260 F. Supp. 3d 427
M.D. Pa.2017Background
- Plaintiff Samantha Sayles was insured under an Allstate auto policy that provided up to $5,000 in first-party medical expense benefits and contained a clause allowing insurer-selected independent medical examinations (IMEs) “as often as [Allstate] reasonably require[d].”
- After Sayles’s 2015 motor-vehicle accident, Allstate told her counsel it would withhold payment of medical bills until an IME was conducted by a physician selected by Allstate and estimated a 60-day delay.
- Allstate never petitioned a court to obtain a §1796 court order authorizing an IME (which under the MVFRL requires a showing of good cause and the court to set time, scope, and physician).
- Sayles brought a putative class action asserting (inter alia) that the IME-policy term conflicts with §1796 of Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL), plus UTPCPL, bad-faith, implied covenant, unjust enrichment, intentional misrepresentation, and alternative benefits claims.
- Allstate moved to dismiss. The district court denied dismissal of Counts I–II (statutory claim/declaratory relief under §1796), and granted dismissal (often with prejudice) for UTPCPL, bad faith (without prejudice), implied covenant, unjust enrichment, misrepresentation, and alternative benefits claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a policy provision that conditions PIP medical payments on insurer‑selected IMEs ("as often as reasonably required") is enforceable despite 75 Pa. C.S. §1796 | Sayles: §1796 requires an insurer to petition a court and obtain a court order (good cause) before compelling IMEs; insurer policy terms circumvent statutory protections and are void as against public policy | Allstate: §1796 merely authorizes when a court may order an exam; it does not preclude contracting for IMEs as a condition precedent to benefits | Court: Denies dismissal of §1796 claims — predicts PA Supreme Court would find such policy term conflicts with §1796 and is void as against public policy |
| Whether the UTPCPL claim may proceed or is barred by the economic‑loss doctrine | Sayles: Allstate’s statements that insureds must submit to IMEs and benefits would be withheld were deceptive and actionable under UTPCPL | Allstate: UTPCPL claim is barred by the economic‑loss doctrine because the alleged deception is intertwined with the insurance contract | Court: Grants dismissal with prejudice — UTPCPL claim barred by economic‑loss doctrine per Third Circuit precedent |
| Whether Sayles stated a claim for statutory bad faith under 42 Pa. C.S. §8371 | Sayles: Withholding benefits pending unilateral IME amounted to bad faith | Allstate: Its position was reasonable given unsettled law and precedent supporting enforceability of similar provisions | Court: Dismisses bad‑faith claim without prejudice — insurer had a reasonable legal basis in light of conflicting authority |
| Whether contract‑based tort claims (implied covenant, unjust enrichment, intentional misrepresentation, alternative benefits) survive or are precluded by contract‑law doctrines | Sayles: Various equitable and tort remedies available based on Allstate’s conduct | Allstate: These claims are barred by (a) the existence of an express contract (unjust enrichment, implied covenant), and (b) the gist of the action doctrine (misrepresentation/benefits) | Court: Dismisses implied covenant and unjust enrichment with prejudice (contract governs); dismisses misrepresentation and alternative benefits with prejudice under gist of the action doctrine |
Key Cases Cited
- Prudential Prop. & Cas. Ins. Co. v. Colbert, 813 A.2d 747 (Pa. 2002) (insurance policy terms that conflict with MVFRL must yield to statute)
- Generette v. Donegal Mut. Ins. Co., 957 A.2d 1180 (Pa. 2008) (courts may void unambiguous policy provisions that violate statutory public policy)
- Fleming v. CNA Ins. Cos., 597 A.2d 1206 (Pa. Super. 1991) (Superior Court affirmed compelled IME but did not decide public‑policy challenge to policy provision)
- Williams v. Allstate Ins. Co., 595 F. Supp. 2d 532 (E.D. Pa. 2009) (district court upheld similar IME policy clause; court here explains Williams is distinguishable)
- Werwinski v. Ford Motor Co., 286 F.3d 661 (3d Cir. 2002) (Third Circuit predicts Pennsylvania would apply economic‑loss doctrine to bar certain statutory fraud claims, binding here)
- Miller v. U.S. Fid. & Guar. Co., 909 S.W.2d 339 (Ky. Ct. App. 1995) (Kentucky appellate court declined to enforce insurer clause similar to Allstate’s where statute required court order for IME)