September 11, 2006
Is Torture Insurance A Smart Investment?
posted by Dave Hoffman
The Washington Post reports that CIA operatives and other government officials are buying "government-reimbursed, private insurance plan that would pay their civil judgments and legal expenses if they are sued or charged with criminal wrongdoing." According to the article, the insurance costs around $300 a year and "would pay as much as $200,000 toward legal expenses and $1 million in civil judgments. Since the late 1990s, the CIA's senior managers have been eligible for reimbursement of half the insurance premium."
Suppose you are spook, who either already has, or plans to, engage in activities that some pesky court might deem to be torture. Are these policies a good buy? I have some questions.
First, I wonder whether the insurance contract is enforceable. Normally, contracts to indemnify promisees against intentionally illegal conduct are unenforceable, especially to the extent that the conduct is more than an "undesired possibility" and the promise "tend[s] to induce its commission." Farnsworth, Contracts 5.2 (4th ed.) This makes for close calls (securities fraud indemnification, for example). But, in the event that these policies come due, torture won’t be a close call. That is because it seems obvious that the reason there is a run on these policies is that that our intelligence agencies, together with the futures markets, are betting against continued Republican occupation of the white house after '08. As the article points out,
'if an individual does get sued in the course of their official duties, then you get the biggest law firm in the world to step in' -- the Justice Department. Justice regulations allow defending federal workers if the conduct is within the scope of an employee's job and doing so is in the government's 'interest.'
Presumably, a democratic victor in '08 would face significant pressure to repudiate alleged torturers, and might decide that it isn't in the United States' interest to pay their legal bills. (The resulting potential lawsuits against the government remind me of the KPMG case.) In that event, presumably the anti-torture environment will be more stark, making it (a) less likely that the insurance companies will honor their contracts-to-defend; and (b) more likely that the merits litigation will go against the agents.
Second, the agents might think “who cares about the legal rule, won’t the company choose to defend me anyway to keep repeat business with the Agency?” This is a good argument, though it depends on a decidedly progressive relational contract theory. The company writing the claims is reportedly “a subsidiary of the private Special Agents Mutual Benefit Association created by former FBI officials,” and doesn’t appear to be or potentially subject to much public pressure. But according to (what looks like) the plan in question, they exclude coverage for “[d]amage arising out of willful violation of a penal statue or penal ordinance committed by or with the knowledge or consent of the member, or damages arising out of acts of fraud committed by or actual intent to deceive or defraud.” So the insurer has wiggle room in some cases to deny coverage.
Finally, I wonder about the interaction between this coverage and qualified immunity defenses. I assume that evidence of coverage would be a good indication that an agent’s purported good faith belief in the legality of his or her conduct was in fact not genuinely held. Perhaps this has been tested in an analogous context: do our readers know of a case on point? |
