Recent Developments on the Easy Resort to IME’s in First Party Medical Benefits Claims

In a ruling in late November 2019, the Pennsylvania Supreme Court in Sayles v. Allstate Ins. Co., ___ A.3d ___ , 58 MAP 2018, 2019 WL 6138409 (Pa. Nov. 20, 2019), ruled ineffective as against public policy, the standard language in PA auto policies that required insureds to attend PIP medical exams under terms of the auto policy.  (A typical policy provision states “If an accident or loss occurs, the following must be done for the terms of the policy to apply: Any person qualifying as an insured under any coverage part of this policy must … submit, as often as we reasonably require, to physical exams by physicians we select.”).  While many observers in the defense bar characterize this as “yet another victory” scored at the Pennsylvania Supreme Court by the plaintiff’s bar (a not-unreasonable observation), this case in fact is the culmination of a trend pre-dating the current make-up of the Supreme Court.  Also, there is concern expressed that the ruling now makes the selection of the medical examiner solely and exclusively within the purview of the court.  We think that is an overstatement of the ruling.

In Sayles (and a companion case Scott v Travelers), plaintiffs argued that the policy terms such as those above were at odds with the applicable provision of the Pennsylvania Motor Vehicle Financial Responsibility Law (the MVFRL), Mental or Physical Examination of a Person, found at 75 Pa.C.S. § 1796.  Section 1796(a) provides:

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 … 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.

75 Pa.C.S.A. § 1796(a) (West, 2020).  The typical approach of insurers has long been to compel insureds to attend a PIP medical exams on the basis of these types of policy provisions (and to withhold benefits if they fail to do so).  However, the Sayles/Scott plaintiffs contended that Section 1796 required insurers, before an IME could be conducted, to file a motion with a court to compel a PIP exam, and that the burden was in the insurer to demonstrate good cause for the PIP exam.  The Supreme Court accepted the plaintiff’s arguments, and, in the view of some defense observers, further burdensomely required that now only the judge will select the medical examiner.

On whether PIP exams are to be conducted only after the insurer petitions the court and demonstrates good cause for the exam, a well-regarded judge in state court in Pittsburgh, Judge Wettick, had for years found that the policy provisions governing PIP exams violated the public policy evident in section 1796(a).  Erie Ins. Exch. v. Dzadony, 39 D.&C.3rd 33 (Allegheny Cty., 1986); Nationwide Ins. Co. v. Hoch, 36 D.& C.4th 256 (Allegheny Cty., 1997).  When public policy was not invoked by the insured, courts found the policy language enforceable, but at least one state appellate court questioned whether that acceptance could stand if public policy was challenged.  See, e.g., Fleming v. CNA Ins. Co., 409 Pa.Super. 285, 597 A.2d 1206 (1991).  So insofar as case law has at the least telegraphed these analyses for over 30 years while the public policy question was left unaddressed by appellate courts, in our view the Sayles/Scott decision holding such policy language unenforceable is not particularly surprising.

The other major concern with the Sayles/Scott decision is whether it exclusively leaves for the  judge to take on total and exclusive responsibility for selecting the medical examiner.  The Sayles/Scott decision did recognize that section 1796(a) requires:

  • “any court order for an IME [to] give the insured ‘adequate notice of the time and date of the examination,’ as well as ‘state the manner, conditions and scope of the examination.’” 2019 WL 6138409, at *12, citing 75 Pa.C.S. § 1796(a).
  • “a judge to adjudicate the petition”, at *13.

The concern arises from the Sayles/Scott Court’s next observation, that “under Section 1796(a), if the judge does grant an insurer’s request for the IME, the judge selects the physician who will perform the IME, and, importantly, sets the manner, conditions, and scope of the examination.”  Id. [emphasis added].  The Court’s observation is made to contrast the unacceptable “IME policy provisions [that] allow the insurer to unilaterally select the physicians who will perform the IME, and, of great significance, set no limits on the scope or conduct of the IME, a process, as we have emphasized above, which impacts insureds’ significant privacy interests.”  Id.

We take the language in Sayles/Scott, that “the judge selects the physician who will perform the IME,” to mean only that the order of the court is to so identify the physician.  There is nothing in Section 1796 that relegates to the court the exclusive purview to identify and select medical examiners, where the import of this portion of the opinion is to make clear that the PIP examiner may not be unilaterally selected by the insurer.  Typically, in any motion presented to the court, procedural rules call for the movant and respondent to provide proposed orders.  In our view, the argument to be made to the court as part of the good cause demonstration should make clear not just why the PIP exam should be conducted, but why a particular physician should be selected.  The insured may also want to identify a particular and alternative physician for its proposed order, but in any event, it will be up to the court to decide which doctor (or another) should conduct the exam.  In our view, if the insurer’s proposed examiner is well described as qualified and fair, there is no reason to conclude that section 1796 bars the court’s affirmation of that proposed medical examiner.  And we suspect that burdened courts will not relish an interpretation that places new obligations exclusively on them to make independent evaluations of examiners in every instance.

Notably, a federal court in recent days, while recognizing the Sayles/Scott opinion, did not interpret it to mean that only the Court may independently evaluate and select the examiner.  Loughery v. Mid‑Century Ins. Co., 2019 WL 7049565 (W.D. Pa. Dec. 23, 2019).  In granting a defendant insurer’s motion to Compel a Physical Examination of the plaintiff under F.R.C.P. 35, which closely tracks section 1796(a) in material parts, the federal court directed that the insurer “shall notify the Court and Plaintiff by January 10, 2020 of the person who will conduct the examination as well as the date, time, place, manner, conditions and scope for the physical examination. [The insurer] shall provide reasonable notice to Plaintiff of the date and time of the examination.”  Id., 2019 WL 7049565, at *2.