On January 14, 2009, in the matter of Celeste Williams vs. Allstate Insurance Company, E.D. Pa., Civil Action No. 08-3031, Senior U.S. District Judge Ronald L. Buckwalter issued an Opinion/Order opining that the contractual provision in Allstate’s policy requiring an insured to submit to a medical examination is enforceable, despite Section 1796 of the Pennsylvania Motor Vehicle Financial Responsibility Law (75 Pa.C.S.A.§1796) which gives the court the power to issue an order compelling a person to submit to a mental or physical examination by a physician only “upon motion for good cause shown.”
The Williams case arose out of a motor vehicle accident on December 28, 2006. The Plaintiff was driving a vehicle insured by Allstate when she struck a deer. She claimed that her low back injuries which caused nerve damage which allegedly led to a functional bowel obstruction and to her complete disability due to the unpredictability of her bowel movements thereafter. Allstate initially paid for the neck and back treatment provided by her chiropractor and for her work loss. However, Allstate did not pay for any of the GI treatment, because an orthopedic examination concluded that her main problem was her chronic constipation, on which he was not qualified to opine.
Thereafter, Plaintiff retained counsel to represent her. Allstate then requested that Plaintiff attend a physical examination by a gastroenterologist. Plaintiff notified Allstate that she would not attend the examination. Allstate thereafter stopped payments of her work loss benefits and continued to deny payment of her outstanding GI medical bills. Before doing so, Allstate had not: (1) produced a medical report from any physician, which either refuted or even questioned the reasonableness and necessity of her GI treatment; (2) filed a petition to compel a medical examination, particularly by a gastroenterologist; or (3) contacted either Plaintiff’s counsel or her doctor to request additional documentation and/or an opinion on casual relationship between the accident and her GI treatment.
Plaintiff then proceeded to file a Complaint in the Bucks County Court of Commons Pleas. Allstate then removed the action to Federal Court, and filed an Answer and Counterclaim for Declaratory Judgment. In the Counterclaim, Allstate alleged that the Policy explicitly provided that, “[t]he [insured] shall submit to mental and physical examinations by physicians selected by [Allstate] when and as often as [Allstate] may reasonably require.” An endorsement to the policy further provided that “[n]o one may bring an action against [Allstate] in any way related to the existence or amount of coverage, or the amount of loss for which coverage is sought, under Part 2 – First Part Benefits Coverage, unless there is full compliance with all policy terms….” Thereafter, Allstate filed a Motion for Judgment on the Pleadings on the Counterclaim seeking a ruling that plaintiff’s first party medical benefits claim under the policy was barred by her non-compliance with the policy.
In ruling upon Allstate’s Motion, Judge Buckwalter found that there was a conflict in Pennsylvania law over the interplay between such policy provisions and Section 1796 of the MVFRL. Judge Buckwalter fashioned the question presented as “whether an insurance policy that permits an insurer to demand reasonable examinations of its insured as a condition precedent to coverage is valid and enforceable in light of section 1796(a) of the MVFRL.” Judge Buckwalter reasoned that, since there is no decision from the state’s highest court directly on point, he had to predict how that Court would resolve the issue and, thus, proceeded to review prior case precedent.
In 1980, in Fleming v. CNA Ins. Co., 597 A.2d 1206) the Pennsylvania Superior Court ruled that an insurer providing medical benefits to insureds following an automobile accident did not have to establish good cause, because the policy gave the insurer the right to order the examination without establishing good cause. The Fleming Court ruled such policy provisions are valid and do not conflict with the MVFRL’s requirement to obtain a court order.
By contrast, Plaintiff argued that the Fleming decision had come under scrutiny in other cases. In a pair of decisions, Judge R. Stanton Wettick, Jr. of the Allegheny County Court of Common Pleas ignored Fleming and ruled that contractual provisions requiring an insured’s submission to medical examinations as a condition precedent to benefits are unenforceable. In Erie v. Dzadony, 39 Pa. D. & C. 3d 33 (Alleg. CCP 1986), Judge Wettick reasoned that, since section 1796 specifically required a petition showing good cause, a contractual clause allowing an insurer to unilaterally demand such an examination was inconsistent with the insurer’s obligation to pay benefits whenever the insured submitted reasonable proof supporting his or her claim. Similarly, in Nationwide Ins. Co. v. Hoch, 36 Pa. D. & C. 4th 256 (Alleg. CCP 1997), Nationwide petitioned to compel an independent medical examination under both section 1796 and the insurance policy. Judge Wettick cited extensively from his decision in Dzadony and, thus, deemed the contract provision unenforceable. Judge Wettick interpreted the Fleming case as having left unanswered the question of whether such policy provisions are void as unconscionable or as against public policy.
In rejecting the Plaintiff’s reliance on Hoch, however, Judge Buckwalter found that Fleming “has never been overruled, rejected, criticized, or meaningfully distinguished by any Pennsylvania court.” He further noted that no Pennsylvania appellate court, or any court for that matter, had either affirmatively cited the holding in Hoch or rejected it as erroneous. Recognizing that his task his task was not to resolve the apparent inconsistency in the law, “but to predict how the Pennsylvania Supreme Court would decide the issue”, Judge Buckwalter opined that “based on the current state of the law in Pennsylvania, this Court predicts that the Pennsylvania Supreme Court would find that a contractual provision, which requires an insured to submit to reasonable medical examinations as a condition precedent to insurance coverage, is enforceable, notwithstanding section 1796 of the MVFRL.” 1