John Benscoter v. Nationwide Mutual Insurance Co

• Court: Court of Appeals for the Third Circuit
• Decided: November 29, 2024
• Docket: 24-1093
• Status: Unpublished

Opinion

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT ____________

No. 24-1093 ____________

JOHN R. BENSCOTER, individually and as representative of a class of similarly situated individuals, Appellant

v.

NATIONWIDE MUTUAL INSURANCE COMPANY ____________

On Appeal from the United States District Court for the Middle District of Pennsylvania (D.C. Civil No. 4-22-cv-01142) District Judge: Honorable Matthew W. Brann ____________

Submitted Pursuant to Third Circuit L.A.R. 34.1(a) October 2, 2024

Before: SHWARTZ, MATEY and FISHER, Circuit Judges.

(Filed: November 29, 2024) ____________

OPINION * ____________

FISHER, Circuit Judge.

This appeal arises out of an insurance coverage dispute between plaintiff John R.

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. Benscoter and his insurer, Nationwide Mutual Insurance Company. Nationwide covered

Benscoter’s medical treatment following an automobile accident but terminated his

benefits after it requested that he undergo a medical examination that determined he was

back to his pre-accident health. The day before the examination, the Supreme Court of

Pennsylvania held contractual policies providing for insurer-mandated medical

examinations to be void because they violate state public policy. 1 Benscoter later filed a

complaint containing five claims, only one of which is at issue on appeal: his breach of

contract claim. 2 The District Court dismissed this claim under Federal Rule of Civil

Procedure 12(b)(6), holding Benscoter failed to allege injury and causation. 3 Benscoter

appeals. We will affirm. 4

A complaint may be dismissed under Rule 12(b)(6) for “failure to state a claim

upon which relief can be granted.” 5 In considering a motion to dismiss, “we accept all

1 Sayles v. Allstate Ins. Co., 219 A.3d 1110, 1126–27 (Pa. 2019). 2 The District Court converted Nationwide’s initial motion to dismiss to a motion for summary judgment, see Fed. R. Civ. P. 12(d), and granted summary judgment on Benscoter’s other claims for damages and declaratory and injunctive relief under 75 Pa. Cons. Stat. § 1796 and for denial of insurance benefits in bad faith. Benscoter v. Nationwide Mut. Ins. Co., No. 22-00142, 2023 WL 5409937, at *3–12 (M.D. Pa. Aug. 22, 2023). 3 Benscoter v. Nationwide Mut. Ins. Co., No. 22-00142, 2024 WL 115984, at *2–3 (M.D. Pa. Jan. 10, 2024). 4 The District Court had jurisdiction under 28 U.S.C. § 1332. We have jurisdiction under 28 U.S.C. § 1291 (final decisions of district courts). We exercise de novo review of a district court’s grant of a motion to dismiss. Kalu v. Spaulding, 113 F.4th 311, 324–25 (3d Cir. 2024) (motion to dismiss). 5 Fed. R. Civ. P. 12(b)(6).

2 factual allegations as true, constru[ing] the complaint in the light most favorable to the

plaintiff.” 6 The “complaint must contain sufficient factual matter, accepted as true, to

‘state a claim to relief that is plausible on its face.’” 7

Under Pennsylvania law, “[t]he necessary material facts that must be alleged for [a

breach of contract] action are simple: there was a contract, the defendant breached it, and

plaintiffs suffered damages from the breach.” 8 Moreover, the plaintiff is entitled to

recover for damages pursuant to a breach of contract where they “show a causal

connection between the breach and the loss” 9 and the damages are the kind that

“naturally and ordinarily result from the breach, or . . . were reasonably for[e]seeable and

within the contemplation of the parties at the time they made the contract, and . . . can be

proved with reasonable certainty.” 10 It is undisputed that Benscoter was insured by

Nationwide through a valid insurance contract. However, the District Court held that

Benscoter failed to allege damages and causation. 11 Benscoter presents a myriad of

6 Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)). 7 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). 8 McShea v. City of Philadelphia, 995 A.2d 334, 340 (Pa. 2010). 9 Logan v. Mirror Printing Co. of Altoona, 600 A.2d 225, 226 (Pa. Super. Ct. 1991); see also Trans Penn Wax Corp. v. McCandless, 50 F.3d 217, 231 (3d Cir. 1995). 10 Vinculum, Inc. v. Goli Techs., LLC, 310 A.3d 231, 250 (Pa. 2024) (internal alterations omitted) (quoting Taylor v. Kaufhold, 84 A.2d 347, 351 (Pa. 1951)). 11 Benscoter, 2024 WL 115984, at *3.

3 arguments about why the District Court erred. 12

Under 75 Pa. Cons. Stat. § 1796(a), part of the Pennsylvania Motor Vehicle

Financial Responsibility Law (MVFRL), 13 an insurer seeking to compel a claimant for

first-party medical benefits to undergo a medical examination must (1) file a petition with

a court of competent jurisdiction and (2) show good cause for the examination. 14 Where

good cause is demonstrated, the court appoints a doctor, provides “adequate notice” to

the claimant, and sets the “manner, conditions and scope of the examination.” 15 Failure to

comply with the § 1796(a) procedure to compel an examination may lead to a breach of

contract.

Benscoter’s policy does not reflect Pennsylvania’s statutory scheme. Instead, it

provides that “[t]he insured will . . . if injured, submit to examinations by company-

selected physicians as often as the company reasonably requires.” 16 The policy entitles

Benscoter to medical benefits after eighteen months only where “it is determined with

reasonable medical probability that further expenses may be incurred as a result of the

[covered] injury.” 17 Accordingly, eighteen months after Benscoter’s accident, Nationwide

12 Benscoter challenges the District Court’s legal conclusions regarding causation made in the summary judgment order and motion to dismiss order on the same grounds. Because Benscoter’s arguments concern only questions of law and because Benscoter treats the orders in tandem, so too do we. 13 75 Pa. Cons. Stat. §§ 1701–99.7. 14 Id. § 1796(a). 15 Id. 16 JA337. 17 JA324.

4 requested an examination to determine whether he had recovered.

When Nationwide made this request, the Supreme Court of Pennsylvania had not

yet interpreted the contrast between the MVFRL and policy provisions requiring insurer-

run examinations. One day before Benscoter attended Nationwide’s requested

examination, the Pennsylvania Supreme Court held—in an answer to a certified question

from our Court—that provisions that require the insured to submit to medical

examinations requested by the insurer and conducted by a doctor selected by the insurer

are void as against public policy. 18 Instead, the Court held, the proper method for an

insurer to obtain an examination in Pennsylvania is outlined in § 1796(a). 19 The parties

do not dispute that Nationwide did not utilize that process.

First, Benscoter argues the District Court erred in holding he inadequately pled

causation. The physician who examined Benscoter found that his ongoing shoulder pain

was “due to calcific tendinitis” which was “not causally related to the reported motor

vehicle accident,” and that Benscoter had “returned to pre-accident status.” 20 After that,

Nationwide stopped paying benefits. Benscoter contends the examination is void;

therefore, Nationwide lacked grounds to discontinue benefits.

18 Sayles, 219 A.3d at 1112. 19 See id.; 75 Pa. Cons. Stat. § 1796(a). 20 JA 463–64.

5 Benscoter relies on Sayles to support his theory that the examination is void. 21 He

argues that Nationwide unlawfully compelled the exam, but “Sayles voided that paradigm

and held that medical benefits could only be denied if specific legal requirements clearly

set forth in [§] 1796 were met by the insurer.” 22 But Sayles does not prohibit insurers

from requesting or relying on medical examinations. Rather, Sayles clarifies that § 1796’s

purpose is to “balance[] the right of the insurer to obtain needed information for the

payment of first-party medical claims with the right of the insured not to be subject to

unwarranted intrusions on his or her privacy by being subject to repeated and

unnecessary medical examinations.” 23

Process aside, Benscoter alleged that he needed further treatment but failed to

allege facts that would plausibly support that assertion. Benscoter characterized the

results of the examination as “inaccurate and wrong” and “the product of bias and

interest.” 24 We do not assume the truth of “naked assertions” and “conclusory

statements” like these, which are “devoid of further factual enhancement.” 25 Benscoter

failed to establish the causal link needed for a cognizable breach of contract claim,

21 The parties disagree whether Benscoter attended the medical examination voluntarily or was unlawfully compelled to do so. We will not address this dispute, as it does not affect the merits of this appeal. 22 Appellant’s Br. 17. 23 219 A.3d at 1124. 24 JA508. 25 Santiago v. Warminster Twp., 629 F.3d 121, 131 (3d Cir. 2010) (quoting Iqbal, 556 U.S. at 678)).

6 despite three opportunities to do so. As this missing element is dispositive, we need not

address what kind of relief would be appropriate for such a breach.

Second, Benscoter argues the District Court erred in holding he lacked an

“unqualified” right to his medical benefits. However, “an insured must demonstrate that

the treatment was warranted by the circumstances.” 26 Requiring Benscoter to establish

his entitlement to benefits also does not wrongly shift the burden under § 1796(a). It is

true that the insurer has the burden to prove, in the § 1796 court proceeding, why a

medical examination is needed—but the insured need not prove why it is not. 27 This

burden differs from whether a claimant must show entitlement to further benefits to

establish damages when asserting a breach of contract claim. By asking Benscoter to

allege his right to benefits, the District Court simply required Benscoter to plead all

elements of his claim. The examination found Benscoter back to his pre-accident health,

and he failed to plausibly allege otherwise.

Third, Benscoter argues the District Court misapprehended the significance of

Thompson v. Workers’ Compensation Appeal Board (Exelon Corporation). 28 There,

Thompson’s workers’ benefits had been reduced from full to partial based on an

Impairment Rating Evaluation (IRE), 29 a physician evaluation of the claimant’s “degree

26 Tagliati v. Nationwide Ins. Co., 720 A.2d 1051, 1056 (Pa. Super. Ct. 1998). 27 Sayles, 219 A.3d at 1126 n.12. 28 168 A.3d 408 (Pa. Commw. Ct. 2017). 29 Thompson, 168 A.3d at 409–11.

7 of impairment” that an employer was permitted to demand. 30 But after Thompson’s IRE

took place, “the entire IRE process” had been “essentially struck” from the Workers’

Compensation Act. 31 Therefore, the Court held that Thompson’s benefits could not be

reduced from full to partial based on the IRE. 32

Benscoter argues that Thompson shows that his benefits may not change based on

an examination that did not comply with § 1796(a). But unlike in Thompson, Sayles did

not eliminate insurers’ ability to use medical examinations to determine benefits. Sayles

instead confirmed that § 1796(a) provides the required process for obtaining an

examination in Pennsylvania. 33 Thus, Benscoter’s examination is not void, nor is

Nationwide responsible for Benscoter’s unpaid medical bills.

Benscoter concludes by asking us to certify a question of state law to the

Pennsylvania Supreme Court: whether an insurer “may deny medical benefits to its

insured based upon the opinion and/or report of the expert who examined the insured

based on the void policy [medical examination] attendance requirement.” 34 We decline to

certify this or a similar question. In certifying a question of state law to the highest court

of a state, 35 we consider (1) whether the question’s resolution is unclear and controls an

30 Protz v. Workers’ Comp. Appeal Bd. (Derry Area Sch. Dist.), 161 A.3d 827, 830 (Pa. 2017). 31 Thompson, 168 A.3d at 412–13 (citing Protz, 161 A.3d 827). 32 Id. 33 See Sayles, 219 A.3d at 1126–27. 34 Appellant’s Br. 27–28; App. Dkt. 23. 35 3d Cir. L.A.R. Misc. 110.1.

8 issue in the case; (2) the importance of the question; and (3) judicial economy. 36

Pennsylvania courts stress the importance of uncertainty in the determination of whether

to accept a certified question. 37 Benscoter’s proposed question already has a clear answer

under Pennsylvania law, 38 the question will not determine the outcome of the case

because Benscoter failed to plausibly allege that the examination’s results were incorrect,

and certification will drain judicial resources by unnecessarily occupying two courts with

the same issue. 39 The circumstances of this appeal do not merit certification.

For the foregoing reasons, we will affirm.

36 United States v. Defreitas, 29 F.4th 135, 141–42 (3d Cir. 2022). 37 See 210 Pa. R. App. P. § 3341 (providing that the Pennsylvania Supreme Court accepts certification “only where there are special and important reasons therefor,” including questions of first impression and conflicting decisions). 38 See Borough of Longport v. Netflix, Inc., 94 F.4th 303, 307 n.17 (3d Cir. 2024) (denying certification where the answer to the proposed question was clear). 39 See Defreitas, 29 F.4th at 141 (“[A]n immaterial question should not be certified.”).