Insurer sues ex-banker over disability benefits

Mass Mutual seeks $842,276 from former FNB chief executive

Legal affairs

March 17, 2000|By Eileen Ambrose | Eileen Ambrose,SUN STAFF

An insurance company is demanding that former bank executive Charles W. Cole Jr. return $842,276 in disability benefits and unpaid premiums, claiming that he is healthy enough to work full time and mountain-climb in New Hampshire.

Massachusetts Mutual Life Insurance Co. filed a lawsuit in U.S. District Court in Baltimore against Cole, 64, who retired as chief executive of First National Bank of Maryland in 1994. Cole has been chairman and chief executive officer of Legg Mason Trust Co. in Baltimore since the summer.

Cole, of Owings Mills, could not be reached yesterday for comment, but his lawyer said the insurer's accusations against Cole are untrue. "We have documents indicating to the contrary," said attorney Joan Cerniglia-Lowensen.

In January 1991, Cole applied for a policy from Connecticut Mutual Life Insurance Co. that would pay $12,500 a month if he became disabled. The insurer merged with Massachusetts Mutual in February 1996.

In his application, Cole indicated that he had passed his annual physical in the fall. Cole had a heart murmur, but a cardiologist's report in September 1990 had found that he was symptom-free, according to the lawsuit.

He received the policy in May 1991, and in August 1992 asked for a $5,000 increase in coverage. Despite Cole's "elevated Epstein-Barr titers," his primary physician told the insurer that the executive did not have chronic fatigue syndrome or clinically significant fatigue, the lawsuit stated. Epstein-Barr is a virus that causes symptoms of fatigue.

The increased coverage was approved in December 1992. He was also eligible for another $5,000 monthly coverage after a two-year waiting period under another insurance rider.

In January 1994, Cole's retirement from the bank was announced in Baltimore newspapers, and he left the bank in April. A few weeks later, he filed for disability benefits, submitting statements from two doctors that said he suffered from chronic fatigue syndrome, the lawsuit said.

Cole began collecting benefits in August. The next month, Cole started a full-time job as vice chairman of Brown Investment Advisory & Trust and senior adviser to Brown Asset Management, the lawsuit said. Before starting the new job, Cole took a mountain-climbing vacation in New Hampshire, the insurer claimed.

His lawyer said Cole took a family vacation in New Hampshire but did not climb any mountains.

However, in an interview with Cole published in early August 1994 in The Sun, the executive said he had been mountain-climbing in New Hampshire for a month.

Massachusetts Mutual said that during an examination of claims it found inconsistencies in Cole's case. While his primary physician said Cole could not perform his job, a cardiologist said Cole was "robustly healthy," the lawsuit said.

Besides accepting a new job, Cole continued to serve on the University of Maryland Board of Regents and as president of the Elkridge Club, a golf and country club, the insurer said.

A review by the insurance company's physician found that Cole did not meet the national Centers for Disease Control and Prevention criteria for chronic fatigue syndrome. The physician said Cole appeared to be chronically sleep-deprived, the lawsuit said.

In May 1998, the insurer told Cole it was terminating his benefits. It asked later for the return of $775,625 in disability payments plus $66,651 in premiums that were not paid while Cole collected benefits.

Cole has not returned the money. He filed a complaint with the Maryland Insurance Administration to seek a determination that he was disabled, but the agency said it did not have jurisdiction, the lawsuit said.

The insurer is asking the court to declare that Cole has never been disabled, is not entitled to benefits and must return payments and pay premiums.

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