In a recent appeal from the United States Court of Appeals for the Third Circuit, the Pennsylvania Supreme Court examined the enforceability of a commonly used automobile policy provision related to Independent Medical Examinations (“IMEs”) and first-party benefits. Sayles v. Allstate Ins. Co., 2019 Pa. LEXIS 6457 (Pa. 2019). The Pennsylvania Supreme Court held that an automobile insurance policy provision, which requires an insured seeking first-party medical benefits under the policy to submit to an IME whenever the insurer requires and with a doctor selected by the insurer, conflicts with 75 Pa.C.S. § 1796(a) of the Pennsylvania Motor Vehicle Financial Responsibility Law (“PMVFRL”) and is therefore void as against public policy.
The Court’s ruling arises out of two separate lawsuits commenced in the courts of common pleas which were subsequently removed to federal district courts and consolidated for disposition by the United States Court of Appeals for the Third Circuit. Both matters involved claims for PIP benefits which were terminated when the insured failed to comply with a request by the insurer for the claimants to undergo IMEs.
The Pennsylvania Supreme Court analyzed the specific policy provisions which require an insured to submit to mental and physical examinations by physicians selected by the insurance company “when and as often as we may reasonably require,” and compared same with Section 1796 of the PMVFRL, which states:
Based upon a plain reading of Section 1796(a), the Court held that it was the intention of legislature to set exclusive requirements for all insurers issuing automobile policies in the Commonwealth, including requirements for IMEs. As such, if an insured did not voluntarily submit to an IME, the insurer is limited by Section 1796(a) and must comply with all requirements contained therein regardless of any contrary policy terms or provisions.
As a practical implementation of the ruling, insurers now must file a petition with a court of competent jurisdiction and demonstrate “good cause” sufficient to justify the requested IME before an order compelling same is issued. In addition, any court order for an IME must give the insured “adequate notice of the time and date of the examination” and outline “the manner, conditions and scope of the examination.” Furthermore, if the insurer is successful in compelling an IME, the court selects the physician who will perform the IME, and, sets the manner, conditions, and scope of the examination. While the Pennsylvania Supreme Court explicitly stated that the court ruling on the petition would select the physician performing the IME, it is likely that in implementation, the court will choose based on recommendations of the insurer and insured. Finally, if all other requirements are met and the insured fails to attend the IME, the authority to terminate benefits vests solely with the court.
The ruling of the court certainly increases the costs and the burden that insurers face when trying to determine if it’s insured is entitled to PIP benefits.