Schultz v. Ability Ins. Co.
| Decision Date | 25 October 2012 |
| Docket Number | No. C11-1020,C11-1020 |
| Parties | PHYLLIS SCHULTZ, Plaintiff, v. ABILITY INSURANCE COMPANY, f/k/a MEDICO LIFE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
I. INTRODUCTION ......................................2
II. PROCEDURAL HISTORY.................................2
III. RELEVANT FACTS.....................................3
IV. DISCUSSION.........................................4
V. ORDER............................................ 32
I. INTRODUCTION
This matter comes before the Court on the Motion for Partial Summary Judgment (docket number 66) filed by Defendant Ability Insurance Company on August 14, 2012, the Response (docket number 78) filed by Plaintiff Phyllis Schultz on September 8, and the Reply (docket number 86) filed by Ability Insurance on September 21.
Also before the Court is the Motion to Strike Certain Testimony (docket number 85) filed by Ability Insurance on September 21, 2012, the Response (docket number 96) filed by Schultz on October 9, and the Reply (docket number 101) filed by Ability Insurance on October 19, 2012.
Also before the Court is the Motion to Strike Plaintiff's Statement of Additional Material Facts (docket number 88) filed by Ability Insurance on September 21, the Response (docket number 95) filed by Schultz on October 9, and the Reply (docket number 100) filed by Ability Insurance on October 19.
Ability Insurance's request for oral argument is denied. Pursuant to Local Rule 7.c, the issues will be decided without oral argument.
II. PROCEDURAL HISTORY
On June 21, 2011, Schultz sued Ability Insurance following its refusal to pay benefits allegedly owed pursuant to a long-term care insurance policy. Schultz filed an amended complaint on December 19, 2011, although the allegations against AbilityInsurance remained unchanged.1 Schultz states three claims for relief: breach of contract, bad faith, and fraud and misrepresentation. Schultz seeks compensatory damages, including emotional distress, and punitive damages. Trial is scheduled on January 24, 2013.
In its instant motion for partial summary judgment, Ability Insurance asks that Schultz's bad faith claim and fraud claim be dismissed. Ability Insurance also argues that Schultz's claims for emotional distress and punitive damages fail as a matter of law. Schultz asks that die motion be denied.
III. RELEVANT FACTS
Plaintiff Phyllis Schultz, who is now 86 years old, purchased a long-term care insurance policy from Mutual Protective Life Insurance in 1999. Ability Insurance assumed the policy on August 14, 2009, although it effectively assumed responsibility for the policy on September 27, 2007.2 On August 16, 2008, Schultz moved into the Dubuque Retirement Community. Ten days earlier - on August 6, 2008 - Schultz submitted a claim for benefits under the policy. The claim was denied on October 24, 2008. On April 9, 2009, Schultz submitted a second claim for benefits. The second claim was denied on or about August 12, 2009. At about that time, Schultz moved to Sunset Park, where she continues to reside.
To be eligible for benefits under the policy, Schultz must meet one of three "benefit qualifiers": medical necessity, loss of functional capacity, or cognitive impairment.3 Obviously, the parties disagree regarding whether Schultz qualifies for benefits pursuant to the policy. Ability Insurance does not seek summary judgment on the breach of contract claim, apparently recognizing that there are genuine issues of fact which must be decided by the jury. Rather, Ability Insurance asks that the Court determine, as a matter of law, that it has not acted in bad faith and the evidence does not support a finding of fraud. Schultz argues that Ability Insurance had no reasonable basis to deny her claim, and that genuine issues of material fact exist regarding whether Ability Insurance acted fraudulently.
The parties have provided voluminous information regarding Schultz's condition, treatment, and the handling of her claim. While the Court has carefully reviewed the parties' respective statements of fact, the attachments thereto, and the responses, it will not attempt to describe die record in detail. Ability Insurance argues that, at the least, Schultz's claim was "fairly debatable," thus prohibiting a recovery for bad faith. Ability Insurance also argues that Schultz's fraud claim is "merely a repackaged breach of contract claim," and fails as a matter of law.4 Additional relevant facts will be set forth below.
IV. DISCUSSION
Preliminarily, the Court must address die Motion to Strike Certain Testimony (docket number 85) and the Motion to Strike Plaintiff's Statement of Additional Material Facts (docket number 88), both filed by Ability Insurance on September 21, 2012. First, Ability Insurance asks die Court to strike, as undisclosed expert testimony, the affidavits of Dr. Hillard Salas and Dr. Roger D. Shafer. Second, Ability Insurance asks the Courtto strike the "inappropriate portions" of Schultz's additional statement of facts, as "irrelevant, argumentative, and/or unsupported."
On March 19, 2012, Schultz timely served a designation of expert witnesses.5 The designation identified one "retained expert," and identified Dr. Salas and Dr. Shafer as "treating physicians." According to the designation, the doctors were not specifically retained for purposes of litigation, but are "expected to have knowledge of facts and opinions within the scope of expert testimony under the Federal Rules." The designation then referred Ability Insurance generally to the "medical records and/or authorizations previously provided to Defendants."
A party must disclose the identity of any witness it may use at trial to present expert testimony. See FED. R. CIV. P. 26(a)(2)(A). If a witness is retained or specially employed to provide expert testimony hi a case, then the disclosure must be accompanied by a written report containing specific information. See FED. R. CIV. P. 26(a)(2)(B)(i-vi). If a witness is not required to provide a written report (i. e., was not retained or specially employed to provide expert testimony), then the disclosure must state the "subject matter" on which the witness is expected to testify and "a summary of the facts and opinions" to which the witness is expected to testify. See FED. R. CIV. P. 26(a)(2)(C). "This disclosure is considerably less extensive than die report required by Rule 26(a)(2)(B)." See Advisory Committee notes (2010). According to the Advisory Committee notes, "[f]requent examples [requiring only summary disclosure] include physicians or other health care professionals . . . Id.
Ability Insurance first argues that die opinions contained in the doctors' affidavits go "far beyond the scope of their treatment," thereby effectively turning them into retained experts. Both Dr. Salas and Dr. Shafer state in their affidavits that it is "reasonablyprobable" that Schultz's condition would have been "adversely affected" if she had not received supervised care beginning in August 2008. Both doctors also opine that providing supervised care was "consistent with accepted medical standards" in treating persons with Schultz's conditions. Not coincidentally, in meeting the "medical necessity" alternative for qualifying for benefits, Schultz must prove that the care was "consistent with accepted medical standards for treating the diagnosed condition and could not have been omitted without adversely affecting your condition."6
The extent to which a treating physician may render expert testimony without preparing a written report has been a persistent question. The issue was ably described by Judge Walters in Crabbs v. Wal-Mart Stores, Inc.:
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