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Stanczyk v. Prudential Insurance Company of America

United States District Court, N.D. Iowa, Cedar Rapids Division

January 10, 2017

AMY STANCZYK, Plaintiff,
v.
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA, Defendant.

          ORDER

          C.J. WILLIAMS, UNITED STATES MAGISTRATE JUDGE

         I. INTRODUCTION

         This matter is before the Court pursuant to defendant Prudential Insurance Company of America's Motion for Leave to Amend Scheduling Order and For Leave to File Amended Answer and Counterclaim. Doc. 75. Plaintiff, Amy Stanczyk, originally sued defendant in state court alleging defendant refused in bad faith to pay her insurance benefits pursuant to a Group Long-Term Disability Plan. Doc. 3. Defendant filed an answer to the complaint, denying liability. Doc. 9. Defendant now seeks to amend its answer and assert a counterclaim alleging plaintiff was ineligible for coverage because she did not work full time. Defendant's counterclaim seeks return of benefits paid by defendant to plaintiff under an unjust enrichment theory. Plaintiff resists defendant's motion. Doc. 80. Plaintiff argues defendant has not shown good cause to modify the Court's scheduling order. Plaintiff also argues the Court should deny defendant's motion to amend on the ground defendant's counterclaim is futile because it is defective for a number of reasons.

         On December 5, 2016, the Court heard argument on defendant's motion. For the reasons that follow, the Court grants defendant's motion to amend its answer and bring a counterclaim.

         II. BACKGROUND

         Plaintiff was a certified public accountant who worked as a part-time independent contractor. On July 7, 2004, plaintiff applied for insurance coverage. Doc. 75-5 (Exhibit A). Pursuant to the terms of the policy, for plaintiff to be eligible for coverage, she was required to be "actively at work on full time." Doc. 75-6, at 9 (Exhibit B). The policy defines "full time" as "regularly working 17½ or more hours per week." Id. The policy further provides:

Your Participant Insurance under a Coverage will be delayed if you do not meet the Active Work Requirement on the day your insurance would otherwise begin. Instead, it will begin on the first day you meet the Active Work Requirement and the other requirements for the insurance. The same delay rule will apply to any change in your insurance that is subject to this section. If you do not meet the Active Work Requirement on the day that change would take effect, it will take effect on the first day you meet that requirement.

Doc. 75-6, at 10. The policy again defines "Active Work Requirement" as working full time, meaning 17½ or more hours per week." Id., at 18.

         On October 13-14, 2016, defendant deposed plaintiff. During her deposition, plaintiff testified that she charged at least $100 per hour (and up to $150 per hour) for work she performed from the mid-1990s until she stopped working in 2006. Doc. 75-7 (Exhibit C, at 31, 116-17). Plaintiff also testified that she would trust her husband's recollection better than her own regarding the most she made in a year because he completed the taxes; plaintiff's husband testified that the "largest revenue year for [plaintiff's] consulting practice was about $60, 000." Id., at 117.

         Based on this testimony about plaintiff's hourly rate and maximum revenue, defendant calculated that she worked less than the required 17½ hours per week. Doc. 75-4, at 4. Through further discovery requests, defendant obtained plaintiff's Social Security records. Defendant asserts these records show that plaintiff's actual work hours were even fewer than previously calculated based on plaintiff's husband's recollection of plaintiff's maximum revenue.

         Defendant now seeks to amend its answer and assert an unjust enrichment counterclaim against plaintiff, seeking restitution in excess of a quarter of a million dollars. Specifically, defendant's proposed counterclaim asserts, in pertinent part:

10. On July 7, 2004, Stanczyk applied for LTD[1] coverage under the Policy by submitting an application for coverage electronically to Aon Corporation ("Aon"). At that time, Aon received and processed applications for the coverage under the Policy.
11. At the time Stanczyk applied for coverage[, ] she was not regularly working 17½ or more hours per week and had not done so for several years.
12. At no time since Stanczyk applied for coverage under the Policy has she regularly worked 17½ hours per week.
13. Stanczyk applied for and ultimately received LTD benefits under the Policy beginning on or about January 18, 2007, less a six month elimination period specified in the Policy.
14. Stanczyk received LTD benefits under the Policy through July 31, 2013[, ] in the amount of $3, 000 per month.
15. Because Stanczyk has never been eligible for LTD insurance coverage under the Policy, she was paid LTD benefits in the amount of $238, 900 to which she was not entitled. By paying LTD benefits to Stanczyk, Prudential conferred a benefit upon Stanczyk.
16. Stanczyk voluntarily accepted and retained the payments, and took affirmative actions, and made affirmative representations, in order to procure the payment of the LTD benefits.
17. The entire amount of the payment, less the premiums Stanczyk paid for coverage, is money belonging in good ...

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