Yes. I have heard of that. I believe the main issue with asbestos is when it becomes dust and floats in the air and is inhaled into the lungs. Painting over that seals it in and prevents that from happening. It probably should be repainted whenever it starts to show wear.
You will probably need to use a government certified painter who will use special equipment to prevent the process from filling the air with particulates. (You'll have to check with your local government agency for exact requirements.) Asbestos is a very regulated substance.
The EPA's website has an Asbestos Page that covers the topic from a concerned homeowner's point of view with links and advice:
How To Manage An Asbestos Problem
If the asbestos material is in good
shape and will not be disturbed, do
nothing! If it is a problem, there are
two types of corrections: repair and
Repair usually involves either sealing
or covering asbestos material.
Sealing (encapsulation) involves treating the material with a sealant
that either binds the asbestos fibers
together or coats the material so
fibers are not released. Pipe, furnace
and boiler insulation can sometimes be
repaired this way. This should be done
only by a professional trained to
handle asbestos safely.
Covering (enclosure) involves placing something over or around the
material that contains asbestos to
prevent release of fibers. Exposed
insulated piping may be covered with a
protective wrap or jacket.
With any type of repair, the asbestos
remains in place. Repair is usually
cheaper than removal, but it may make
later removal of asbestos, if
necessary, more difficult and costly.
Repairs can either be major or minor.
That page includes a section on "Asbestos Professionals: Who Are They and What Can They Do?". Also, farther down the page, under the heading "If You Hire A Corrective-Action Contractor" (I'm assuming your painting contractor would fall under this heading.):
Contact your state and local health
departments, EPA regional office, and
the Occupational Safety and Health
Administration regional office to
find out what the regulations are. Be
sure the contractor follows local
asbestos removal and disposal laws. At
the end of the job, get written
assurance from the contractor that all
procedures have been followed.
You should put removal of that onto your "someday list" because that will come up as a negative if you ever want to sell your house.