Clinton lose the case.
Lawyers who specialize in insurance law are divided over whether Clinton's policies should cover his legal fees in this case.
Such policies provide coverage against accidental injuries caused to others, but they don't protect policy holders who commit deliberate acts of sexual harassment, as Ms. Jones alleges.
President Clinton and his lawyers deny Jones' charges.
Some say the president appears to be receiving preferential treatment from State Farm and a second insurance company, Chubb Corp., which agreed to pay the other half of Clinton's legal fees in the Jones case.
Other lawyers say the companies are acting routinely in paying all defense costs of their policy holder - who in this case just happens to be the president.
The Clintons' legal fees are mounting. Last week, the White House released information showing the Clintons' prospective legal debts - of up to $5 million for the Whitewater investigations alone - are more than three times larger their assets.
Robert Bennett, president Clinton's $475-an-hour lawyer, has rung up hundreds of thousands of dollars in legal fees in a strategy designed to delay the Jones case until after Clinton leaves office. Mr. Bennett argues that Clinton should not have to stand trial while he is president. The issue is pending before the US Supreme Court.
It is those efforts that have been funded so far by State Farm and Chubb.
Usually when an insurance company agrees to pay for the defense of a policy holder, the company hires the lawyer, helps decide legal strategy, and determines whether to settle the case out of court (Jones is seeking $700,000 in damages and an apology from Clinton). But Chubb and State Farm apparently have no such clout with the president and his lawyer.
At issue in the Judicial Watch suit is whether Clinton's State Farm policy covers an alleged intentional act of sexual harassment. "It looks to us clearly - in slam-dunk fashion - that it is not an instance where there is policy coverage," says Peter Mulhern, an attorney with Judicial Watch. "This is the kind of service you only get when you live at 1600 Pennsylvania Avenue," he says.
According to State Farm, Clinton purchased a standard $1 million umbrella liability policy. The standard policy says in part that injuries caused by intentional or willful acts are not covered. It adds: "We will not provide insurance ... for any loss caused by illegal discrimination.''
But the policy does provide coverage for defamation of character and false imprisonment if they weren't done intentionally.
Jones also claims in her suit to have been subject to intentional false imprisonment and intentional defamation by Clinton. Some lawyers say that defamation and false imprisonment allegations would automatically trigger an insurance company to pay for a policy holder's defense.
Others say the key issue in the Jones suit will be whether the acts were intentional.
Unless the case is settled out of court, whether Clinton acted intentionally or not will ultimately be decided by a jury.
That will be a decisive factor in determining to what extent the insurance companies must pay any damage award in the case. If a jury finds that Clinton intentionally sexually harassed, defamed, and falsely imprisoned Jones, both firms could ask for a refund of the money they are now paying to support Clinton's defense.