Q: is the president getting special insurance treatment for the Paula Jones lawsuit?

0 Comments | Insight on the News, July 21, 1997 | by Richard Giller, | Sean Mooney

Yes: It is established law that insurance does not cover intentional wrongful acts.

The costs of defending President Clinton against the sexual-harassment allegations of Paula Corbin Jones are being paid by two insurance companies: Pacific Indemnity Co. (a member of the Chubb Corp.) and the "good neighbors" at State Farm Insurance Co. To date, these companies equally have shared in paying the more than $1.5 million in fees charged by Clinton's lawyer, Robert Bennett, for his (unsuccessful) attempt to postpone the discovery phase of the Jones case until the year 2001.

Having advised insurance companies for more than a dozen years on how best to respond to requests by policyholders for defense and indemnity in situations where coverage is questionable, I find the actions of Pacific Indemnity and State Farm extremely troubling.

Neither Pacific Indemnity nor State Farm legally are obliged to provide the president with a defense in the Jones case, based upon the nature of the allegations of Jones' complaint, the terms and conditions of the two policies, applicable case law and the strong public policy against allowing people accused of sexual wrongdoing to pass off their liability to insurance companies.

So why would Pacific Indemnity or State Farm agree to share in the million-dollar cost of defense -- a figure that could double or triple quickly? At least to this expert, the answer is simple and straightforward: because their policyholder is the president of the United States. If you or I were accused of the same wrongdoing of which Jones has accused the president, neither company would have lifted a finger to assist us. And if they did, there only is about a .01 percent chance that we would be allowed to select our own counsel. In any case, neither company would cover all of Bennett's $475-per-hour fee.

There appears to be a common misperception among Americans (promulgated and propagated by the media) that Jones' complaint alleges only a single, isolated incident of sexual misconduct by then-Gov. Clinton at the Excelsior Hotel in Little Rock on May 8, 1991. Actually, the complaint sets forth an even more nefarious set of facts. The lady contends that following her refusal of Clinton's sexual advances, the governor and several Arkansas state troopers persisted in a pattern of sexual harassment and malfeasance.

Specifically, Jones alleges that members of Clinton's security detail approached her on three separate occasions to inquire about her availability to sleep with Clinton. Another incident involved a chance meeting between Clinton and Jones in the Arkansas State Capitol. Jones claims that she was accosted by Clinton in the rotunda, where he draped his arm around Jones, pulled her close to him and said: "Don't we make a beautiful couple -- beauty and the beast?" During this time, Jones purportedly was treated in a hostile and rude manner by superiors at her state job. She later was transferred to a position that had no responsible duties or opportunities for advancement. In addition, the job in which she was placed called for a higher grade and pay scale, yet Jones received neither. The work environment became so hostile that Jones terminated her employment on Feb. 20, 1993.

In January 1994, a story appeared in the American Spectator magazine claiming that a woman named "Paula" told an unnamed trooper who escorted her to Clinton's Excelsior Hotel suite on May 8, 1991, that she was "available to tee Clinton's regular girlfriend if he so desired." Jones was upset by these accusations. She held a press conference on Feb. 11, 1994, to denounce the article, request that Clinton acknowledge the incident and state that Jones had rejected his advances and apologize to her. Clinton's representatives replied that Clinton never had met Jones, thus implicitly branding her a liar.

The complaint filed by Jones contains only four causes of action against Clinton: (1) civil-rights violations based on gender discrimination resulting from sexual harassment and sexual assault beginning on May 8, 1991, (2) conspiring with members of his security detail to violate her civil rights on similar grounds, (3) intentional infliction of emotional distress; and (4) defamatory remarks made on or after Feb. 11, 1994. All four of these counts are based entirely upon intentional misconduct. Such claims fall outside the insuring agreement of both the Pacific Indemnity and the State Farm policies. Additionally, both policies expressly and specifically exclude coverage for sexual discrimination/ harassment.

According to published reports, Pacific Indemnity issued a personal-liability umbrella policy to Clinton in the mid-1980s. That policy expired in February 1992. State Farm also issued a similar policy, effective in February 1992. The Pacific Indemnity policy was in place at the time of the 1991 incident and subsequent sexual harassment but was not in effect at the time the alleged defamatory remarks were made. The reverse holds true for State Farm: All of the alleged sexual misconduct took place before the inception of its policy, but the alleged defamation occurred after that inception.