Sayles v. Allstate Ins. Co.

• Decision Date: 20 November 2019
• Docket Number: No. 58 MAP 2018,No. 59 MAP 2018,58 MAP 2018,59 MAP 2018
• Citation: 219 A.3d 1110
• Parties: Samantha SAYLES, Individually and on Behalf of All Others Similarly Situated, Appellee v. ALLSTATE INSURANCE COMPANY, Appellant William H. Scott, Appellee v. Travelers Commercial Insurance Company, Appellant
• Court: Pennsylvania Supreme Court

219 A.3d 1110

Samantha SAYLES, Individually and on Behalf of All Others Similarly Situated, Appellee

v.ALLSTATE INSURANCE COMPANY, Appellant

William H. Scott, Appellee

v.Travelers Commercial Insurance Company, Appellant

No. 58 MAP 2018

No. 59 MAP 2018

Supreme Court of Pennsylvania.

Argued: May 15, 2019

Decided: November 20, 2019

OPINION

JUSTICE TODD

In these consolidated matters, we answer a certified question from the United States Court of Appeals for the Third Circuit: 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 Pennsylvania Motor Vehicle Financial Responsibility Law ("MVFRL"), such that the requirement is void as against public policy? After review, we conclude that the provision conflicts with Section 1796(a), and is void as against public policy.

I. Factual Background and Procedural History

This matter arises out of two separate lawsuits commenced in the courts of common pleas which were subsequently removed to federal district courts on the basis of diversity jurisdiction and thereafter consolidated for disposition by the United States Court of Appeals for the Third Circuit.

A. Scott v. Travelers (59 MAP 2018)

In 2009, Appellee William H. Scott was covered by an automobile insurance policy issued by Appellant Travelers Commercial Insurance Company ("Travelers"),¹ which contained a clause requiring Scott, if he filed a claim for first-party medical benefits, to "[s]ubmit, as often as [Travelers] reasonably require[s] to physical exams by physicians [Travelers] select[s]."² Travelers Automobile Insurance Policy at 16 (Travelers Joint Appendix at 205a).

Scott was injured in an automobile accident on April 8, 2009. He sought reimbursement from Travelers under his automobile policy for his medical expenses, as they were first-party benefits, and Travelers responded to his request by sending a letter stating that he was to be scheduled to undergo an independent medical exam ("IME"), pursuant to the right Travelers claimed it possessed to require such an examination under the above-referenced clause in its insurance policy.

Scott, through his attorney, sent a responsive letter to Travelers requesting that Travelers submit a list of three doctors, whom Scott indicated that he would consider allowing to examine him, even though Travelers had not obtained a court order. Travelers did not send such a list, but, instead, renewed its request that Scott submit to an IME it had scheduled.

Scott did not attend the scheduled IME, and Travelers discontinued paying Scott's outstanding medical bills. Scott then sued Travelers in the Court of Common Pleas of Dauphin County alleging, inter alia , that Travelers had breached its contract with him by imposing its IME requirement, which he contended conflicted with Section 1796(a) of the MVFRL, which requires a court order, based upon a showing of good cause by an insurer paying first-party benefits, to compel an insured to submit to an IME.^{3 4} Travelers responded by removing the action to the United States District Court for the Middle District of Pennsylvania, where the matter was assigned to United States Magistrate Judge Susan E. Schwab. Subsequently, both Scott and Travelers filed cross motions for summary judgment.

In an opinion accompanying her ruling on these motions, Judge Schwab addressed whether the IME clause violated Section 1796(a), and, hence was void as against public policy. She initially determined that our Court had never directly addressed this question; thus, she endeavored to predict how our Court would rule on this issue.⁵ Judge Schwab first examined the language of Section 1796(a), and she found it to be plain and unambiguous in requiring the insurer to petition a state court to obtain an order for an IME, and similarly clear in requiring the insurer to demonstrate good cause for the issuance of such order. In her view, Section 1796(a) did not permit Travelers to unilaterally terminate Scott's first-party benefits for his failure to comply with its request that he undergo an IME. Accordingly, because Judge Schwab found that the language in Travelers' insurance policy, permitting it to require that its insured undergo an IME if its insured refuses to voluntarily comply with its request for an IME, violated Section 1796(a). Thus, she predicted that our Court "would find that, absent voluntary compliance on the part of the insured, insurers ... are not free to disregard the statutory language in § 1796, which sets forth the standard by which an insured may be forced to undergo an IME." Scott v. Travelers Ins. Co. , 1:14-CV-00535, 2016 WL 5851960, at *7 (M.D. Pa. Oct. 6, 2016) (hereinafter, " Scott ").

In reviewing the extant caselaw on this question from other Pennsylvania courts, Judge Schwab noted that the sole Pennsylvania intermediate appellate court opinion to consider whether an insurer could compel an insured to submit to an IME absent a court order avoided answering this question, and, hence, was unpersuasive. See Fleming v. CNA Ins. Co. , 409 Pa.Super. 285, 597 A.2d 1206 (1991) (holding that insurer was entitled to have its insured submit to an IME when insured submitted claims for medical bills and lost wages under provision of its automobile policy which gave it the right to request such an exam; however, the court specifically noted that insured did not challenge this provision as being void as against public policy). For this reason, Judge Schwab also declined to follow the ruling of the United States District Court of the Eastern District of Pennsylvania, Williams v. Allstate Insurance Company , 595 F. Supp.2d 532 (E.D. Pa. 2009), as it relied heavily on Fleming to predict that this Court would find this type of provision to be enforceable. Judge Schwab also noted that Judge R. Stanton Wettick of the Court of Common Pleas of Allegheny County, in Nationwide v. Hoch , 36 Pa. D. & C.4th 256 (Allegheny County Common Pleas 1997), had also refused to follow Fleming because it never squarely addressed this question; rather, Judge Wettick continued to adhere to his then-decade-old decision in Erie Insurance Exchange v. Dzadony , 39 Pa. D. & C.3d 33 (Allegheny County Common Pleas 1986), holding that such clauses violate Section 1796(a) and, hence, are unenforceable. Scott, at *9. Judge Schwab ultimately determined, based on her prediction that our Court would find that the Travelers policy provision requiring the IME conflicted with Section 1796(a), that it was void as against public policy. Thus, she concluded that Scott was entitled to judgment as a matter of law. Travelers sought, and was granted, the right to take an interlocutory appeal of this decision to the United States Court of Appeals for the Third Circuit.

B. Sayles v. Allstate (58 MAP 2018)

In 2015, Appellee Samantha Sayles was covered by an automobile policy issued by Appellant Allstate Insurance Company ("Allstate"). Allstate's policy contained a clause, similar to the one in Scott's policy, providing that, in order to receive first-party medical benefits, the insured "shall submit to mental and physical examinations by physicians selected by us when and as often as we may reasonably require." Allstate Automobile Insurance Policy at 12 (Joint Appendix to Brief for Allstate Insurance Company filed in Sayles v. Allstate Ins. Co. , 17-3463 (3d. Cir.) at A168) (emphasis original).

In December 2015, Sayles was injured in an automobile accident, necessitating her medical treatment. She sought reimbursement of the amount of her medical bills under her policy's provision for the payment of first-party medical benefits, which obligated Allstate to pay her up to $5,000 per person.

In response, Allstate sent a letter to Sayles' attorney requesting that she submit to an IME, which would be performed by a doctor of Allstate's choosing. Allstate refused to pay Sayles' medical bills until she did so. Allstate was apparently acting pursuant to the above-referenced provision of the insurance policy, as it never sought a court order under Section 1796(a) to compel Sayles to undergo such an exam. Sayles never submitted to an IME, and Allstate refused to pay her claim for medical benefits.

Sayles subsequently sued Allstate in the Court of Common Pleas of Pike County, alleging, inter alia , that Allstate's conditioning her first-party medical benefits on the IME violated Section 1796(a). Sayles also sought a declaratory judgment pronouncing Allstate in violation of Section 1796(a), an order requiring Allstate to hereinafter comply with Section 1796(a), and certification of the suit as a class action.⁶ In response, Allstate successfully removed the action to the United States District Court for the Middle District of Pennsylvania.

Allstate then filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), which was adjudicated by the Honorable Richard A. Caputo of the Middle District of Pennsylvania. Sayles v. Allstate Ins. Co. , 260 F. Supp.3d 427 (M.D. Pa. 2017). Addressing Sayles' claims under Section 1796(a), Judge Caputo, like Judge Schwab, observed that our Court has never directly addressed this question.

After reviewing the terms of Section 1796(a), as Judge Schwab had previously determined, Judge Caputo found the language of Section 1796(a) to prohibit the IME which Allstate requested. In this regard, Judge Caputo reasoned that Section 1796(a) enumerated specific requirements which an insurer must meet in order to compel its insured to submit to an IME: that the insurer file a petition in court; that the insurer carry its burden to show that the insured's mental or physical condition is material to the claim for first-party benefits; and that the insurer demonstrate good cause for the exam. By contrast, Allstate's policy allowed it to compel its insured to...