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Sayles v. Allstate Insurance Co.

United States District Court, M.D. Pennsylvania

May 10, 2017

SAMANTHA SAYLES, individually and on behalf of all others similarly situated, Plaintiffs,
v.
ALLSTATE INSURANCE COMPANY, Defendant.

          MEMORANDUM

          A. RICHARD CAPUTO, UNITED STATES DISTRICT JUDGE

         Presently before the Court is a Motion to Dismiss filed by Defendant Allstate Insurance Company (“Allstate”). (Doc. 10.) For the reasons that follow, Allstate's Motion will be granted in part and denied in part.

         I. Background

         The well-pleaded facts as set forth in Plaintiff's Complaint (Doc. 1-1) are as follows:

         Plaintiff Samantha Sayles (“Sayles”) was insured under an auto insurance policy issued by Defendant Allstate (the “Policy”). (Compl. ¶ 13.) The Policy provided for, inter alia, first-party medical expense benefits up to $5000 per person. (Ex. A, Doc. 11-1.) Relevant to the instant dispute, the Policy states under a subheading labeled “Proof of Claim; Medical Reports”:

As soon as possible, you [claimant] or any other person making claim must give us [Allstate] written proof of claim including all details reasonably required by us to determine the amounts payable.
The injured person may be required to take physical examinations by physicians selected by us, as often as we reasonably require. The injured person or his representative must authorize us to obtain medical reports and copies of records.

(Ex. A, Doc. 11-1) (the “examination requirement”). On December 11, 2015, Sayles was involved in a motor vehicle accident within the Commonwealth of Pennsylvania in which she sustained numerous physical injuries. (Compl. ¶ 14.) Sayles was treated by medical providers for these injuries. (Id. ¶ 15.) On May 20, 2016, Allstate sent a letter to Sayles's counsel, Charles Kannebecker, concerning Sayles's medical benefits under the Policy. (Id. ¶ 17.) The letter states in pertinent part:

Please be advised that we [Allstate] are requesting MES Solutions to perform an Independent Medical Exam (IME) on your client, Samantha Sayles.
Pursuant to our contract (policy) Section Proof of Claim: Medical Reports, an insured must submit to mental and physical examinations by physicians selected by Allstate when and as often as we may reasonably require.
During the time all pending bills won't be paid until the Independent Medical Exam is completed. Once the review comes back, all bills will be processed per the results of the Independent Medical Exam review. This process will take approximately 60 days.

(Doc. 11-1 Ex. B.) In accordance with the letter, Allstate refused to pay Sayles's medical benefits until the physical examination was completed. (Compl. ¶¶ 16, 18, 26.) At no point did Allstate petition a court to compel the physical examination of Sayles that it sought. (Id. ¶ 21.) Sayles alleges that Allstate's examination requirement is a company-wide policy. (Id. ¶ 27.)

         Sayles claims that the Policy's examination requirement violates the Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”), 75 Pa. Cons. Stat. Ann. § 1701, et seq. (Compl. ¶ 41.) Section 1796 of the MVFRL entitled “Mental or Physical Examination of Person” states in relevant part:

(a) General rule. Whenever 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. The order may only be made upon motion for good cause shown. The order shall give the person to be examined adequate notice of the time and date of the examination and shall state the manner, conditions and scope of the examination and the physician by whom it is to be performed. If a person fails to comply with an order to be examined, the court or the administrator may order that the person be denied benefits until compliance.

         Because Allstate did not petition a court to compel Sayles to submit to a physical examination, and consequently because there was no court order based upon a showing of “good cause” directing Sayles to submit to such an examination in accordance with the statutory specifications, Sayles claims that Allstate's refusal to pay her medical benefits until she completed the physical examination that it requested violated the statute.[1] (Compl. ¶¶ 41-42; see Count II.)

         This putative class action was originally filed in the Court of Common Pleas of Pike County on June 20, 2016. (See Doc. 1.) On July 25, 2016, Allstate removed the action to federal court. (See Doc. 16.)

         II. Legal Standard

         Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. See Fed. R. Civ. P. 12(b)(6). When considering a Rule 12(b)(6) motion, the Court's role is limited to determining if a plaintiff is entitled to offer evidence in support of her claims. See Semerenko v. Cendant Corp., 223 F.3d 165, 173 (3d Cir. 2000). The Court does not consider whether a plaintiff will ultimately prevail. Id. A defendant bears the burden of establishing that a plaintiff's complaint fails to state a claim. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).

         A pleading that states a claim for relief must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The statement required by Rule 8(a)(2) must “‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.'” Erickson v. Pardus, 551 U.S. 89, 93 (2007) (per curiam) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). Detailed factual allegations are not required. Twombly, 550 U.S. at 555. However, mere conclusory statements will not do; “a complaint must do more than allege the plaintiff's entitlement to relief.” Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). Instead, a complaint must “show” this entitlement by alleging sufficient facts. Id. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations. Ashcroft v. Iqbal, 556 U.S. 662, 664 (2009). As such, “[t]he touchstone of the pleading standard is plausibility.” Bistrian v. Levi, 696 F.3d 352, 365 (3d Cir. 2012).

         The inquiry at the motion to dismiss stage is “normally broken into three parts: (1) identifying the elements of the claim, (2) reviewing the complaint to strike conclusory allegations, and then (3) looking at the well-pleaded components of the complaint and evaluating whether all of the elements identified in part one of the inquiry are sufficiently alleged.” Malleus v. George, 641 F.3d 560, 563 (3d Cir. 2011).

         Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, a plaintiff has not pleaded “enough facts to state a claim to relief that is plausible on its face, ” Twombly, 550 U.S. at 570, meaning enough factual allegations “‘to raise a reasonable expectation that discovery will reveal evidence of'” each necessary element. Phillips v. Cty. of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678. “When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id. at 679.

         In deciding a motion to dismiss, the Court should consider the complaint, exhibits attached to the complaint, and matters of public record. Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010) (citing Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993)). The Court may also consider “undisputedly authentic” documents when the plaintiff's claims are based on the documents and the defendant has attached copies of the documents to the motion to dismiss. Pension Benefit Guar. Corp., 998 F.2d at 1196. The Court need not assume that the plaintiff can prove facts that were not alleged in the complaint, see City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 263 & n.13 (3d Cir. 1998), or credit a complaint's “‘bald assertions'” or “‘legal conclusions, '” Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (quoting In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1429-30 (3d Cir. 1997)).

         III. Discussion

         The Complaint seeks to bring claims on behalf of a class, which Sayles generally defines as:

All persons injured in motor vehicle accidents and insured under Pennsylvania auto insurance polices issued by [D]efendant which provided for medical benefits coverage whom [D]efendant required or directed to submit to insurance physical exams without Court order directing insured to submit to physical exams.[2]

(Compl. ¶ 43.) The Complaint raises eight (8) counts seeking relief: (1) a request for a declaratory judgment declaring Allstate in violation of § 1796 of the MVFRL and that it must hereafter comply with the statute (id. ¶¶ 59, 128(B)); (2) claims for a violation of § 1796 of the MVFRL (id. ¶ 62); (3) claims for violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“UTPCPL”), 73 Pa. Cons. Stat. Ann. § 201-1, et seq. (id. ¶ 71); (4) claims for violations of Pennsylvania's Insurance Bad Faith Act, 42 Pa. Cons. Stat. Ann. § 8371 (id. ¶ 83); (5) claims for breach of the duty of good faith and fair dealing (id. ¶ 99); (6) claims for unjust enrichment (id. ¶ 108); (7) claims of intentional misrepresentation (id. ¶ 117); and (8) alternative claims for medical benefits (id. ¶ 124). Allstate filed the instant Motion to Dismiss on August 26, 2016. (Doc. 10.) Allstate's Motion is premised chiefly upon the argument that Pennsylvania law permits parties to enter into an insurance contract like the one presently at issue, which contains a provision that requires the insured to submit to an IME as often as the insurer “reasonably requires.” (See Doc. 11, at 7-11.) Because Sayles did not attend the IME which Allstate required, Allstate contends that she breached the insurance contract. (Id. at 11.) Sayles filed her Brief in Opposition on September 20, 2016. (Doc. 23.) Allstate filed its Reply Brief on October 11, 2016. (Doc. 24.) Allstate's Motion is now ripe for disposition.

         A. Counts I and II: Section 1796 of Pennsylvania's MVFRL

         First, Allstate moves to dismiss Counts I and II of Sayles's Complaint on the ground that its examination requirement in the Policy, which purportedly allows Allstate to require its insureds to submit to an IME by a physician of Allstate's choosing as a condition precedent to payment of medical expenses, is enforceable notwithstanding § 1796 of the MVFRL. (See Doc. 11, at 7-11.) Based on the allegations in the Complaint and supporting documents, the Court predicts that the Pennsylvania Supreme Court would find Allstate's examination requirement in conflict with § 1796 and thus unenforceable. Accordingly, Allstate's Motion will be denied with respect to Counts I and II.[3]

         The Pennsylvania Supreme Court has not addressed the predominant issue presently before the Court: whether a provision in an automobile insurance policy that requires an insured to submit to an IME by a physician selected by the insurer as often as the insurer reasonably requires in order to receive her first-party medical benefits conflicts with the MVFRL and, therefore, violates Pennsylvania public policy. Because the Court is sitting in diversity, and because the Commonwealth's highest court has not issued an opinion on point, the Court is “charged with predicting how that court would resolve the question at issue.” Colliers Lanard & Axilbund v. Lloyds of London, 458 F.3d 231, 236 (3d Cir. 2006). In making this prediction, the Court must consider:

(1) what that court has said in related areas; (2) the decisional law of the state intermediate courts; (3) federal cases interpreting state law; and (4) decisions from other jurisdictions that have discussed the issue.

Id. “[L]ower state court decisions are not controlling on an issue on which the highest court of the state has not spoken, ” however, “federal courts must attribute significant weight to these decisions in the absence of any indication that the highest state court would rule otherwise.” Wisniewski v. Johns-Manville Corp., 759 F.2d 271, 273-74 (3d Cir. 1985). That is, “due deference” must be given to the well-reasoned decisions of intermediate state courts. See U.S. Underwriters Ins. Co. v. Liberty Mut. Ins. Co., 80 F.3d 90, 93 (3d Cir. 1996). Of course, a federal court is free to reach a result that is contrary to an intermediate appellate court “if, by analyzing other persuasive data, [the court] predict[s] that the State Supreme Court would hold otherwise.” Gruber v. Owens-Ill. Inc., 899 F.2d 1366, 1369 (3d Cir. 1990) (alterations, internal quotation marks, and citation omitted). Therefore, “a federal court interpreting state law may discount state appellate decisions it finds flawed, if it predicts the state supreme court would reach a contrary result.” In re Makowka, 754 F.3d 143, 148 (3d Cir. 2014).

         As this case turns largely on how the Pennsylvania Supreme Court would interpret § 1796 of the MVFRL, the Court is also guided by the Pennsylvania rules of statutory construction. See Transguard Ins. Co. of Am., Inc. v. Hinchey, 464 F.Supp.2d 425, 433 (M.D. Pa. 2006). “These rules provide that where a statute is clear on its face and unambiguous, it should be interpreted by its plain meaning.” Id. (citing 1 Pa. Cons. Stat. Ann. § 1921(b))[4]; see Warrantech Consumer Prods. Servs., Inc. v. Reliance Ins. Co. in Liquidation, 96 A.3d 346, 354 (Pa. 2014) (“When the words of a statute are clear and unambiguous, there is no need to look beyond the plain meaning of the statute ‘under the pretext of pursuing its spirit.'” (quoting § 1921(b))).

         Returning to the relevant statutory language, § 1796(a) of the MVFRL provides:

Whenever the mental or physical condition of a person is material to any claim for medical . . . benefits, a court of competent jurisdiction . . . may order the person to submit to a mental or physical examination by a physician. The order may only be made upon motion for good cause shown. The order shall give the person to be examined adequate notice of the time and date of the examination and shall state the manner, conditions and scope of the examination and the physician by whom it is to be performed. If a person fails to comply with an order to be examined, the court . . . may order that the person be denied benefits until compliance.

         According to Allstate, the statute does not require Allstate to obtain a court order based upon a showing of good cause in order to have its insureds submit to an IME prior to receiving medical benefits. (Doc. 11, at 7.) Instead, Allstate contends that the statute merely provides when a court “may” order a person to submit to an IME, and does not foreclose an insurer and an insured from entering into an insurance contract that includes a mandatory IME provision which the insurer may invoke in its discretion. (Seeid.) In response, Sayles argues that the procedure prescribed by the statute applies to “any claim” for medical benefits “whenever” the mental or physical condition of a person is material to that claim, without exception. (See Doc. 23, at 3.) Sayles contends that allowing insurers to insert ...


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