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Zisumbo v. Convergys Corp.

United States District Court, D. Utah

March 12, 2019

HOPE ZISUMBO, Plaintiff,
v.
CONVERGYS CORP., JOHN PATTON II, RYAN MITCHELL, and ADRIANA WOLDBERG,

          MEMORANDUM DECISION AND ORDER GRANTING MOTION TO AMEND AND DENYING WITHOUT PREJUDICE MOTION FOR SPOLIATION SANCTION AND MOTIONS FOR SUMMARY JUDGMENT

          ROBERT J. SHELBY, UNITED STATES CHIEF DISTRICT JUDGE

         Chief District Judge Robert J. Shelby Magistrate Judge Dustin B. Pead This case arises from the alleged failure of Defendant Convergys Corporation to inform its former employee, Plaintiff Hope Zisumbo, of her rights regarding health insurance in violation of the Employment Retirement Security Act. This case also arises from Convergys's alleged interference with Zisumbo's rights under the Family Medical Leave Act. Before the court are Convergys's Motion for Spoliation Sanction, [1] Convergys's Motion for Summary Judgment, [2] Zisumbo's Cross Motion for Summary Judgment, [3] and Zisumbo's Motion to Amend her First Amended Complaint.[4] For the reasons given below, the court GRANTS Zisumbo's Motion to Amend her First Amended Complaint and DENIES without prejudice Convergys's Motion for Spoliation Sanction, Convergys's Motion for Summary Judgment, and Zisumbo's Cross Motion for Summary Judgment.

         BACKGROUND

         According to the First Amended Complaint, Zisumbo was hospitalized with life-threatening kidney stones on June 24, 2013.[5] Four days later, on June 28, 2013, her supervisor at Convergys terminated her by text message “for medical reasons.”[6] Convergys also retroactively terminated her SelectHealth health insurance with an effective termination date of April 30, 2013.[7] Based on these allegations, Zisumbo asserts a claim for unlawful interference with her rights under the Family Medical Leave Act (FMLA).[8] Zisumbo seeks-in addition to other things-the recovery of over $100, 000 in medical expenses she believes her health insurance, through Convergys, should have covered.[9]

         Based on Convergys's alleged failure to provide her with COBRA notice of her right to continuation coverage for health insurance, Zisumbo also asserted a claim under the Employment Retirement Security Act (ERISA).[10] The court previously dismissed that ERISA claim as time barred.[11] Zisumbo now seeks to amend her First Amended Complaint to add a new ERISA claim based on newly discovered information concerning Convergys's failure to inform Zisumbo of her entitlement to and actual coverage by Aetna Health Insurance.[12]

         Zisumbo received three letters concerning insurance from three separate entities.

         Around the time of her hospitalization, on about June 20, 2013, Zisumbo received a letter from the Aetna Life Insurance Company.[13] That letter, in relevant part, states, Welcome to the Aetna Voluntary Plan insurance plan. Enclosed in your packet are the following:

• Identification card(s)
• HIPPA Authorization Form
• HIPPA Privacy Notice
• Prescription Mail Order Form
Your employer has enrolled you in the Benefits Plus Plan underwritten by Aetna Life Insurance Company.
If you have not yet completed an enrollment form, please see your employer immediately to avoid any delay and/or denial of claims. Your enrollment form specifies eligible dependents you wish to enroll as well as your designated beneficiary for Life benefits.
For questions regarding your premiums or claims, please contact Member Services, toll free, at 1-800-292-3374. Representatives will be available to assist you Monday through Friday from 6 a.m. to 7 p.m. and Saturday and Sunday from 9 a.m. to 11 p.m. Central Time.
DocFind (PPO plan) - To locate participating health care providers, visit, http://www.aetna.com/docfind/custom/aahc/bn or contact the Member Services department.
Plans underwritten by Aetna Life Insurance Company[.][14]

         Zisumbo received a second letter on about July 8, 2013 from The Boon Group.[15] That two-page letter is titled “General Notice Continuation Coverage Rights.”[16] Its “Introduction” provides,

You are receiving this notice because you have recently become covered under a group health plan (the Plan). This notice contains important information about your right to continuation coverage, which is a temporary extension of coverage under the Plan. This notice generally explains continuation coverage, when it may become available to you and your family, and what you need to do to protect the right to receive it.
Continuation coverage can become available to you when you would otherwise lose your group health coverage, it can also become available to other members of your family who are covered under the Plan when they would otherwise lose their group health coverage. For additional information about your rights and obligations under the Plan you should review the Plan's Summary Plan Description or contact the Plan Administrator.[17]

         About a year after her hospitalization, on about July 11, 2014, Zisumbo received a “Cobra Election Notice” from Convergys.[18] It stated, in relevant part,

We recently learned that you were not sent notice of your COBRA rights at the time of your Qualifying Event(s).
Enclosed you will find the COBRA notification package (the “COBRA Notice”) that you would ordinarily have received at the time of your Qualifying Event(s).
If you elect COBRA coverage, you will be required to pay the premium for the COBRA coverage you elect, retroactive to the start of the coverage. If elected, your COBRA coverage must begin as of the first day of the month after your employment termination date. The maximum period of coverage is 18 months, unless an extension of the COBRA coverage period applies to you.
If you had been able to elect COBRA coverage when you first terminated employment, you would have been required to pay the premium for the COBRA coverage you elected, retroactive to the start of the coverage. Because there has been a delay in providing your COBRA notification, if you now elect retroactive COBRA coverage you will be responsible to pay the same amount of monthly premiums, but you will not be required to pay the retroactive premiums immediately. Instead, you will be allowed to pay the premiums for the months of coverage you elect, on a monthly schedule beginning after you elect the coverage and continuing for the number of months of coverage you elected.
The applicable monthly premium for the Select Health Government Employee option is $485.21 a month.
The applicable monthly premium for the AETNA Part Time Government Employee option is $466.75 a month.[19]

         Convergys corrected its Answer No. 5 after a three-year delay.

         During discovery, Zisumbo posed Interrogatory No. 5 asking “when, why, how, and by whom Ms. Zisumbo's health insurance benefits were canceled by Convergys?”[20] In its initial Answer No. 5, Convergys responded,

Subject to the General Objections, Convergys responds that Plaintiff ceased fulltime employment on April 28, 2013, which made her ineligible to participate in its health insurance plan. When Convergys updated Plaintiff's employment status to part-time in its PeopleSoft database, an electronic and automated message was automatically sent to SelectHealth notifying it of the change in Plaintiff's employment status. Thereafter, SelectHealth cancelled Plaintiff's health insurance benefits.[21]

Zisumbo received Convergys's initial Answer No. 5 on March 13, 2015, [22] a couple weeks before the March 31, 2015 cutoff date to amend pleadings.[23]

         Convergys served a corrected Answer No. 5 on September 26, 2018.[24] It disclosed for the first time that although Zisumbo's SelectHealth health insurance was only available to fulltime Convergys employees, part-time employees were eligible to receive Aetna Health Insurance.[25] Explaining its delay in correcting its initial Answer No. 5, Convergys stated that until recently, it did not realize that Zisumbo was eligible for Aetna Health Insurance.[26]

         The discovery of new evidence continued in October 2018.

         On October 24, 2018, Zisumbo deposed a representative from The Boon Group, which administered Convergys's health insurance plans.[27] The representative testified that not only was Zisumbo eligible for Aetna Health Insurance, she was automatically covered by it, despite never having enrolled.[28] The representative further testified Convergys paid premiums for Zisumbo's coverage.[29] He explained, “the employee has no choice about whether or not to be enrolled. It's funded by employer dollars, so the employer dictates enrollment.”[30] When asked if Zisumbo could now get Aetna Health Insurance to cover her medical bills from 2013 if she was unaware that she was covered by the insurance at the time, the representative testified that it was too late.[31]

         Zisumbo seeks to amend her First Amended Complaint in view of the newly discovered evidence.

         On January 25, 2019, Zisumbo moved to amend her First Amended Complaint.[32] She seeks to add ERISA and negligence claims based on Convergys's alleged failure to notify her about her entitlement to and actual coverage by Aetna Health Insurance.[33]

         LEGAL STANDARD

         When moving for leave to amend pleadings after the scheduling order deadline has passed, the moving party carries the burden of satisfying Rule 16(b)(4) of the Federal Rules of Civil Procedure.[34] Once the moving party satisfies Rule 16(b)(4), the burden is on the non-moving party under Rule 15(a)(2) to provide a reason why justice does not require amendment.[35]The court begins its analysis with Rule 16(b)(4).

         ANALYSIS

         I. Newly discovered evidence serves as good cause for the Proposed Amendment.

         Rule 16(b)(4) provides, “[a] schedule may be modified only for good cause and with the judge's consent.” Rule 16(b)(4)'s good cause standard “focuses on the diligence of the party seeking leave to modify the scheduling order to permit the proposed amendment.”[36] Thus, to establish good cause, Zisumbo must make two separate showings related to her own diligence. First, she must show she had “good cause for failing to move to amend prior to the cutoff date.”[37] Second, she must show good cause for the length of time that passed between when she “learn[ed] of the new information warranting amendment and moving to amend.”[38]

         Zisumbo argues, and the court agrees, that newly discovered evidence serves as good cause for her failure to move to amend prior to the March 31, 2015 cutoff date to amend pleadings.[39] Zisumbo punctually served Interrogatory No. 5 on Convergys.[40] Convergys served its initial, erroneous, Answer No. 5 on March 13, 2015, [41] a couple weeks before the March 31, 2015 cutoff date to amend pleadings.[42] Convergys corrected its Answer No. 5 three and one-half years later, on September 26, 2018, disclosing for the first time that Zisumbo was eligible for Aetna Health Insurance.[43] Thus Convergys's error, not Zisumbo's, delayed the Proposed Amendment. Moreover, Zisumbo did not learn about her actual coverage until October 24, 2018, when The Boon Group disclosed that fact.[44] Accordingly, Zisumbo has shown good cause for her failure to move to amend prior to the March 31, 2015 cutoff date to amend pleadings.[45]

         Zisumbo has also met her burden under the second good cause prong. The court agrees with Zisumbo that her three month delay-between when she learned of the new information warranting amendment (October 24, 2018) and when she moved to amend (January 25, 2019)-reflects adequate diligence because she used that time to process, research, and draft a motion conveying the legal significance of Convergys's and The Boon Group's admissions.[46]Because she lacked the evidence necessary to seek relief from the Scheduling Order until October 24, 2018, because she lacked that evidence due to Convergys's initially incorrect Answer No. 5, and because she sought leave to amend ...


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