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A conservative group suing to make President Clinton return insurance payouts in the Paula Jones case took steps Friday to reactivate its own lawsuit after being dismissed by a District of Columbia court.

Judicial Watch, a conservative organization suing Clinton on behalf of State Farm policyholders, made a formal demand for restitution Friday -- the first step toward filing its lawsuit in Illinois, where State Farm Mutual Automobile Insurance Co. is based.

The lawsuit seeks to force Clinton to repay more than $1 million paid by State Farm to private attorneys defending him against Paula Jones' sexual harassment charges. From his days as Arkansas governor, Clinton maintained personal liability umbrella coverage with State Farm.

Judicial Watch originally filed in D.C. Superior Court on behalf of Thomas Flocco, a State Farm policyholder. Judge Geoffrey M. Alprin dismissed the complaint last week on several grounds.

Judicial Watch chairman Larry Klayman said Friday that he will try again in Illinois.

He argued that Clinton's attorneys squandered time and policyholders' money in stalling the case until after the president's 1996 re-election.

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