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The Pennsylvania Supreme Court has agreed to answer for the U.S. Court of Appeals for the Third Circuit the question of whether an insurer can mandate that claimants undergo an unlimited number of medical exams by a doctor of the carrier's choosing before they can receive benefits.

The justices issued identical Oct. 15 orders in Sayles v. Allstate Insurance and Scott v. Travelers Commercial Insurance, granting the Third Circuit's petition for certification of a question of law:  “Whether, under Pennsylvania law, a contractual provision in a motor vehicle insurance policy that requires an insured to submit to an independent medical examination by a physician selected by the insurer, when and as often as the insurer may reasonably require, as a condition precedent to the payment of first-party medical benefits under that policy, conflicts with the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. Section 1796(a), and is therefore void as against public policy.”

In Sayles, a federal judge in the Middle District, predicting how the Pennsylvania Supreme Court  would rule on the issue, allowed a proposed class action lawsuit to proceed against Allstate over its policy compelling medical exams. The question of whether insurers can mandate claimants to attend as many independent medical examinations as the carrier wants has been percolating through state courts in recent years and insurance attorneys have expressed a need for clarity.

U.S. District Judge A. Richard Caputo of the Middle District of Pennsylvania ruled in Sayles v. Allstate Insurance in May 2017 that Allstate's policy provision conflicted with the state Motor Vehicle Financial Responsibility Law, and predicted that the state Supreme Court would find the provision unenforceable.

“The court reads the plain language of Section 1796 [of the MVFRL] to prohibit precisely what Allstate allegedly did in this case,” Caputo said. “Because it appears that Allstate's examination requirement permits the insurer to require its insureds to submit to an IME without first filing a petition demonstrating good cause, and because the examination requirement transfers control over the statutory safeguards from the province of an impartial court to discretion of an interested insurer, the court predicts that the Pennsylvania Supreme Court would find the examination requirement, as alleged, in conflict with Section 1796 and thus violative of Pennsylvania public policy.”

Although the ruling green-lighted claims that the policy conflicts with the MVFRL, Caputo dismissed all other claims raised.

Charles Kannebecker of Weinstein Schneider Kannebecker & Lokuta, who represents plaintiff Samantha Sayles, did not return a call for comment on the Supreme Court's order granting the Third Circuit's petition.

Marc Wolin of Saiber, who represented Allstate, also did not return a call for comment.

According to Caputo, Sayles was injured in a car accident in December 2015. Allstate subsequently requested that Sayles undergo an independent medical exam by a doctor that the carrier chose before she could receive any benefits. Allstate, however, never petitioned the court to compel the physical exam.

Sayles challenged the policy, arguing it violated the state MVFRL, which, she argued, requires carriers to get a court order based on “good cause” before refusing to pay the benefits.

Sayles lodged a proposed class action against Allstate over the policy, seeking a declaratory judgment that the policy violated the MVFRL and the Pennsylvania Unfair Trade Practices and Consumer Protection Law. She also alleged that the policy violated the state Bad Faith Act, was a breach of the duty of good faith and fair dealing, and that the company violated statutes against unjust enrichment and misrepresentation.

Allstate said the MVFRL did not mandate a court order, but only suggests when a court may order a person to submit to an IME. Sayles countered that Allstate's policy allowed insurers to “circumvent the procedure and protections the legislature afforded insureds” in enacting the law.

Caputo noted that the 2009 Eastern District case Williams v. Allstate Insurance sanctioned a similar policy, but he said that decision improperly interpreted a 1991 state Superior Court case, which approved a similar provision, but specifically did not wade into public policy issues.

“Although the [Superior Court in Fleming v. CNA Insurance] deliberately abstained from analyzing whether the policy provision was void as against public policy, the Williams court found Fleming to have 'explicitly discussed the interplay,'” Caputo said. “The court disagrees.”

Ultimately, Caputo relied on case law from Allegheny County Judge R. Stanton Wettick dating back to 1986, and the Middle District's 2016 Scott ruling, which dealt with a Travelers Commercial Insurance policy. In Scott, the court predicted that the state Supreme Court “would find that the MVFRL's provision prevails over the conflicting terms in the parties' policy.”

“Based on the policy of cost containment that motivated the enactment of the MVFRL, the plain language set forth in Section 1796 of that statute, and the legislature's balancing of both the insured's and the insurer's interests in requiring the insurer to seek a court order to compel the insured's attendance at an IME, we predict that the Supreme Court of Pennsylvania would find that the policy provision impermissibly conflicts with Section 1796 of the MVFRL such that the provision is rendered void as against public policy,” U.S. Magistrate Judge Susan Schwab said in Scott.

Counsel for Scott, Adam Reedy of Handler, Henning & Rosenberg in Harrisburg, said he was “excited” that the Supreme Court granted the Third Circuit's petition and that he feels confident the justices will side with the plaintiffs.

Reedy said state trial court opinions on the issue “have been all over the map” and clarity from the Supreme Court will be “good for everybody.”

Counsel for Travelers, Audrey Copeland of Marshall Dennehey Warner Coleman & Goggin in King of Prussia, said she's not authorized to comment on pending litigation.