Posted 9/16/2013 12:00 am
Updated 11 months ago
John Mathis “Matt” Lile III now knows what it’s like to have several insurance claims denied.
Lile, who is facing two federal counts of embezzlement in connection with his time as president of Cosmopolitan Life Insurance Co. of Little Rock, has sued his insurance carriers for denying claims to represent him in lawsuits.
Lile filed suit against Mutual Marine Office Inc. of New York and Gotham Insurance Co. of Morristown, N.J.
The other plaintiff in the case is Advanced Insurance Brokerage of America Inc., where Lile was a CEO.
Lile claims Gotham was supposed to provide legal coverage for AIBA while Mutual Marine was supposed to provide a defense when Lile was sued by customers.
But neither insurance company did so when lawsuits started piling up against AIBA and Lile beginning in 2010. Lile also faced a lawsuit from the Arkansas Insurance Department, which took Cosmopolitan into receivership.
AIBA and Lile spent more than $170,000 defending themselves in the lawsuits. Lile said in the complaint that when he submitted claims for coverage, they were denied even though the carriers “had no valid reason to deny the claims.”
Lile is seeking an unspecified amount of damages against the carriers for bad faith and breach of contract.
Gotham denied Lile’s allegations in its response filed in U.S. District Court in Little Rock.
The case will raise some sticky legal issues for Lile, who is accused of using his position with Cosmopolitan and AIBA to charge more than $300,000 in personal expenses to a company credit card over a three-year period.
The expenses were ultimately paid by Cosmopolitan and AIBA, which managed self-insured health care plans for small businesses around the state.
If Lile is deposed as part of his civil suit and decides to exercise his constitutional protection against self-incrimination, the fact that he took the Fifth could be noted to the jury in the civil case, but not in the criminal.
And, of course, his testimony in the civil case could be used against him in his criminal case.
Ashlea Brown of Little Rock, Lile’s attorney in the lawsuit, didn’t immediately return a call for comment.
Lile’s criminal trial is scheduled to start on Nov. 12. If convicted, Lile faces a statutory sentence of 10 years on each count.