Huntt v. State Farm Mutual Automobile Insurance

KARWACKI, Judge. Kimberly Ann Huntt, the appellant, was injured in an accident on February 2, 1985, while she was a passenger in an automobile insured under a policy of automobile liability ¹⁹¹ insurance issued in Maryland by the appellee, State Farm Mutual Automobile Insurance Company (State Farm). Section II of that policy contained provisions for the payment of personal injury protection (PIP) benefits, as required by Md.Code (1986 Repl. Vol.), Art. 48A, § 539(a).

Ms. Huntt was an “insured” as that term was defined in Section II of that policy. As a result of the injuries she sustained, Ms. Huntt incurred expenses for medical treatment. She requested that State Farm reimburse her for those medical expenses under the PIP provisions of its policy. In support of that request, she supplied State Farm with copies of her medical reports and bills.

State Farm reimbursed Ms. Huntt for her medical expenses until October 31, 1985, when it advised Ms. Huntt that it would not pay any further benefits unless she submitted to a medical examination by a physician selected by State Farm. State Farm’s request that Ms. Huntt submit to a medical examination was made pursuant to paragraph 4(b) of the policy section applicable to PIP benefits entitled “Reporting a Claim-Insured’s Duties.” That provision allowed State Farm to require that a person making a claim “be examined by physicians chosen and paid by [State Farm] as often as [it] reasonably may require.” Ms. Huntt continued to receive medical treatment after October 31, 1985 and to send State Farm her medical bills seeking reimbursement. She refused, however, to submit to a medical examination by a physician of State Farm’s choice. Because of Ms. Huntt’s refusal to be examined, State Farm continued to refuse her requests for reimbursement.

On May 6, 1986, Ms. Huntt filed a three-count complaint against State Farm in the Circuit Court for Baltimore City. She sought damages in Count I for breach of contract and in Count II for “tortious breach of duty of good faith and reasonable care.” In Count III she requested a declaratory judgment concerning State Farm’s obligations under the PIP provisions of its policy. State Farm moved to dismiss Ms. Huntt’s complaint pursuant to Rule 2-322 on the ground that it failed to state any ¹⁹² claims upon which relief could be granted. After a hearing, Judge Thomas Ward granted State Farm’s motion and entered judgment in its favor.

Ms. Huntt appeals from that judgment, contending: I. The Maryland PIP statute does not permit an insurer to require a beneficiary under the statute to submit to an examination by a physician chosen and paid by the insurer before the insurer’s obligation to pay benefits required by the statute accrues.

II

An action may be maintained in the Maryland courts against an insurer by an insured for tortious breach of duty of good faith and reasonable care in the handling of a claim against the insurer by the insured. The appellant’s argument that the PIP statute does not permit an insurer to require a beneficiary to submit to a physical examination is premised on the notion that such a requirement is somehow at odds with the “remedial purpose” of Maryland’s no-fault automobile insurance legislation. The Court of Appeals recently reiterated that “[t]he primary purpose of § 539 is ‘to assure financial compensation to victims of motor vehicle accidents without regard to the fault of a named insured or other persons entitled to PIP benefits.’” Tucker v. Fireman’s Fund Ins. Co., 308 Md. 69, 75 , 517 A.2d 730 (1986) (quoting Pennsylvania Nat’l Mut.

Cas. Ins. Co. v. Gartelman, 288 Md. 151, 154 , 416 A.2d 734 (1980)). In keeping with that “clear remedial purpose, [citation omitted], a liberal construction of the statute is required.” Tucker v. Fireman’s Fund Ins.

Co., supra, 308 Md. at 77 , 517 A.2d 730 . This does not mean, however, that we should construe the statute so as to preclude an insurance company from enforcing a policy provision that is not in conflict with any statutory provision. See DeJarnette v. Federal Kemper Ins. Co., 299 Md. 708, 725 , 475 A.2d 454 (1984).

The statutory language requiring construction in this case is found in Md.Code, supra, Art. 48A, § 544(a), which provides in part: “All payments of benefits prescribed ¹⁹³ under § 539 shall be made periodically as the claims therefor arise and within 30 days after satisfactory proof thereof is received by the insurer____” (Emphasis supplied). The appellant asserts that, by sending State Farm copies of her medical reports and bills, she satisfied the statutory requirement of “satisfactory proof” and that the State Farm policy provision imposing the additional condition of a physical examination is repugnant to that legislative standard and hence unenforceable. She attempts to distinguish between “reasonable medical proof,” a term used in § 539(a) and again in § 544(a)(2), and “satisfactory proof.” Section 539(a) permits an insurer providing loss of income benefits to require, as a condition of receiving such benefits, “that the injured person furnish the insurer reasonable medical proof of his injury causing loss of income.” Section 544(a)(2) permits an insurer to require “reasonable medical proof” when an injured person who received benefits under the coverage(s) described in § 539 seeks additional benefits after a lapse in the period of disability or in medical treatment. In the appellant’s view, these uses of “reasonable medical proof” as the standard of proof in certain particularized situations reflect a legislative intention that “reasonable medical proof” should be a higher standard than “satisfactory proof.” Whatever the distinction, if any, between “reasonable medical proof” and “satisfactory proof,” we do not think it has a bearing on the resolution of this appeal.

The only question we need to address is whether an insurer seeking “satisfactory proof” of a PIP claimant’s request for benefits may require the claimant to undergo a physical examination by a physician selected and paid by the insurer. Section 544(a) mandates that “payments of benefits prescribed under § 539 shall be made ... within 30 days after satisfactory proof thereof is received by the insurer—” The benefits prescribed under § 539 include: “payment of all reasonable expenses arising from the accident and incurred within three years from the date thereof for necessary medical, surgical, x-ray and dental services, ¹⁹⁴ including prosthetic devices, and necessary ambulance, hospital, professional nursing and funeral services____” (Emphasis supplied). While § 539 was enacted in order to assure prompt payment of PIP benefits without regard to fault, this does not mean that PIP coverage was intended to provide a PIP claimant with a blank check. Maryland’s no-fault statute, like those of other states, places a control on inflated or spurious claims by limiting the insurer’s obligation to payment of “reasonable” expenses for “necessary” services arising from the accident in question. 5 M. Minzer, et al., Damages in Tort Actions § 47.12[2][b] (1987).

In our view, it would be impossible in many cases for an insurer to determine whether a PIP claimant’s expenses were “reasonable” and for “necessary” services if the insurer could not require that the claimant be examined by a physician of its choice. Therefore, we hold that a policy provision permitting an insurer to require that a PIP claimant submit to a physical examination as a condition precedent to payment of benefits is consistent with the statutory mandate in § 544(a) that payment shall be made after the insurer receives “satisfactory proof” of the claim. The remedial purpose of the no-fault statute does not dictate that the State Farm policy provision be held unenforceable simply because that provision may cause some delay in the payment of PIP benefits.. When a policy provision is not in conflict with the statute, that provision will be enforced, the statute’s underlying purpose notwithstanding.

Thus, in DeJarnette v. Federal Kemper Ins. Co., supra, the Court of Appeals upheld a provision in an automobile liability policy excluding from PIP coverage persons injured while using a motorcycle. DeJarnette had been injured while riding a motorcycle as a passenger. He sought to recover PIP benefits under his father-in-law’s automobile liability