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Insurers Cannot Mandate IME's on First-Party Claims Without Court Order (PA)

December 11, 2019

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In a case we have been monitoring <a href="">since we posted about it in February</a>, the Supreme Court of Pennsylvania recently held that an automobile insurance policy provision regarding independent medical examination requirements was void and against public policy because it conflicted with 75 Pa.C.S. §1796(a) of the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”).

The Court answered a certified question from the United States Court of Appeals for the Third Circuit asking: “Does an automobile insurance policy provision, which requires an insured seeking first-party medical benefits under the policy to submit to an independent medical exam whenever the insurer requires and with a doctor selected by the insurer, conflict with 75 Pa.C.S. §1796(a) of the PA MVFRL, such that the requirement is void as against public policy?” Sayles v. Allstate Ins. Co., No. 58 MAP 2018, 2019 WL 6138409 (Pa. Nov. 20, 2019).
<p style="text-align: justify;">The underlying action, <em><a href="">Sayles v. Allstate Insurance Company </a></em>began in 2015 when Sayles was injured in an automobile accident and required medical treatment. She sought reimbursement from her insurance company, Allstate. Allstate sent Sayles a letter stating that Sayles was required to submit to an IME, which would be completed by a physician of Allstate’s choosing. Sayles refused to submit to the IME, and Allstate declined to pay her claim for medical benefits. Sayles then sued Allstate in the Court of Common Pleas of Pike County and alleged that Allstate’s IME requirements violated 75 Pa.C.S. §1796(a), which reads, in pertinent part:</p>

<ul style="text-align: justify;">
<li>General rule.--Whenever the mental or physical condition of a person is material to any claim for medical, income loss or catastrophic loss benefits, a court of competent jurisdiction or the administrator of the Catastrophic Loss Trust Fund for catastrophic loss claims may order the person to submit to a mental or physical examination by a physician. The order may only be made upon motion for good cause shown. The order shall give the person to be examined adequate notice of the time and date of the examination and shall state the manner, conditions and scope of the examination and the physician by whom it is to be performed. If a person fails to comply with an order to be examined, the court or the administrator may order that the person be denied benefits until compliance.</li>
<p style="text-align: justify;">Among other things, Sayles argued that §1796 allows the judge to order an IME and delineate the matter, conditions and scope of the IME; as opposed to Allstate’s IME clause at issue, which she argued allows the insurer to have unilateral authority and control of all aspects of the IME. The Court rejected Allstate’s contention that §1796 does not apply when an insurance company has its own IME clause, and subsequently found that the legislature’s deliberate statutory design cannot be bypassed by clauses of automobile insurance contracts. Further, the Court rejected the argument that Allstate’s IME clause language followed the Pennsylvania Insurance Department’s (“Insurance Department”) form policy language, and stated “[o]ur Court has made clear that the Insurance Department cannot, by regulation, legally approve an insurer's use of policy language which conflicts with the express requirements of the MVFRL as enacted by the General Assembly.” <em>See</em> Ins. Fed'n of Pa. v. Pa. Dep't of Ins., 585 Pa. 630, 889 A.2d 550 (2005) (holding that the Insurance Department did not have legal authority to enact a regulation which mandated that all insurance coverage disputes involving uninsured or underinsured motorist coverage be subject to binding arbitration, inasmuch as neither the MVFRL nor the Uninsured Motorist Act allowed imposition of such a requirement).</p>
<p style="text-align: justify;">The Court held that §1796 governs, because the statute was “intended to set the irreducible requirements all insurers issuing policies of automobile insurance in this Commonwealth must meet in order to compel their insured to submit to an IME when the insured does not voluntarily comply with the insurer's request to do so.” <em>See</em> 75 Pa.C.S. §1796(a) (section applies “[w]henever the mental or physical condition of a person is material to <strong><em>any</em></strong> claim for medical ... benefits”) (emphasis added). The Court found that §1796 is meant to prevent harassment and upward intrusion of an unwarranted examination and ultimately held that Allstate’s IME policy provisions conflict with, and are repugnant to, the statutory protections under §1796. Accordingly, insurers cannot enforce IME policy provisions that allow the insurer to unilaterally select the physicians, as it impacts the insureds’ significant privacy interests.  Going forward, a Court Order will be required, which means significantly more litigation (and associated fees) will be forthcoming in first-party MVA claims in Pennsylvania.</p>
<p style="text-align: justify;">Thanks to Emily Finnegan for her contribution to this post.   Please email <a href="">Brian Gibbons</a> with any questions.</p>

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