A. Richard Caputo, United States District Judge.
Presently before the Court is a Motion to Dismiss filed by Defendant Allstate Insurance
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":
(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:
(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:
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.
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, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (per curiam) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Detailed factual allegations are not required. Twombly, 550 U.S. at 555, 127 S.Ct. 1955. 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (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, 127 S.Ct. 1955, 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
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)).
The Complaint seeks to bring claims on behalf of a class, which Sayles generally defines as:
(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
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:
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))
Returning to the relevant statutory language, § 1796(a) of the MVFRL provides:
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. (See id.) 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 requirements, such as the examination requirement, into insurance policies would permit insurers to circumvent the procedure and protections the legislature afforded insureds in enacting § 1796. (See id. at 4.)
1. Allstate's Examination Requirement Conflicts with the Plain Language of § 1796
The Court reads the plain language of § 1796 to prohibit precisely what Allstate allegedly did in this case. Section 1796 sets forth specific requirements that an insurer must satisfy in order to have its insureds submit to an IME in connection with any claim for medical benefits: the insurer (1) must file a petition with a court, (2) satisfy its burden of demonstrating that the person's mental or physical condition is "material" to her claim for benefits, and (3) satisfy its burden of demonstrating "good cause" for the IME. 75 Pa. Cons. Stat. Ann. § 1796(a); see State Farm Ins. Cos. v. Swantner, 406 Pa.Super. 235, 594 A.2d 316, 321-22 (1991). Additionally, the plain language of the statute specifically requires a court — as a disinterested adjudicator — to decide (a) the time and date of the IME, (b) the manner, conditions, and scope of the IME, and, importantly, (c) the physician who will perform the IME. § 1796(a). Consequently, because it appears that Allstate's examination requirement permits the insurer to require its insureds to submit to an IME without first filing a petition demonstrating good cause, and because the examination requirement transfers control over the statutory safeguards from the province of an impartial court to the discretion of an interested insurer, the Court predicts that the Pennsylvania Supreme Court would find the examination requirement, as alleged, in conflict with § 1796 and thus violative of Pennsylvania public policy. See Generette v. Donegal Mut. Ins. Co., 598 Pa. 505, 957 A.2d 1180, 1190-91 (2008) ("[W]e are obliged to find contractual language to be
The language of § 1796(a) unambiguously provides for a broad scope of the statute's application: "Whenever" a person's mental or physical condition is material to "any claim" for, inter alia, medical benefits. 75 Pa. Cons. Stat. Ann. § 1796(a). In that case, the statute authorizes a court to order such a person to submit to a mental or physical examination, but only upon a motion demonstrating "good cause."
Therefore, the Court concurs with the well-reasoned opinion of the district court in Scott v. Travelers Commercial Insurance Co. and "read[s] § 1796 to plainly require the insurer to petition the state court and obtain an order for an IME of
2. The Pennsylvania Supreme Court Has Found Other Provisions of the MVFRL to Prevail over Conflicting Language in Insurance Policies
In making its prediction, the Court considers what the Pennsylvania Supreme Court has held in related areas. Although the Commonwealth's highest court has not resolved the specific question presently at issue, it has repeatedly held that "[a]s a general rule, stipulations in a contract of insurance in conflict with, or repugnant to, statutory provisions which are applicable to, and consequently form a part of, the contract, must yield to the statute, and are invalid, since contracts cannot change existing statutory laws." Prudential Prop. & Cas. Ins. Co. v. Colbert, 572 Pa. 82, 813 A.2d 747, 750 (2002) (quoting Allwein v. Donegal Mut. Ins. Co., 448 Pa.Super. 364, 671 A.2d 744, 752 (Pa. Super. Ct. 1996) (quoting George J. Couch, Couch on Insurance 2d (rev. ed.) § 13.7, at 827 (1984))); see Warrantech Consumer Prods. Servs., Inc. v. Reliance Ins. Co. in Liquidation, 626 Pa. 218, 96 A.3d 346, 354 (2014) (same); Generette v. Donegal Mut. Ins. Co., 598 Pa. 505, 957 A.2d 1180, 1191 (2008) (same). More specifically, the Pennsylvania Supreme Court has found clear provisions in insurance policies unenforceable when they conflict with the plain language of the MVFRL.
In Colbert, for example, the court found an insurance policy that defined "insured" more narrowly than the MVFRL in conflict with the statutory language and thus unenforceable. 813 A.2d at 751. The court held that "[n]othing in the MVFRL permits [an insurer] to diminish the MVFRL's definition of `insured' and thereby provide coverage of a lesser scope than the MVFRL requires." Id. Accordingly, although the insurance policy's provision was "clear and unambiguous," the court found that the "policy impermissibly narrows and conflicts with the plain language of the MVFRL," and thus was unenforceable. Id.
Subsequently in Generette, the court reiterated that, although declaring unambiguous provisions in an insurance contract void as against public policy comes with a "heavy burden," Pennsylvania courts nevertheless "are obliged to find contractual language to be contrary to public policy when it violates statutory language[.]" 957 A.2d at 1190-91. Under this principle, the court found an unambiguous contract provision unenforceable because it conflicted with the public policy of the MVFRL to provide "excess" rather than "gap" underinsured motorist coverage. Id. at 1192. The challenged provision limited recovery of UIM coverage under the second priority policy to the amount by which that policy's coverage limit exceeded the coverage of the UIM policy at the first priority level. See id. at 1183. In holding the policy provision unenforceable, the court held that "the structure of the MVFRL's definition of an underinsured motorist requires the provision of excess rather than gap underinsured motorist coverage because the definition is framed in terms of the total of the injured's losses rather than the injured's own insurance coverage limits."
The Court reads these cases to demonstrate a willingness on the part of the Pennsylvania Supreme Court to void unambiguous provisions in insurance policies that conflict with the MVFRL to the detriment of insureds. The Colbert court voided an insurer-friendly contract provision that conflicted with and diminished the plain language of the MVFRL. Here, the examination requirement conflicts with and reduces the plain language of § 1796 to the benefit of the insurer, as it allows insurers to require insureds to submit to IMEs without demonstrating good cause to a neutral party and permits the insurer, rather than a court, to dictate the terms of the examination. Moreover, the Generette court found a policy provision void as against public policy based on the "structure" of the statutory definition of "underinsured motor vehicle," despite the fact that the MVFRL does not specifically state that excess rather than gap UIM coverage is required. Similarly, although § 1796 is "silent" as to whether an insurer is permitted to include an IME provision in its policy (Doc. 24, at 8), the structure of the statutory provision makes clear that the procedural safeguards apply "[w]henever the mental or physical condition of a person is material to any claim for medical... benefits...." § 1796(a) (emphasis added).
Separately and importantly, the Court notes that the Pennsylvania Supreme Court has long recognized that "[t]he traditional contractual approach fails to consider the true nature of the relationship between the insurer and its insureds. Only through the recognition that insurance contracts are not freely negotiated agreements entered into by parties of equal status; only by acknowledging that the conditions of an insurance contract are for the most part dictated by the insurance companies and that the insured cannot `bargain' over anything more than the monetary amount of coverage purchased, does our analysis approach the realities of an insurance transaction." Collister v. Nationwide Life Ins. Co., 479 Pa. 579, 388 A.2d 1346, 1353 (1978). The Court's prediction is further guided by these "realities" recognized by the Commonwealth's highest court.
Accordingly, the Court considers these decisions in predicting that the Pennsylvania Supreme Court would similarly find Allstate's examination requirement in conflict with § 1796.
3. Decisions from the Superior Court and Federal Courts Interpreting § 1796
Although the Court rejects Allstate's arguments in support of its Motion to Dismiss Counts I and II, its position is not without support. Indeed, in concurring with the decision of Magistrate Judge
Nevertheless, in making its prediction the Williams court accorded significant weight to the Fleming decision. See Williams, 595 F.Supp.2d at 541. Although the Fleming court deliberately abstained from analyzing whether the policy provision was void as against public policy, the Williams court found Fleming to have "explicitly discussed the interplay between section 1796 and a policy of insurance that permits an insurance company to unilaterally compel medical examinations, without a showing of `good cause.'" Id. at 538. The Williams court concluded that the Superior Court in Fleming "clearly found that a contractual provision requiring the insured to attend a medical examination as a prerequisite to benefits does not violate the twin purposes" of § 1796.
In addition to its reliance on Fleming, the Williams court concluded that the challenged contractual provision was consistent with the two-fold purpose of § 1796: (1) protecting insureds from "harassment, untoward intrusion and unwarranted examination"; and (2) protecting insurers by providing checks designed to prevent insureds from "ignor[ing] reasonable limitations on treatment by continuing in treatment without validation or justification." 595 F.Supp.2d at 542-43 (quoting State Farm Ins. Cos. v. Swantner, 406 Pa.Super. 235, 594 A.2d 316, 322 (1991)). The Court disagrees. Allstate's examination requirement fails entirely to take the protections afforded to insureds into consideration. Not only does it circumvent the "good cause" requirement imposed by the legislature, it also transfers the relevant decision-making authority from the courts to the interested insurer. Furthermore, the examination requirement removes the burden that the legislature allocated to the insurer to file a petition demonstrating "good cause" and places that burden on the insured, who must file a complaint and initiate full-scale litigation in order to challenge the "reasonableness" of the IME. As such, the Court does not find that Allstate's examination requirement, as alleged, is consistent with the purposes of § 1796.
Furthermore, the Williams court's reliance on the fact that "other states, acting within the framework of their own no-fault insurance statutes, have consistently enforced contractual provisions requiring an insured to submit to medical examinations as a condition precedent to coverage" appears to be misplaced. 595 F.Supp.2d at 544 & n.9; see Scott, 2016 WL 5851960, at *10. Williams relied on cases out of Colorado, Georgia, Maryland, Massachusetts, and Ohio, which found that insurers could include policy provisions requiring insureds to submit to an IME as a condition precedent to the payment of benefits. Williams, 595 F.Supp.2d at 544 n.9. However,
In fact, although not considered by the Williams court, the Commonwealth of Kentucky has enacted a statutory provision that is similar to § 1796. See Ky. Rev. Stat. Ann. § 304.39-270.
In departing from the opinion of the Williams court, the Court finds the reasoning of Magistrate Judge Schwab more persuasive. In Scott v. Travelers Commercial Insurance Co., No. 1:14-CV-00535, 2016 WL 5851960 (M.D. Pa. Oct. 6, 2016), Magistrate Judge Schwab predicted that the Pennsylvania Supreme Court would not enforce an insurance policy provision that required an insured to submit to IMEs conducted by physicians selected by the insurer as often as the insurer reasonably required, "because such a provision is in clear derogation of the plain language set forth in § 1796 of the MVFRL." Id. at *8. In so holding, the Scott court found the statutory language in § 1796 "to plainly require the insurer to petition the state court and obtain an order for an IME of
The Court agrees with the reasoning of the Scott court. To predict otherwise would allow insurers to circumvent the "good cause" requirement prescribed by the legislature. Moreover, it would permit interested insurers to transfer the relevant decision-making authority from the courts to themselves. Such a conclusion would render the protections afforded to insureds by § 1796 meaningless. Indeed, a contrary conclusion would allow insurers to effectively limit an insured's coverage "by requiring the insured to either submit to the unilaterally compelled IME or be denied coverage." Scott, 2016 WL 5851960, at *8 (emphasis in original). Had the legislature intended such unilateral limitations on coverage, it would not have imposed the good cause requirement. Id. Accordingly, the Court is persuaded by the reasoning in Scott that the Pennsylvania Supreme Court would find Allstate's examination requirement, as alleged, in conflict with the plain language of § 1796 and therefore void as against public policy.
4. "Other Persuasive Data"
Considering that Pennsylvania case law has left the issue confronting the Court unresolved, the Court also finds it appropriate to turn to "other persuasive data" in making its prediction. Two opinions of the Honorable R. Stanton Wettick, Jr. of the Court of Common Pleas of Allegheny County persuasively addressed the exact issue at hand. In Erie Insurance Exchange v. Dzadony, 39 Pa. D. & C. 3d 33, 1986 WL 2077 (Pa. Com. Pl. 1986), Judge Wettick declined to enforce a provision in an automobile insurance policy that required the insured to submit to IMEs by a physician selected by the insurer as often as the insurer "reasonably require[d]." See id. at 36-38. Judge Wettick noted that the MVFRL "is comprehensive legislation
Eleven years later, Judge Wettick had the opportunity to address this issue once again. In Nationwide Insurance Co. v. Hoch, 36 Pa. D. & C. 4th 256, 1997 WL 1056869 (Pa. Com. Pl. 1997), Judge Wettick reaffirmed the holding in Erie. In so doing, Judge Wettick expanded upon the "good cause" standard, concluding that an "insurance company is not entitled to a medical examination until it has pursued non-intrusive means to obtain reliable information concerning the insured's physical condition such as providing the insured with the opportunity to submit medical records from her treating physician addressing any questions of the insurance company." Hoch, 36 Pa. D. & C.4th at 257 (citing State Farm Insurance Cos. v. Swantner, 406 Pa.Super. 235, 594 A.2d 316 (1991)). Notably, the Hoch opinion was issued after the Superior Court's decision in Fleming. Judge Wettick reviewed the procedural history and holding of Fleming, concluding that the "Fleming opinion never reached the issues raised in ... [Erie], [and] there is no appellate court case law that is inconsistent with this opinion." Id. at 264. As such, Judge Wettick found the insurer failed to demonstrate "good cause" and denied the insurer's petition to compel an IME, despite the fact that the policy had a similar provision to Allstate's examination requirement. See id.
The Court finds the opinions of Judge Wettick considerably more persuasive than the "implication" of Fleming. These two opinions are the only state-court decisions of which this Court is aware that engaged in any meaningful analysis of the issue presently before the Court.
Moreover, the Court agrees with the general principles set forth in Judge Wettick's decisions. As explained previously, the Court concurs with Judge Wettick's opinion that Fleming did not address the question presently before the Court and is unpersuasive on this issue. See Hoch, 36 Pa. D. & C.4th at 264. Additionally, the Court agrees with Judge Wettick's conclusion that policy provisions like the examination requirement "impose additional burdens on an insured" before the insured may recover benefits to which she may be statutorily entitled, and therefore are "inconsistent" with the legislative scheme prescribed by the MVFRL. Id. at 261 (quoting Erie, 39 Pa. D. & C.3d at 36). Furthermore, the Court finds considerable merit to Judge Wettick's commitment to preserving the balance of the interests struck by the legislature in enacting § 1796. See id.
5. Decisions from Other Jurisdictions That Have Discussed the Issue
Finally, in making its prediction the Court turns to decisions from other jurisdictions that have persuasively discussed this issue. As noted previously, the Kentucky Court of Appeals has analyzed statutory language that is quite similar to § 1796 in the context of whether an insurer can require an insured to submit to an IME without first satisfying the "good cause" standard if such a requirement was included in an insurance policy. See Miller v. U.S. Fid. & Guar. Co., 909 S.W.2d 339, 343 (Ky. Ct. App. 1995). In Miller, after finding that the insurer failed to meet the "good cause" standard under Kentucky's Motor Vehicle Reparations Act,
Miller, 909 S.W.2d at 343 (internal citations omitted); see Coleman v. Bee Line Courier Serv., Inc., 284 S.W.3d 123, 132 (Ky. 2009) (citing Miller with approval). The Miller court also found the Pennsylvania Superior Court's decision in Fleming "unpersuasive," commenting that the Fleming court "specifically noted that the claimants `did not challenge this policy provision as being void as against public policy or void as unconscionable....'" Miller, 909 S.W.2d at 343 (quoting Fleming v. CNA Ins. Co., 409 Pa.Super. 285, 597 A.2d 1206, 1208 (1991)).
This analogous case law out of Kentucky fortifies the Court's prediction that the Pennsylvania Supreme Court would find Allstate's examination requirement in conflict with the MVFRL and thus void as against public policy.
6. The Court Predicts That the Pennsylvania Supreme Court Would Find Allstate's Examination Requirement Void as Against Public Policy
In summation, the Court predicts that the Pennsylvania Supreme Court would find Allstate's examination requirement, as alleged, in conflict with § 1796 of the MVFRL and thus void as against public policy. The examination requirement conflicts with the plain language of the statute and is inconsistent with the twin purposes of § 1796. Moreover, the Court is not persuaded by the "implication" of the Superior Court's decision in Fleming and, consequently, departs from the conclusion reached by the district court in Williams. Instead, the Court finds it appropriate to rely on the opinion of the district court in Scott, as well as the opinions of Judge Wettick in Erie and Hoch. Additionally, the Court finds the analogous case law from the Commonwealth of Kentucky addressing a similar statutory provision under similar factual circumstances compelling.
Accordingly, in light of the above discussion, Allstate's Motion to Dismiss will be denied with respect to Counts I and II of Sayles's Complaint.
B. Count III: The Pennsylvania Unfair Trade Practices and Consumer Protection Law
Count III of Sayles's Complaint alleges that Allstate violated the UTPCPL. See 73 Pa. Cons. Stat. Ann. § 201-1, et seq. Specifically, Sayles contends that Allstate "willfully and intentionally falsely stated to Plaintiff and class members" that the parties "were required to submit to [a] physical exam at the unilateral direction of Allstate, even without a showing of good cause to a court and without a court order directing [them] to submit to insurance physical exams." (Compl. ¶ 73.) Sayles further
Under Pennsylvania law, the economic loss doctrine "prohibits plaintiffs from recovering in tort economic losses to which their entitlement flows only from a contract." Werwinski v. Ford Motor Co., 286 F.3d 661, 671 (3d Cir. 2002) (quoting Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d 604, 618 (3d Cir. 1995)). The Pennsylvania Supreme Court has not yet ruled on whether the economic loss doctrine bars claims arising under the UTPCPL. See Ridolfi v. State Farm Mut. Auto. Ins. Co., 146 F.Supp.3d 619, 626 (M.D. Pa. 2015). However, the Third Circuit Court of Appeals has predicted that the Commonwealth's highest court would hold that the economic loss doctrine bars UTPCPL claims of intentional fraud for solely economic losses, except in situations where the fraud occurs outside of the contract. See Werwinski, 286 F.3d at 681. The Court is bound by this holding.
Here, Sayles's UTPCPL claim is clearly interwoven with her insurance contract. Her claim is premised entirely on allegations that Allstate told its insureds that they were required to submit to an IME per the terms of their insurance policy, and that Allstate would not pay medical benefits until the IME was completed. (Compl. ¶¶ 73-74.) This "communication from her insurance company was related to, and indeed was centered on, the substance of the contract of insurance Plaintiff maintained with Defendant," and therefore is barred by the economic loss doctrine. Ridolfi, 146 F.Supp.3d at 627.
Accordingly, Allstate's Motion to Dismiss will be granted with respect to Count III of Sayles's Complaint.
C. Count IV: Pennsylvania's Insurance Bad Faith Act
In Count IV, Sayles alleges a bad faith claim pursuant to Pennsylvania's insurance bad faith statute. See 42 Pa. Cons. Stat. Ann. § 8371. Sayles alleges that Allstate acted in bad faith when it falsely stated to its insureds that they were required to undergo IMEs at Allstate's unilateral direction, and that Allstate could refuse to pay medical benefits until the exams were completed despite the fact that Allstate did not obtain a court order predicated upon "good cause" compelling such exams.
In order to state a claim of bad faith against an insurer, the insured must allege: "(1) that the insurer did not have a reasonable basis for denying benefits under the policy; and (2) that the insurer knew of or recklessly disregarded its lack of a reasonable basis in denying the claim." Nw. Mut. Life Ins. Co. v. Babayan, 430 F.3d 121, 137 (3d Cir. 2005). However, "[b]ad faith cannot be found where the insurer's conduct is in accordance with a reasonable but incorrect interpretation of the insurance policy and the law." Bostick v. ITT Hartford Grp., Inc., 56 F.Supp.2d 580, 587 (E.D. Pa. 1999); see Aumen v. Nationwide Mut. Ins. Co., No. 1:10-CV-597, 2011 WL 1120414, at *6 (M.D. Pa. Mar. 8, 2011) ("[R]egardless of whether Defendant knew of such case law at the time it made its initial determination to deny coverage or whether such holding supported its position as to the interpretation of the term `fee' within the exclusion, the undeniable conclusion is that its interpretation was reasonable."); Emp'rs Mut. Cas. Co. v. Loos, 476 F.Supp.2d 478, 496 (W.D. Pa. 2007) ("Pennsylvania law does not recognize bad faith where an insurer makes `a reasonable legal conclusion based on an area of the law that is uncertain or in flux.'" (quoting Brown v. Progressive Ins. Co., 860 A.2d 493, 501 (Pa. Super. Ct. 2004))).
Here, even when viewing all well-pleaded allegations as true, the Complaint fails to state a claim for bad faith. Allstate clearly had a reasonable basis for denying Sayles's medical benefits under the Policy. As the Court noted above, the Pennsylvania Supreme Court has not determined whether insurers can include mandatory IME provisions in their insurance policies without violating the MVFRL. Additionally, the district court in Williams reached a different conclusion than the Court does today, in reliance on the Pennsylvania Superior Court's decision in Fleming. It was reasonable for Allstate to rely on the holding in Williams, which supported Allstate's decision to deny Sayles's medical benefits based on her failure to submit to an IME per the terms of the Policy. Because Sayles's bad faith claim is predicated entirely on the examination requirement, the Court finds that the Complaint alleges only that Allstate made a "reasonable legal conclusion based on an area of the law that is uncertain or in flux." Loos, 476 F.Supp.2d at 496 (quoting Brown, 860 A.2d at 501). Accordingly, the Court will grant Allstate's Motion to Dismiss with respect to Count IV of Sayles's Complaint.
D. Count V: Breach of the Duty of Good Faith and Fair Dealing
Sayles next contends that Allstate breached its duty of good faith and fair dealing in requiring its insureds to submit to IMEs at its unilateral direction and representing that it could refuse to pay medical benefits until the IME was completed. (Compl. ¶ 99.) Allstate contends that Sayles's claim fails as a matter of law because the implied covenant alleged conflicts with an express term of the Policy. (Doc. 11, at 19.) The Court agrees and will dismiss Count V with prejudice.
"The covenant of good faith and fair dealing `involve[s] an implied duty to bring about a condition or to exercise discretion in a reasonable way.'" USX Corp. v. Prime Leasing Inc., 988 F.2d 433,
Sayles's claim against Allstate for a breach of the duty of good faith and fair dealing relates entirely to the examination requirement in the Policy — an express term of the contract. Thus, Sayles cannot bring a claim for a breach of an implied covenant because an express term in the contract relates to this particular issue. Moreover, the allegations in Count V are essentially identical to those in Counts I and II, which seek a declaratory judgment and allege a violation of 75 Pa. Cons. Stat. Ann. § 1796. Thus, there is no reason for the Court to "imply" a separate cause of action for breach of the duty of good faith and fair dealing. See Northview Motors, Inc., 227 F.3d at 92 (citing Parkway Garage, Inc. v. City of Phila., 5 F.3d 685, 701-02 (3d Cir. 1993)). Consequently, Sayles may not maintain her claim that Allstate breached an implied covenant of good faith and fair dealing. Allstate's Motion will therefore be granted with respect to Count V.
E. Count VI: Unjust Enrichment
Sayles's Complaint also includes a claim for unjust enrichment based on the alleged savings Allstate secured in refusing to pay the medical benefits of its insureds based on the examination requirement. (Compl. ¶¶ 105, 107.) Allstate contends that Sayles cannot maintain a claim for unjust enrichment because she has pled the existence of an express contract, which precludes a claim for unjust enrichment. (Doc. 11, at 19-20.) The Court finds that the Complaint fails to state a claim for unjust enrichment and will dismiss Count VI with prejudice.
In order to state a claim for unjust enrichment under Pennsylvania law, the plaintiff must allege that (1) she conferred a benefit on the defendant, (2) the defendant appreciated the benefit, and (3) it would be inequitable to allow the defendant to keep the benefit without paying for it. Curley v. Allstate Ins. Co., 289 F.Supp.2d 614, 619 (E.D. Pa. 2003) (citing Styer v. Hugo, 422 Pa.Super. 262, 619 A.2d 347, 350 (1993)). If unjust enrichment has occurred, "courts will imply a quasi contract — which the Pennsylvania Commonwealth Court has defined as `not really a contract at all, but a fictional contract
Sayles's quasi-contractual claim fails, however, because the relationship between Sayles and Allstate is founded upon an express contract. "Pennsylvania law has long recognized that the doctrine of unjust enrichment is unavailable where, as here, `the relationship between parties is founded on a written agreement or express contract.'" Curley, 289 F.Supp.2d at 619-20 (quoting Schott v. Westinghouse Elec. Corp., 436 Pa. 279, 259 A.2d 443, 448 (1969)); see Grudkowski v. Foremost Ins. Co., 556 Fed.Appx. 165, 169-70 (3d Cir. 2014) ("`[T]he doctrine of unjust enrichment is inapplicable when the relationship between parties is founded upon a written agreement or express contract, regardless of how harsh the provisions of such contracts may seem in the light of subsequent happenings.' Because the relationship between [plaintiff] and [defendant] was governed by valid insurance contracts, unjust enrichment cannot provide [plaintiff] a basis for relief." (quoting Wilson Area Sch. Dist. v. Skepton, 586 Pa. 513, 895 A.2d 1250, 1254 (2006))) (internal quotation marks omitted); Wingert v. T.W. Phillips Gas & Oil Co., 398 Pa. 100, 157 A.2d 92, 94 (1959) ("[The doctrine of unjust enrichment] applies only to situations where there is no legal contract."); see also Century Indem. Co. v. URS Corp., No. 08-5006, 2009 WL 2446990, at *10 (E.D. Pa. Aug. 7, 2009) (dismissing unjust enrichment claim because Plaintiff "failed to take advantage of its contractual rights" and thus it was "not appropriate" to "invoke an equitable remedy of unjust enrichment"). As explained by the Pennsylvania Supreme Court, this "`bright-line rule.... embodies the principle that parties in contractual privity ... are not entitled to the remedies available under a judicially-imposed quasi[-]contract [i.e., the parties are not entitled to restitution based upon the doctrine of unjust enrichment] because the terms of their agreement (express and implied) define their respective rights, duties, and expectations." Skepton, 895 A.2d at 1254 (quoting Curley, 289 F.Supp.2d at 620-21) (alterations in original).
Here, although the Court has concluded that the examination requirement appears to be unenforceable as void as against public policy, the Complaint clearly states that Sayles and Allstate entered into an express contract for automobile insurance. (See, e.g., Compl. ¶¶ 1 (admitting that plaintiffs are "insureds covered by auto insurance policies issued by" Allstate "in accordance with Pennsylvania law"), 13 (admitting Plaintiff was an insured under Allstate's insurance Policy at all relevant times), 43.) It is abundantly clear that the pertinent "relationship" between the parties is founded upon the Policy. As such, Pennsylvania's "bright line rule" applies, and the quasi-contract theory of unjust enrichment is inapplicable. Skepton, 895 A.2d at 1254; see Curley, 289 F.Supp.2d at 620-21. Although the Complaint does not contain a claim for breach of contract, Plaintiff has not argued, and the Court does not find, that this omission has any bearing on this rule. See Curley, 289 F.Supp.2d at 619-20. Indeed, it is clear that the foundation of Plaintiff's claim is the insured-insurer relationship between Sayles and Allstate, which was created by an express agreement that Sayles acknowledges.
Because the relationship between the parties is founded on the Policy, Allstate's Motion to Dismiss will be granted with respect to Count VI.
F. Counts VII and VIII: Intentional Misrepresentation and "Alternative Claims for Medical Benefits"
Lastly, Allstate moves to dismiss Sayles's claims for intentional misrepresentation and medical benefits
The gist of the action doctrine forecloses a tort claim if: "(1) it arises solely from a contract between the parties; (2) the duties allegedly breached were created and grounded in the contract itself; (3) the liability stems from a contract; or (4) the tort claim essentially duplicates a breach of contract claim or the success of which is wholly dependent on the terms of a contract." Tennis v. Ford Motor Co., 730 F.Supp.2d 437, 446 (W.D. Pa. 2010). "[T]he gist of the action test `requires the court to focus on the substance of the dispute, or more colloquially, to ask the question, "What's the case really about?"'" Smith v. Lincoln Ben. Life Co., 395 Fed.Appx. 821, 823 (3d Cir. 2010) (quoting Pediatrix Screening, Inc. v. TeleChem Int'l, Inc., 602 F.3d 541, 550 (3d Cir. 2010)). The gist doctrine "precludes plaintiffs from `recasting ordinary breach of contract claims into tort claims' and maintains the `conceptual distinction between breach of contract claims and tort claims.'" Id. (quoting Pediatrix Screening, 602 F.3d at 548). In the context of an insured raising a misrepresentation claim against an insurer, the Third Circuit has explained:
Id. (internal citation omitted); see Yakubov v. GEICO Gen. Ins. Co., No. 11-3082, 2011 WL 5075080, at *2 (E.D. Pa. Oct. 24, 2011) (dismissing intentional misrepresentation claim based on the gist doctrine where plaintiff alleged insurer's promise to pay income loss benefits was "wholly illusory," because the claim was "really about" the insurer's alleged breach of its obligations under the policy and because the insurer's failure to pay income loss benefits to which plaintiff was entitled would be a breach of the policy); Bruno v. Erie Ins. Co., 630 Pa. 79, 106 A.3d 48, 68 (2014) ("If the facts of a particular claim establish that the duty breached is one created by the parties by the terms of their contract-i.e., a specific promise to do something that a party would not ordinarily have been obligated to do but for the existence of the contract-then the claim is to be viewed as one for breach of contract.").
Here, the Court finds it appropriate to apply the gist of the action doctrine to bar Sayles's intentional misrepresentation
Accordingly, the Court will grant Allstate's Motion with respect to Counts VII and VIII.
G. Leave to Amend
The Third Circuit has instructed that if a complaint is vulnerable to a 12(b)(6) dismissal, the district court must permit a curative amendment, unless an amendment would be inequitable or futile. Phillips v. Cty. of Allegheny, 515 F.3d 224, 236 (3d Cir. 2008); Grayson v. Mayview State Hosp., 293 F.3d 103, 108 (3d Cir. 2002) (citing Shane v. Fauver, 213 F.3d 113, 116 (3d Cir. 2000)). Here, because the economic loss doctrine bars Sayles's UTPCPL claim, an amendment would be futile. Similarly, since the facts and circumstances of this case would not support recovery on the claim for breach of the duty of good faith and fair dealing or unjust enrichment claim, amendment of these claims also would be futile. Lastly, because the gist of the action doctrine bars Sayles's claims for intentional misrepresentation and "medical benefits," an amendment of these claims would likewise be futile. Therefore, these claims will be dismissed with prejudice. However, because it is unclear whether Sayles may be able to plausibly allege a claim for bad faith, the Court will grant her leave to amend to state a plausible claim in accordance with this opinion, if she is able to do so.
For the above stated reasons, Defendant Allstate's Motion to Dismiss (Doc. 10) will be granted in part and denied in part.
An appropriate order follows.