Court Addresses Various Breach of Contract and Bad Faith Allegations in a First Party Medical Benefits Case

In the case of Castellani v. Travelers Ins. Co., No. 2025-CV-3425 (C.P. Lacka. Co. May 18, 2026 Nealon, J.), the court addressed various issues raised in a claim for breach of contract and bad faith in a first party medical benefits case.

The Plaintiff basically asserted that the insurance company had allegedly fraudulently induced her to purchase medical expense benefits coverage that it allegedly never truly intended to provide. 

The Plaintiff also asserted that the carrier unjustifiably initiated numerous peer reviews by allegedly biased medical professionals in order to allegedly manufacturer a sham basis upon which to deny coverage for allegedly reasonable and necessary treatment.

In additional to suing the carrier for breach of contract and bad faith, the Plaintiff also sued the individual claims representative as well.

The carrier filed Preliminary Objections relative to the Plaintiff’s demand for counsel fees under §1716 and §1798 of the Motor Vehicle Financial Responsibility Law. 

The carrier also filed Preliminary Objections against the bad faith claim.

The claims representative also filed a demurrer on the claims against that party.

Challenges were also made against the claims under the UTPCPL.

The court granted the demurrer asserted by the claims adjuster after finding that the Plaintiff was not able to demonstrate a duty of care owed to the claims adjuster to the insured so as to expose the adjuster to individual tort liability.

The court otherwise found that the Plaintiff had stated a valid cause of action against the carrier for bad faith. The court also found that the claims were not barred by the gist of the action doctrine. The court additionally found that the economic loss doctrine did not preclude the tort claims asserted by the Plaintiff.

Anyone wishing to review a copy of this decision may click this LINK.

Source of image:  Photo by Marek Studzinski on www.unsplash.com.

Superior Court Rejects Unlicensed Driver Exclusion In Context of First Party Benefits Claims

In the case of Nationwide Prop. and Cas. Ins. Co. v. Castaneda, No. 1030 MDA 2022 (Pa. Super Dec. 5, 2023 Panella, P.J., Bender, P.J.E., McCaffery, J.) (Op. by Panella, P.J.), the Pennsylvania Superior Court held that automobile insurance carriers must provide mandated first party benefits and that such mandated benefits could not be the subject of the exclusions found under 75 Pa. C.S.A. §1718, including the unlicensed driver exclusion.

In this case, the injured party was operating her mother’s Nationwide insured vehicle when that vehicle was rear-ended.

Although the injured party was a permissive user of his mother’s vehicle, the injured party driver did not have a valid driver’s license at the time of the accident.

The Nationwide Insurance policy had an exclusion for first party medical benefits that applied if the injured party did not have a valid driver’s license and was neither a named insured nor a resident relative of the named insured.

In this case, because the injured party did not have a valid driver’s license, Nationwide denied the claim.

The injured party challenged the validity of the exclusion and argued that first party medical benefits were mandatory under the Pennsylvania Motor Vehicle Financial Responsibility Law.

Nationwide filed a declaratory judgment action seeking a judicial declaration that it did not have to pay the benefits under an application of the exclusion. The trial court ruled in favor of Nationwide and the injured party appealed.

On appeal, the Pennsylvania Superior Court ruled that the “unlicensed driver” exclusion was not valid in this context of first party benefits coverage which is mandated under the MVFRL.

As such, the Pennsylvania Superior Court held that the injured party was entitled to coverage for her medical expenses claims unless one of the limited exclusions allowed under §1718 applied to the claim.  The Court noted that the unlicensed driver exclusion was not listed among the limited exclusions to such coverage under §1718.   The trial court decision was therefore reversed.

Anyone wishing to review a copy of this decision may click this LINK.


I send thanks to Attorney Dale Larrimore of the Philadelphia law firm of Larrimore and Farnish, LLP for brining this case to my attention.

PA Superior Court Rules That 75 Pa.C.S.A. Sections 1716 and 1718 Do Not Support Award of Attorney's Fees in Peer Review Cases

In the case of Turnpaugh Chiropractic Health & Wellness Cr., P.C. v. Erie Ins. Exch., No. 1448 MDA 2021 (Pa. Super. June 8, 2023 Stevens, P.J.E., Bowes, J., McCaffery, J.) (Op. by Stevens, P.J.E.)(Bowes, J, Concurring), the Pennsylvania Superior Court affirmed in part and denied in part a trial court’s entry of judgment in favor of a chiropractor in a first party peer review case.   

In this case, the insurance company appealed a judgment in favor of the chiropractor and an award of attorney’s fees. 

According to the Opinion, the insurance company had repriced the chiropractor’s invoices and referred the chiropractor’s bills to a peer review. 

The Superior Court found that the trial court had erred in allowing the chiropractor’s expert to testify on matters outside the scope of an expert report.

In what may be a case of first impression, the Superior Court additionally found that the trial court had erred in awarding the chiropractor attorney’s fees under §1716 and §1798 because there was no statutory authorization for an award of attorney’s fees when an insurance company invokes the peer review process.   

Anyone wishing to review a copy of this decision may click this LINK. The Concurring Opinion by Judge Bowes can be read HERE.

I thank attorney Candace Edgar of the Camp Hill, PA office of Margolis Edelstein for bringing this case to my attention.

Source of image: Photo by Kenny Eliason on www.unsplash.com.

First Party and UIM Bad Faith Claims Dismissed in Post-Koken Case; Leave to Amend Granted

 

In the case of Canfield v. Amica Mut. Ins. Co., No. 20-2794 (E.D. Pa. Oct. 2, 2020 Pappert, J.), the court ruled that a Plaintiff could not recover  damages under Pennsylvania's MVFRL or on her bad faith claim  where the allegations in her Complaint suggested nothing more than an ordinary dispute with her carrier over the value of her claims in this post-Koken auto accident matter.

More specifically, the court found that the facts alleged regarding the dispute between the Plaintiff and the carrier over the value of the claim and the payment of first party benefits did not amount to allegations of wanton conduct as required for the relief requested by the Plaintiff relative to her first party medical benefits claims asserted under Section 1797 of the MVFRL.

The court's decision with respect to Section 1797 is also notable in that the court followed prior precedent holding that, unless the carrier's actions fall outside the ambit of Section 1797 and involves bad faith abuses not related to the challenge of the denial of first party medical benefits, the MVFRL preempts the statutory bad faith claim concerning the Plaintiff's request for PIP benefits.

With regards to any separate bad faith claims asserted by the Plaintiff in the Complaint, the court pointed out that the Plaintiff did not aver an unreasonable denial of UIM or first party medical benefits by the carrier, but rather only alleged a delay in the payment of the same and an allegedly unreasonable position taken by the carrier on the value of the case.  

The court found that, while the Plaintiff disagreed with the value put on the file by the carrier, she had not asserted facts in the Complaint to support an allegation that the carrier's evaluation was unreasonable and/or that the carrier knew that it was unreasonable, all as is required to move forward on a bad faith claim.  

The court noted that, to proceed on a bad faith UIM claim in this regard, the Plaintiff must allege more than that the carrier extended "low-ball offers."  The court reaffirmed the rule of law that a carrier is permitted to make low but reasonable offers of settlement without fear of being found in bad faith. 

In the end, the court granted the Plaintiff leave to amend the Complaint to try to assert valid claims with regards to the above issues.

Anyone wishing to review this Opinion may click this LINK.  The court's companion Order can be viewed HERE.

Source: "Digest of Recent Opinions - Most Viewed Opinions."  Pennsylvania Law Weekly (Nov. 3, 2020).

Sayles Decision Limited to Pre-Suit Claims by Federal Court Case

In the case of Loughery v. Mid-Century Insurance Co., No. 19-383 (W.D. Pa. Dec 23, 2019 Dodge, Fed. Mag. J.),a Western District Federal Magistrate Judge addressed the issue of the proper procedure for an insurance company to compel compliance by a Plaintiff relative to attending a medical examination under a first party medical benefits claim when a first party benefits case was already in suit. 

Before the Court was a motion by the carrier, pursuant to Federal Rule of Civil Procedure 35, which is entitled “Physical and Mental Examinations,” to compel the Plaintiff to attend a medical exam.

The Plaintiff asserted that, under its recent decision in the case of Sayles v. Allstate Ins. Co., --- A.3d --- (Pa. Nov. 20, 2019), the Pennsylvania Supreme Court established the proper method for scheduling an exam under the Pennsylvania Motor Vehicle Financial Responsibility Law (MVFRL) as requiring motions practice and the securing of a court order.

While the court agreed that the Sayles decision may apply to pre-suit requests for medical exams in the first party contest, once a first party lawsuit was filed in Federal Court, then F.R.C.P 35 was to be applied. 

Applying F.R.C.P. 35 to the case before it, the Loughery court found that there was good cause shown by the carrier for the exam.

Anyone wishing to review this decision by Western Federal Magistrate Judge Dodge may click this LINK.

I send thanks to Attorney Scott Cooper of the Harrisburg, PA office of Schmidt Kramer for bringing this case to my attention.

PTSD May Constitute a "Bodily Injury" For a Claim for First Party Benefits

In the case of Evans v. Travelers Ins. Co., 2019 Pa. Super. 353 (Pa. Super. Dec. 4, 2019 Panella, P.J., Stevens, P.J.E., and Kunselman, J.), held that an insured who suffers from post-traumatic stress disorder may be covered under first party medical benefits following a motor vehicle accident under an analysis that such an injury constitutes a “bodily injury” under the policy when the disorder is accompanied by physical manifestations.

The automobile insurance policy at issue allowed the Plaintiff to pursue first party medical benefits if she sustained a bodily injury as a result of a motor vehicle accident.

The medical expenses allowed under this provision included expense related to care for psychological services. Bodily injury was defined as an illness, disease or death.

The carrier attempted to argue that the Plaintiff's PTSD was not a "bodily injury." As noted, this argument was rejected, particularly where, as here, the were issues of fact as to whether the Plaintiff had physical symptoms as a result of her PTSD.

Anyone wishing to review a copy of this decision may click this LINK.

THE 2019 TORT TALK TOP TEN

Here is the Tenth Annual 2019 Tort Talk Top Ten--an annual listing of notable cases and important trends in Pennsylvania civil litigation law over the past year or so as highlighted in Tort Talk blog posts.

If you wish to view the actual Tort Talk post on any of the following cases or topics, or the actual Opinion, please go to TortTalk.com and type the name of the Plaintiff in the case in the Search Box in the upper right hand corner of the blog.  There should be a Link to the actual Opinion within the blog post itself.


10. Palmiter v. Commonwealth Health Systems, Inc., No. 19-CV-1315 (C.P. Lacka. Co. Nov. 22, 2019 Nealon, J.)

In a case of first impression, Judge Terrence R. Nealon of the Lackawanna County Court of Common Pleas addressed the issue of whether the Medical Marijuana Act creates an implied private cause of action or a medical assistant who was terminated by her health care employers for prescribed use of medical marijuana while not working in her place of employment. The court recognized such a cause of action and allowed the claim to proceed.


9. Lack of Appellate Guidance on Post-Koken Issues Continues

Despite the passage of well over a decade of time since the Koken decision was handed down in 2005, there is still a continuing trend of a lack of any concrete appellate guidance on any of the many novel issues created by this form of litigation from the pleadings stage to trial. The lack of appellate guidance is due to the fact that most of the cases in this area of law continue to be resolved by one form of ADR or another. The hope remains that those cases that do go up the appellate ladder will result in published decisions by the Superior Court and grantings of allocatur by the Supreme Court.

Here is a quick LINK to the Post-Koken Scorecard on Tort Talk.


8. Yanakos v. UPMC, No. 10 WAP 2018 (Pa. Oct. 31, 2019)


The Pennsylvania Supreme Court, in a 4-3 decision, ruled in favor of the Plaintiff’s argument that MCARE's statute of repose was unconstitutional. The rationale of the majority Opinion in Yanakos striking down the statute of repose under the MCARE Act was that the statute of repose was not substantially related to a governmental interest as was necessary to uphold the statute. The Court also found that the statute of repose in the MCARE Act violated the Pennsylvania Constitution's guarantee of open access to the Courts.


7. Livingston v. Greyhound Lines, Inc., No. 318 EDA 2017 (Pa. Super. April 29, 2019 Colins, J., Lazarus, J., Kunselman, J.) (Op. by Colins, J.)

In April of 2019, the Pennsylvania Superior Court provided its latest pronouncement on the law on the admissibility of intoxication evidence in civil litigation matters. The Court reiterated the rule of law that evidence of alcohol or drug consumption by a person involved in an accident is admissible only where there is sufficient evidence that reasonably shows intoxication and unfitness to engage in the activity at issue at the time of the accident.


6. Moran v. USAA, No. 3:18-cv-2085 (M.D. Pa. Feb. 14, 2019 Caputo, J.)

The court dismissed a Plaintiff’s bad faith claim without prejudice and leave to amend to correct certain issues with the Complaint. This is one of many Federal Court decisions evidencing a continuing trend towards forcing Plaintiffs’ to avoid conclusory allegations in bad faith matters and instead requiring the pleading of specific acts of alleged bad faith.  There were also a number of decisions handed down over the past year that confirmed that the extension of an alleged low ball offer followed by a settlement or an award of a much higher number does not necessarily equate to bad faith -- click HERE to view those Bad Faith - Low Ball Offer cases.


5. Sawyers v. Davis, 2019 Pa. Super. 219 (Pa. Super. Oct. 22, 2019 Bowes, J., Olson, J., Stabile, J.) (Op. by Bowes, J.) (Olson, J, dissenting)

The Pennsylvania Superior Court ruled that a trial court erred in dismissing the Plaintiff’s personal injury action against a defendant motorist for improper service.  Over the past year, a number of decisions have been handed down at both the trial court and appellate level analyzing the application of the Lamp v. Heyman line of cases and their progeny.  Click HERE to view a compilation of those cases.


4. Davis v. Volkswagen, No. 1405 EDA 2018 (Pa. Super. July 19, 2019 Bowes, J., McLaughlin, J., Stabile, J.) (Op. by McLaughlin, J.)(Stabile, J., Concurring)

The Pennsylvania Superior Court held that the Lehigh County Court of Common Pleas did not commit any error in a products liability case when it instructed the jury on both the consumer expectation test and the risk-utility test that the Pennsylvania Supreme Court established in the case of Tincher v. Omega-Flex.  The Superior Court ruled in this fashion even though the Plaintiff only litigated the case under the consumer expectation test. The Court found that, where the defense presented evidence that also implicated the risk-utility test, a jury instruction was warranted in that regard as well.


3. Farese v. Robinson, 2019 Pa. Super. 336 (Pa. Super. Nov. 8, 2019 Lazarus, J., Kunselman, J., Colins, J.)   (Dissenting Op. by Lazarus, J.).

In Farese, the Pennsylvania Superior Court held, in what appears to be the first appellate decision of its kind, that future medical expenses need not be reduced in accordance with Act 6 before being presented to the jury at trial in an auto accident case. This decision did not impact the rule that past medical expenses incurred in motor vehicle accident cases have to be reduced before being presented to a jury.


2. BouSamra v. Excela Health, No. 5 WAP 2015 (Pa. June 18, 2019)

The Pennsylvania Supreme Court offered its latest pronouncement on attorney work product issues in June of 2019. The Court addressed the issue of whether a law firm’s sending of pre-litigation emails to a public relations firm served to waive the attorney work-product doctrine, and whether a third party must provide legal advice, or be acting under the control of an attorney or the client, in order to qualify as a privileged person under the doctrine. The Pennsylvania Supreme Court concluded the work product doctrine was not waived by disclosure unless the alleged work product was disclosed to an adversary or disclosed in a manner which significantly increased the likelihood that an adversary or anticipated adversary would obtain it.

1. Gallagher v. GEICO, 201 A.3d 131 (Pa. Jan. 23, 2019)

The Pennsylvania Supreme Court held that the Household Exclusion contained in a Geico policy violated the MVFRL was invalid because it served as a “de facto waiver” of stacked coverage. The Court suggested that its decision in Gallagher not only applied to that case, but should also be read to eradicate the Household Exclusion across the board.  While a number of subsequent Federal Court decisions served to expand the scope of the Gallagher decision, at least one more recent trial court decision (Nationwide v. Ryman) has suggested that the Gallagher decision should be limited to its facts.

ARTICLE: 'Sayles' Decision by Pa. Supreme Court Illustrates Continued Judicial Activism

The below article appeared in the December 5, 2019 edition of the Pennsylvania Law Weekly and is republished here with permission.


'Sayles' Decision by Pa. Supreme Court Illustrates Continued Judicial Activism

By Daniel E. Cummins | December 05, 2019
Daniel E. Cummins.


Over the past several years, the plaintiffs bar made an organized push to support various candidates running for seats on the Pennsylvania Supreme Court, with many of those candidates winning their elections. Now, over the past year or so, with the new make-up of the Pennsylvania Supreme Court containing several new members that are shoving the pendulum to the opposite direction, the plaintiffs bar has been pushing cases up the appellate ladder in a determined and organized effort to alter the course of Pennsylvania jurisprudence.

For example, in Cagey v. Pennsylvania Department of Transportation (PennDOT), 179 A.3d 458 (Pa. Feb. 21, 2018), the Pennsylvania Supreme Court expressly overruled the long-followed 12-year-old Commonwealth Court decision in Fagan v. Commonwealth, Department of Transportation, 946 A.2d 1123 (Pa.Cmwlth. 2006), and held that PennDOT is now only immune from suit in guiderail claims in limited circumstances, thereby allowing the plaintiffs to bring more actions against PENNDOT in auto accident cases.

In another recent stunning reversal, the new Pennsylvania Supreme Court overturned 30 years of precedent with its holding that the involuntary movement of a vehicle can constitute an “operation” of a motor vehicle for purposes of the vehicle liability exception to governmental immunity under 42 Pa. C.S.A. Section 8542(b)(1), in the case of Balentine v. Chester Water Authority, 191 A.3d 799 (Pa. Aug. 21, 2018 Mundy, J.).

Then, earlier this year, in the case of Gallagher v. GEICO, 201 A.3d 131 (Pa. 2019), the increasingly liberal, judicially activist Pennsylvania Supreme Court shook up the automobile accident litigation world by eradicating the household exclusion not only in the case before it, but across the board. This exclusion that had been routinely upheld for decades by various prior court decisions with some of those decisions even coming from the Supreme Court, was history.

Indeed, even Justice David Wecht, in his dissenting opinion issued in the Sayles case reviewed below, has framed the Supreme Court’s recent jurisprudence, particularly in motor vehicle accident cases, as evidencing “freewheeling and unwarranted invocation of ‘public policy’” to change and rewrite long-standing law.

The Liberal Judicial Activist Trend Continues

Now comes the recent Supreme Court decision in the combined matters of Sayles v. Allstate/Scott v. Travelers, No. 58 MAP 2018 (Pa. Nov. 20, 2019)(Op. by Todd, J.). This case involved the practice of automobile insurance companies requesting insureds to attend first-party personal injury protection (PIP) medical exams as allowed by the terms of the insurance policy. The Supreme Court’s decision in Sayles eradicates this practice in a manner that favors plaintiffs and allegedly injured parties.

The plaintiffs in Sayles argued that such policy terms that allowed carriers to repeatedly require its insureds to submit to an exam or exams at the request of the carrier irreconcilably conflicted with 75 Pa.C.S.A. Section 1796 of the MVFRL, which is titled “Mental or physical examination of a person.” That law basically provides that, whenever a person’s medical condition is at issue in circumstances as applicable to PIP claims and other identified matters, the court may order that person to attend a medical examination “upon motion for good cause shown.”

The plaintiffs bar attempted to paint a picture that the IME practice was being abused by the carriers by alleged repeated referrals of insureds for medical exams, by allegedly selecting doctors favorable to carriers, and in other ways.

The plaintiff’s argument in Sayles was that the policy provisions in automobile insurance policies allowing a carrier to refer an insured to a medical exam to test the validity of the insured’s need for ongoing treatment violated the wording of Section 1796 which required insurers to file a motion with the court and to demonstrate good cause in order to compel a PIP exam. The plaintiffs also emphasized that, even when good cause is shown for such an exam, it is the court and not the insurer who should select the doctor to complete the exam.

It should come as no surprise that the current Supreme Court (except the dissenting Wecht) in Sayles accepted the plaintiff’s argument and rejected the long-standing practice of PIP insurers compelling its insureds to attend a PIP independent medical examinations on the basis of policy provisions. The Supreme Court ruled that insurers must, instead, file a petition with the court and demonstrate good cause. Also, the court ruled that it will now be a trial court judge who will select the medical examiner and not the carrier.

In footnote 11, the majority of the Supreme Court dismissively rejected the notion that its decision in Sayles would result in any great number motions being filed in this regard in the trial courts. The Supreme Court noted that Section 1796 has been on the books for years and has never generated much motions practice. What the court does not acknowledge in this footnote is that motions practice was never required in the context of PIP medical expense claims before as automobile insurance policies all contained the agreement between the carriers and their insureds that the carriers could refer the plaintiffs to exams without the necessity of the carrier filing a motion with the court.

Now that plaintiffs attorneys are armed with the Sayles decision, there is no doubt that they will, in many cases, balk at allowing their clients to be referred to medical examinations unless the carrier files a motion with the court. Forcing a motions practice will allow the plaintiffs to exert some control over the selection of the doctor and the parameters and conditions of the exam.

It can therefore be anticipated that the practice of PIP carriers referring its insureds to medical exams to test the validity of the need for treatment will be changed from one in which the already overburdened trial courts did not have any such motions or litigation whatsoever to address in this regard to one where they will likely be flooded with many motions filed and dickered over by fighting attorneys and parties in petty fashion.

Even worse, the Supreme Court, in its haste to rewrite the law and change long-standing practice for the benefit of plaintiffs in Sayles, did not provide any guidance to the trial courts regarding how to select an appropriate doctor to complete the examination or what parameters or conditions should be imposed upon the examination.

In the end, the plaintiffs’bar convinced the Supreme Court to take what was a molehill of nonissue and to turn it into a mountain of anticipated litigation without any trail to follow up its steep terrain to nowhere but trouble.

Impetus for a Class Action Suit?

It appears that a main impetus behind the effort to get this issue before the Supreme Court and to secure the ruling that was secured was to open the door for a class action lawsuit by the plaintiffs against various carriers who have, in the past, referred their insureds to medical examinations as per the previous insurance policy provisions and without filing any motion with a court as had been the long-standing practice for decades. Within days, if not hours of the issuance of the Sayles decision, a push was being made by the plaintiffs bar to generate potential plaintiffs for such a class action.

However, in a rare instance of restraint, the Supreme Court declined to state whether its decision should apply only prospectively or retroactively and left that issue for another day. As such, the Sayles decision opened the door for a potential class action lawsuit but did not pave the way (yet).
Taking Steps Backwards

The Pennsylvania Supreme Court’s decision in Sayles appears to be of little moment with respect to PIP IMEs themselves as it was a rare event that an insured is sent for multiple independent medical examinations in the PIP context, which appears to have been the main complaint of those that pushed the issue.

The unfortunate detriment of the Sayles decision is that validly injured plaintiffs may now be delayed in continuing their treatment with the uncertainty of whether coverage for their medical expenses will continue given the need to now first proceed through motions practice to secure an eventual court order to determine whether a carrier’s request for a medical exam is appropriate.

Although the plaintiffs bar may have taken a step forward in its effort to generate a class action lawsuit in search of a lucrative recovery, injured plaintiffs themselves have been forced to take a step backwards in their pursuit of treatment for their injuries. Even worse, innocent Pennsylvanians everywhere face the prospect of increased automobile insurance premiums as a result given the new costs that will be attendant with the additional litigation that will now be required for the first time by the Sayles decision.


Daniel E. Cummins is a partner in the Scranton law firm of Cummins Law where he focuses his practice in automobile accident litigation matters.

Pennsylvania Supreme Court Mandates Motions Practice for First Party PIP Medical Exams

The Plaintiff’s bar scored yet another victory at the Pennsylvania Supreme Court level with decision issued by the court in the combined matters of Sayles v Allstate, No. 58 MAP 2018 (Pa. Nov. 20, 2019)(Op. by Todd, J.) and Scott v Travelers.

The case involved the practice of automobile insurance companies requesting insureds to attend PIP medical exams as may be required by the terms of the insurance policy.

The Plaintiffs argued that such policy terms requiring insureds to submit to an exam or exams at the request of the carrier irreconcilably conflicted with 75 Pa.C.S.A. Section 1796 of the MVFRL, which is entitled “Mental or physical examination of a person."

That law basically provides that, whenever a person’s medical condition is at issue in circumstances as applicable to PIP claims and other identified matters, the court may order that person to attend a medical examination “upon motion for good cause shown.”

The Plaintiff’s argument in Sayles was that Section 1796 required insurers to file a motion with the court and to demonstrate good cause in order to compel a PIP exam and that even when good cause is shown, it is the court and not the insurer who would select the examiner.

The Pennsylvania Supreme Court rejected the current practice of PIP insurers compelling its insureds to attend a PIP independent medical examinations on the basis of policy provisions and ruled that insurers must, instead, file a Petition with the Court and demonstrate good cause. Also, it will now be an independent judge who will select the medical examiner and not the carrier.

The Court declined to state whether its decision should apply only prospectively or retroactively and left that issue for another day.  See fn. 13.

Anyone wishing to review the Majority Opinion by Justice Todd may click this LINK.

Justice Baer's Concurring Opinion can be viewed HERE.

Justice Wecht's Dissenting Opinion can be viewed HERE.

I send thanks to Attorney Scott B. Cooper for bringing this case to my attention.

Commentary:  The Pennsylvania Supreme Court's decision in this regard appears to be of little moment as it is a rare event that an insured is sent for multiple independent medical examinations in the PIP context, which appears to have been the main complaint of those that pushed the issue.

Notably, to the extent that motions practice will now be required for those typical cases where an auto carrier wishes to secure an IME as part of the claims process, the Pennsylvania Supreme Court did not provide any guidance on how the already overburdened trial courts are to deal with the possible onslaught of new litigation that may result in this regard by plaintiffs who insist that the now required motions practice be followed.  Nor was any guidance provided by the Supreme Court to the trial court judges on how to select an appropriate doctor to complete the requested examination and/or what the manner, scope or conditions of the exam should be in any given case.

In the end, it appears that what was a non-issue has now been turned into a monumental problem for the trial courts going forward.

Superior Court Rules on Scope of Obligation of First Party Carriers to Pay Chiropractors for Treatment Rendered by Staff

In the recent Superior Court decision in the case of State Farm Mut. Auto. Ins. Co. v. Cavoto, 2018 Pa. Super. 285 (Pa. Super. Oct. 17, 2018 Gantman, P.J., Shogan, J., and Blatt, J.) (Op. by Shogan, J.), the court addressed an appeal from a declaratory action filed by State Farm seeking a judicial declaration that it was not obligated to pay the chiropractor for treatments and procedures delegated to, and perform by, chiropractic support personnel without special licenses or certifications.  

The Superior Court held that the chiropractor cannot be expected to be paid by a first party carrier for such services performed by unlicensed support personnel.  

Anyone wishing to review a copy of this decision may click this LINK.

I send thanks to Attorney Scott B. Cooper of the Harrisburg, Pennsylvania law firm of Schmidt Kramer for bringing this case to my attention.  

Pennsylvania Supreme Court to Address Propriety of Auto Policies Allowing for Multiple IMEs of Insureds

According to an October 18, 2018 article in the Pennsylvania Law Weekly by Zack Needles entitled "Pa. Supreme Court Takes 3rd Circ.'s Question on Auto Insurers' Medical Exam Policies," the Pennsylvania Supreme Court has agreed to review the question certified over by the Third Circuit Court of Appeals 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 article notes that the Pennsylvania Supreme Court issued identical October 15, 2018 Orders in both Sayles v. Allstate Insurance and Scott v. Travelers Commercial Insurance, granting the Third Circuit’s petition for certification of a question of law. 

The certified question is, as follows: “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.”

The Order in Sayles can be reviewed HERE.

The Order in Scott can be reviewed HERE.

Commentary:  It appears that at least one of the arguments by the Plaintiffs in these cases is that an automobile insurance carrier should not be able to send its insured to an IME or multiple IMEs as a matter of course as allowed by the policy language where the Pennsylvania Rules of Civil Procedure only allow for IMEs when good cause is shown.  See Pa.R.C.P. 4010.

In reality and as a practical matter, it is a rare occurrence that an auto insurance carrier will subject its insureds to multiple IMEs.  In some cases, where a Plaintiff has separate types of injuries for which he or she has treated with separate specialists, then a carrier may request separate IMEs with doctors in those same types of specialties.  But carriers are not in the habit of sending its insureds to multiple IMEs as a matter of course.

Therefore, it is curious that the Pennsylvania Supreme Court would accept this issue for review where a decision on this question presented is not likely to have any great effect as a practical matter.

Bad Faith Claim Dismissed in Federal Middle District Court Case

In his recent decision in the case of Sayles v. Allstate Ins. Co., No. 3:16-cv-01534 (M.D. Pa. May 10, 2017 Caputo, J.), Judge A. Richard Caputo dismissed a claim for bad faith in a case where the insured claimed that the requirements to undergo an IME, along with a refusal by the carrier to pay first party medical benefits before the IME took place, were violations of the bad faith statute.  

In this matter, the insurance policy required the insured to submit to an independent medical examination after making a bodily injury claim for medical benefits arising out of auto accident. The policy stated that the carrier did not have to make payments prior to that examination.  

Judge Caputo noted that a federal judge in the Eastern District Federal Court had ruled in 2009 that these kinds of policy terms were enforceable and not inconsistent with the Motor Vehicle Financial Responsibility Law, relying upon case law from the Pennsylvania Superior Court.  However, a judge in the Middle District Court came to a different conclusion in 2017, finding the provisions to be unenforceable.   

 

The court rejected the Plaintiff’s claims of bad faith after finding that the carrier had a reasonable basis for denying medical benefits where the Pennsylvania Supreme Court had not decided the issue and where another federal court had found that the policy language was enforceable.   Judge Caputo found that it was reasonable for the carrier to have relied upon the earlier opinion where the status of the law was in a state of flux.  

Anyone wishing to review this decision may click this LINK.

I send thanks to Attorney Lee Applebaum of the Philadelphia law firm of Fineman Krekstein & Harris and the writer of the Pennsylvania and New Jersey Insurance Bad Faith Case Law blog. 

ARTICLE: Do Act 6 Reductions Under MVFRL Apply Outside of Pa.?

Insurance Law

Do Act 6 Reductions Under MVFRL Apply Outside of Pa.?

by

Daniel E. Cummins, Pennsylvania Law Weekly

Publication Date:  April 25, 2017    

Dan Cummins

 

A common issue faced by Pennsylvania automobile insurance carriers is whether the allowable reductions under Act 6 apply to the bills issued by out-of-state medical providers for treatment rendered as a result of a motor vehicle accident.

More specifically, where a Pennsylvania resident with a Pennsylvania automobile insurance policy gets into an accident in another state, such as in New Jersey, New York, Maryland or Delaware, and treats with medical providers in that other state, is the first party medical benefits carrier entitled to pay only the Act 6 reduced amounts of the related medical expenses as set forth under 75 Pa.C.S.A. Section 1797?

Open Issue

This issue appears to be an open one in the apparent absence of any case law specifically addressing the question presented.

It certainly appears that any medical bills issued by any Pennsylvania medical provider are subject to Act 6 reductions regardless of the place of the accident.

However, excepted in very limited circumstances noted below, it appears that medical bills issued by an out-of-state medical provider would be addressed by the law of that other state and not by Pennsylvania's Act 6 reduction statutory framework.

Effect of Policy Language Limited

Typically the first place to look in determining the answer to any coverage question would be the insurance policy at issue. Courts will usually follow policy language agreed by the parties to resolve any disputes unless that policy language is found to violate Pennsylvania law or go against recognized public policy concerns.

Some auto policies may contain language mandating that any payment of first party medical benefits will be made pursuant to Section 1797 (a) of the Pennsylvania Motor Vehicle Financial Responsibility Law.

Accordingly, the courts of Pennsylvania could possibly construe this language as indicating that payment of any medical expenses under this policy would be under the Act 6 reductions required by Section 1797 regardless of where the treatment is completed as this was what was agreed to by the parties under this insurance contract.

However, such an analysis pertaining to the applicability of the policy language would be limited by pertinent provisions of the Pennsylvania Code. Under the below limitations of the Pennsylvania Code, it does not appear that a carrier's first party benefits policy language would carry the day on the issue of whether Pennsylvania's Act 6 reductions could be applied to an out-of-state medical provider's bills.

Under 31 Pa. Code Section 69.11 of the Pennsylvania Code, it is provided, as follows:

"Section 69.11. Payment limitation applicability.

• The payment limitations of Act 6 apply to a provider rendering services to an injured person whose medical costs are covered by automobile insurance issued under the MVFRL. The payment limitations of Act 6 also apply to providers not currently participating in Medicare.

• The payment limitations of Act 6 apply in cases when care is rendered by a Pennsylvania licensed provider to a Pennsylvania resident covered by automobile insurance for injuries arising out of the maintenance or use of a motor vehicle, irrespective of where the injuries occurred or where the care is rendered."

This code language was taken from the 1991 regulations issued by the insurance commissioner after the MVFRL was updated. In particular, Section (b) allows for Act 6 reduction only against a Pennsylvania medical provider to a resident, regardless of where the care is rendered or where the injuries occurred.

Accordingly, it appears certain that where an individual is entitled to first party medical benefits from a carrier is injured in an out-of-Pennsylvania motor vehicle accident, any treatment by any Pennsylvania medical provider would be subject to the Act 6 reductions pursuant to the policy language and this Pennsylvania code language.

Although no case law on this issue has been found, it is noted that this code provision has been construed by litigators as mandating that the Act 6 reductions specifically only apply to Pennsylvania medical providers and not to out-of-Pennsylvania providers.

Also, due process and constitutional law issues would likely come into play to prevent Pennsylvania's Act 6 reductions to be applied to out-of-state medical providers seeking full payment for the medical treatment they have provided to the patient.

However, an argument can be made under the above Pennsylvania code provision that, if the out-of-state medical provider is also licensed to practice in Pennsylvania, then Act 6 reductions could be apply to that medical provider's medical bills. This is so under the code language that an Act 6 reduction is permitted against a Pennsylvania medical provider for treatment rendered to a Pennsylvania resident, "irrespective of where the injuries occurred or where the care is rendered."

It is also otherwise noted that, depending upon the law of that other state where the treatment was rendered, the Pennsylvania first party carrier may or may not be able to subrogate against the tortfeasor defendant in an effort to secure a payback of the first party benefits paid out under the policy. This would depend upon the law of that other state. •

Special to the Law Weekly Daniel E. Cummins is a partner and civil litigator with the Scranton law firm of Foley Comerford & Cummins (www.foleycomerfordcumminslaw.com). His civil litigation blog, Tort Talk, can be viewed at www.TortTalk.com.

 

Middle District Federal Magistrate Judge Predicts How Pennsylvania Supreme Court Would Rule on PIP IME Issue

In the case of Scott v. Traveler's Commercial Ins. Co., No. 1:14-CV-00535 (M.D.Pa. Oct. 6, 2016 Schwab, M.J.), Federal Magistrate Judge issued an opinion addressing the interplay between an insurance policy provision requiring an insured to undergo IMEs as often as may be reasonably requested by the carrier and a provision of Pennsylvania's Motor Vehicle Financial Responsibility Law (75 Pa.C.S.A. Section 1796) requiring an insurer to petition the state court with a showing of good cause to obtain an order compelling the insured to undergo an IME.

The federal court noted that this was an issue that had not yet been addressed by the Pennsylvania Supreme Court but was a recurring issue in the courts below.

The issue arose in a First Party medical benefits breach of contract case where the carrier denied coverage on the basis, at least in part, of the insured's refusal to attend an IME.

The Scott court predicted that, if faced with the issue, the Pennsylvania Supreme Court would find that the MVFRL's provision prevails over the conflicting insurance policy provision pertaining to IMEs.  Accordingly, the court granted summary judgment to the insured on the liability aspect of his breach of contract claim.

The Plaintiff's bad faith claim was found to be barred by the statute of limitations.


Anyone wishing to read this opinion in Scott may click this LINK.

I send thanks to Attorney Matthew S. Crosby of the law firm of Handler, Henning & Rosenberg, LLC for bringing this case to my attention.  Attorney Adam Reedy of that office handled the matter.

Third Circuit Upholds Summary Judgment On Bad Faith Claim in Favor of Carrier in UIM Context (Non-Precedential)

In the case of Shaffer v. State Farm Mutual Automobile Insurance Company, No. 15-1196 (3d. Cir. March 10, 2016 Jordon, McKie, Vanaski, J.J.) (Not Precedential), the Third Circuit Court of Appeals affirmed the trial court’s summary judgment ruling in favor of the UIM carrier on the Plaintiff’s claim that the carrier had acted in bad faith in handling the UIM claim.   The Third Circuit agreed with the trial court that, viewing the record in a light most favorable to the Plaintiff, no reasonable juror could conclude that there was “clear and convincing” evidence that the carrier acted in bad faith.  

During the lower court proceedings in this matter, when the district court granted summary judgment in favor of the carrier on the bad faith claim, the separate breach of contract claim eventually proceeded to trial and the jury awarded the Plaintiffs a verdict.   The Plaintiff then appealed the summary judgment ruling in favor of the carrier on the issue of bad faith.  
In reviewing the Plaintiff’s claims regarding a delay between the demand for UIM benefits and the insurer’s determination of whether or not to pay a claim, the Third Circuit agreed with the trial court that a delay, in and of itself, does not necessarily constitute bad faith.   The appellate court noted that, rather than focusing solely on the length of the delay, the courts addressing bad faith issues have considered “the degree to which a Defendant insurer knew that it had no basis to deny the claim[].”   The Third Circuit went on to note that, “[i]f delay is attributable to the need to investigate further or even to simple negligence, bad faith has not been shown.”    

In its Opinion, the Third Circuit noted that the Plaintiff did not present any evidence to support their claims that the carrier’s insistence on obtaining a complete medical file was undertaken purposefully to delay the resolution of the claim. 

The court also rejected the Plaintiff’s argument that State Farm retained a consultant position to review the claim as a pretext to deny the claim without a reasonable foundation.   The court noted that, although the carrier’s management of the claim may have been flawed, the Plaintiffs failed to present evidence that the carrier’s delay or intentions were anything other than an attempt to further investigate the Plaintiff’s medical history to determine the value of the UIM claim.  

The Third Circuit also rejected the Plaintiff’s argument that the fact that the Plaintiff later received a substantial jury verdict discredited the carrier’s medical expert and thereby supported a conclusion that the carrier acted in bad faith.   The court noted that a jury’s later determination regarding the credibility of the carrier’s medical review did not affect the reasonableness of the carrier’s earlier reliance upon that review.  

The court also noted that the fact that the UIM carrier’s settlement offer was much lower than the amount the jury ultimately awarded would also not necessarily affect the reasonableness of the carrier’s reliance upon the medical review in making that settlement offer.  

The Third Circuit Court of Appeals also rejected the Plaintiff’s claim that the carrier acted in bad faith by questioning the causal relationship of Plaintiff’s medical condition to the motor vehicle accident even though the same carrier did not do so when it paid all medical expenses under the first party benefits coverage following the accident.   In this regard, the Plaintiff admitted that the inconsistency between the how the claims were handled was, in and of itself, not sufficient to show bad faith.  

The court also rejected the Plaintiff’s argument that the carrier’s bad faith was evidenced by its assertion in the UIM case that the Plaintiff was partially responsible for the accident.  The court found this argument to be “meritless.”   There was no evidence provided that the carrier considered this defense in a frivolous attempt to limit its liability for UIM benefits.  

The appellate court also found no error in the district court’s alleged ignoring the Plaintiff’s insurance expert’s report on the issue of bad faith.   The appellate court noted that the expert review provided legal conclusions without adding any additional facts and, therefore, providing no factual evidence to support a claim of bad faith.  

For these reasons, the appellate court affirmed the trial court’s grant of summary judgment in favor of the UIM carrier on the bad faith issue in this non-precedential Opinion.  

 Anyone wishing to review this Opinion may click this LINK.

 I send thanks to the writers of the Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog Pennsylvania and New Jersey Insurance Bad Faith Case Law Blog for bringing this case to my attention.   
 

Pennsylvania Supreme Court Rules on Propriety of Attorney's Fees in First Party Benefits Litigation Matters

Tort Talkers may recall that previous summaries of the various court decisions in the case of Doctor’s Choice Physical Medicine and Rehabilitation Center, P.C. v. Travelers Personal Insurance Company, addressing attorney’s fees awarded in a first party benefits peer review process litigation, had been repeatedly reviewed here.

Update: In a December 21, 2015 decision by the Pennsylvania Supreme Court at 146 MAP 2014, the Court addressed the issue of the availability of attorney’s fee awards against insurance companies that have revoked peer review provisions of the Motor Vehicle Financial Responsibility Law.

By way of background, after a bench trial at the trial court level, the Court of Common Pleas entered a verdict in favor of the medical provider, which, initially included an award of attorney’s fees of approximately $39,000.00.  On a later motion, the trial court struck the award of attorney's fees in this context.

On appeal, the Pennsylvania Superior Court reversed the trial court's decision to strike the fee award.

In the latest decision in the case, the Pennsylvania Supreme Court has reversed the Superior Court. In so ruling, the Supreme Court noted that it "remains cognizant of the short comings of the peer-review regime." However, the court left changes to the peer review process to be considered by the Legislature and declined to deviate from the court’s conventional statutory interpretation of the peer review statute at issue.  

Anyone wishing to secure more detail on this decision may click this LINK.


I send thanks to Attorney Tom McDonnell of the Pittsburgh law firm of Summers McDonnell for bringing this decision to my attention.

To review the Tort Talk blog posts on the Superior Court's earlier decision and the trial court's initial decision in this case, please go to Tort Talk at www.TortTalk.com and type in "Doctor's Choice" in the Search Box in the upper right hand column of the blog.

Pennsylvania Supreme Court Agrees to Address Important First Party Benefits/Attorney's Fees Issue

On December 31, 2014, the Pennsylvania Supreme Court granted Travelers' Insurance Company’s Petition for Allowance of Appeal in the first party benefits peer review case of Doctor’s Choice Physical Medicine & Rehabilitation Center, P.C. (LaSelva), v. Travelers Personal Ins. Co., No. 512 MAL 2014 (Pa. 2014).  The Court framed the issues to be reviewed as follows:  

"(1) Whether the Superior Court improperly interpreted § 1797 of the MVFRL,the Supreme Court case of Herd Chiropractic v. State Farm, and its own case of Levine v. Travelers, to allow attorneys’ fees even when an insurer has utilized the peer review process? 

(2) Whether the Superior Court improperly interpreted and misapplied §1797(b)(4) by holding that the insurer must oversee the statutory compliance of peer review organizations with 31 Pa.Code § 69.53(e)?"

As such, this eventual Pennsylvania Supreme Court decision will serve to clarify the issue of – whether a plaintiff can get attorney’s fees if a peer review process utilized by a carrier is found to be statutorily non-compliant.

 

For more background on this case, click this LINK to the Tort Talk post summarizing the trial court's opinion.

 

To view the Pennsylvania Supreme Court's Order granting this appeal, click HERE.

 

I send thanks to Attorney Brigid Q. Alford of the Camp Hill, PA office of Marshall, Dennehey, Warner, Coleman & Goggin for bringing this news to my attention.

First Party Auto Carriers Held to Have Duty to Reduce Medical Expenses Before Paying

In the notable Lawrence County Court of Common Pleas decision of Pavelko v. Unitrin Direct Auto Ins., No. 11190 of 2012 (C.P. Lawrence June 12, 2014 Cox, J.), Judge Craig Cox overruled a defendant first party auto insurance carrier's preliminary objections allowing an insured to proceed on a claim that the first party carrier's failure to pay reduced medical expense in accordance with Section 1797(a) of the Motor Vehicle Financial Responsibility Law resulted in a premature exhaustion of the insured's first party medical benefits.

The Lawrence County trial court ruled that first party carriers had a duty to follow the law and pay the properly reduced amounts.  In his decision, Judge Cox rejected the carrier's contention that this failure to re-price medical expenses did not amount to a valid cause of action.

Anyone wishing to review this first party decision may click HERE.

I send thanks to Attorney Scott Cooper of the Harrisburg law firm of Schmidt Kramer for bringing this case to my attention.

Judge Conaboy of Federal Middle District of PA Limits Discovery in Auto Insurance Breach of Contract Case

In McBride v. Infinity Prop. & Cas. Corp., Case No. 3:13-CV-1737 (M.D. Pa. March 24, 2014 Conaboy, J.), Judge Richard P. Conaboy of the U.S. District Court for the Middle District of Pennsylvania addressed an insurer’s subpoenas to third parties in a breach of contract/bad faith claim arising out of the carrier's refusal to pay first party medical benefits to the plaintiff for personal injuries allegedly sustained from an auto accident.


The carrier had refused to pay first party medical benefits on the basis that the insured allegedly misrepresented his state of domicile at the time he made his application for insurance by that stating that his residence was in Bushkill, Pennsylvania rather than New York.  The carrier stated that this was a material misrepresentation on the application that, therefore, no coverage was due.


It was the insured's contention that he moved to Pennsylvania in 2012.


The discovery issue presented in this case centered around the scope of discovery on the pertinent issue of residency.  Overall, the court limited the carrier's discovery efforts to the years 2012 and forward for such items as the insured's tax returns, voter identification records, credit card statements, bank statements, records pertaining to the insured's receipt of governmental benefits, documents related to the insured's driving of a motor vehicle, and real property records.


The court rejected the carrier's efforts to secure copies of the insured's third party personal injury litigation file as the claim before this court only involved issues surrounding the denial of first party medical benefits.  Judge Conaboy felt that the carrier could gather the same information that may be relevant to the payment of medical expenses and the residency issue by a review of the medical records and by deposition of the insured.


Anyone wishing to read this Opinion by Judge Conaboy in the McBride case may click this LINK.


I send thanks to the writers of the excellent PENNSYLVANIA AND NEW JERSEY INSURANCE BAD FAITH CASE LAW BLOG at the Philadelphia law firm of Fineman Krekstein & Harris for publicizing this decision.  

Federal Middle District Court Allows First Party Bad Faith Claim to Proceed

In her recent decision in the case of Neal v. State Farm, PICS Case No. 14-0387 (M.D. Pa. Feb. 18, 2014 Kane, J.), Judge Yvette Kane of the Federal District Court for the Middle District of Pennsylvania allowed a Plaintiff’s bad faith claim to proceed under allegations that the carrier knowingly used a biased independent medical examiner to provide negative reports and and thereby support the carrier’s denial of payments in a first party context. 


The Plaintiff also sued under various provisions of the Motor Vehicle Financial Responsibility Law pertaining to the dispute over the reasonableness and necessity of the Plaintiff’s treatment.  


According to a summary of the Opinion, after being involved in an accident, the insured injured party began receiving payments for her medical expenses from the first party benefits carrier.   Approximately a year later, the carrier retained a doctor to perform an independent medical examination.  


Based upon the IME, the carrier denied further payment of the insured’s medical bills.   The IME report contained conclusions that the Plaintiff had fully recovered from the accident and that the Plaintiff showed signs of symptoms magnification and inappropriate illness behavior.


The Plaintiff insured filed a bad faith suit alleging violations of the Motor Vehicle Financial Responsibility Law and the Unfair Trade Practices Law.  


According to the summary, the insured Plaintiff agreed to the dismissal of claims for breach of contract and deceit.   The Court otherwise allowed the claims for bad faith and other claims related to the carrier’s alleged nonfeasance and misfeasance for failure to pay medical bills to go forward into the discovery phase of the case.   


Anyone desiring a copy of Judge Kane's Opinion may click this LINK.  The accompanying Order can be viewed HERE.




Source:  "Case Digests," Pennsylvania Law Weekly.