Pennsylvania Supreme Court to Consider Physical Exam Requirements Under Automotive Insurance Policies

The Pennsylvania Supreme Court will consider, upon certification from the U.S. Court of Appeals for the Third Circuit, whether common auto policy language requiring a person seeking coverage or benefits to submit to medical examinations at the request of the insurer violates sections of the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) and public policy. Specifically, many auto policies contain general provisions that require any person or entity seeking benefits under the policy to submit to medical examinations, at the request of the insurer, in order to qualify for the available coverage. However, Section 1796(a) of the MVFRL states, “[w]henever 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.” Further, the section states that any such order “may only be made upon motion for good cause shown.” The Pennsylvania Supreme Court has not previously considered the interplay between the statutory language and the contractual requirements often contained in auto insurance policies.

Two cases, Sayles v. Allstate Ins. Co., 260 F.Supp. 3d 427 (M.D.Pa. 2017) and Scott v. Travelers Commercial Ins. Co., 2016 U.S.Dist. LEXIS 138728 (M.D.Pa. Oct. 6, 2016), both initially filed in federal court in the Middle District of Pennsylvania, question whether an insurance carrier can unilaterally require its insureds to submit to medical exams, alleging that such requirements contradict the legislative mandates in the MVRFL. As Pennsylvania appellate courts have not yet directly considered the issue, the federal courts were left to predict how the state courts would hold when analyzing the issue.

In Sayles, the defendant filed a motion to dismiss all counts, and in ruling on the motion, the court predicted that the Pennsylvania Supreme Court would find the carrier’s medical examination provision to be in direct conflict with the requirements of Section 1796 and, thus, would hold that the examination requirement is void as against public policy. The analysis included a review of appellate decisions from other states that have similar statutes to the MVFRL which speak on the requirements of a medical examination in the context of auto insurance benefits. While there is a nuanced discussion surrounding the goals and protections contained in the MVFRL, the court ultimately concluded that the physical examination requirement directly conflicts with the statutory language and the good cause element provided by the Legislature.

In Scott, the court considered the legislative balance contained in Section 1796, which seeks to pair the insured’s interest in having claims paid in a timely and convenient fashion with the insurer’s ability to obtain more complete information regarding the medical details of a particular claim. The court also noted the overall cost reduction intent embodied by the MVFRL and how particular costs would be affected. The court found that the cost of the insurer demonstrating good cause to the court to obtain a medical examination was relatively low, as compared to the high cost to the insured, who would have to utilize the litigation process to obtain benefits if the insured did not wish to participate in the medical examination. Similar to Sayles, the Scott court also predicted that the Pennsylvania Supreme Court would find the physical examination requirement to be in contradiction with Section 1796.

The holdings in both Sayles and Scott that dealt with the medical examination requirements were ultimately appealed to the Third Circuit. The Third Circuit, rather than also attempt to predict how the state courts would rule, certified the question to the Pennsylvania Supreme Court.

On October 15, 2018, the Pennsylvania Supreme Court granted the petition submitted by the Third Circuit and agreed to consider the following issue:

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. § 1796(a), and is therefore void as against public policy.

Sayles v. Allstate Ins. Co., 194 A.2d 1045 (Pa. 2018).

While the ultimate decision from the Supreme Court is pending, one must be informed by not only the Sayles and Scott analyses, but also by the overall structure of the MVFRL as well as the public policy considerations often employed by courts when interpreting the statute. While the outcome is not yet determined, the holding from the Supreme Court will, at long last, give a definitive answer to the contractual language and legislative intent debate.

*Patrick is an associate in our Philadelphia, Pennsylvania office. He can be reached at 215.575.3569 or pjfurlong@mdwcg.com.

^{Defense Digest, Vol. 25, No. 1, March 2019. Defense Digest is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2019 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.}