Beware Of The Insurance Company’s “Independent” Medical Examination

When a policy holder makes a claim for personal injuries with an insurance company, the insurer may have a right to order an "independent" medical examination. In our experience, these exams are often anything but "independent." Some insurance companies hire the same doctors over and over again to conduct examinations. Doctors are paid handsomely for providing this service. Are you surprised that most often the insurance company doctor offers opinions favorable to the insurance company? There is some truth to the old adage: "He who pays the fiddler calls the tune."

This insurance industry practice has given rise to a potentially dangerous defense in insurance bad faith cases. Let me explain.

Insurance companies must have a reasonable basis to deny payment of a claim. Insurance companies argue that they have a reasonable basis to deny a claim based upon the opinions of their "independent" medical examiner. In other words, if an insurance company medical expert says that the injured person's injuries are not related to the automobile accident, but instead to a preexisting condition, insurers may argue they have a reasonable basis to deny the claim.

Wisconsin law does not support this position.

Wisconsin case law recognizes that denying claims solely on the basis of a retained expert's opinion does not insulate an insurer from bad faith. For example, in Schlussler v. American Family Mut. Ins. Co., 157 Wis.2d 516, 460 N.W.2d 756 (Wis. App. 1990), the Court rejected the idea that an opinion from an insurance company doctor was sufficient to form the basis for denial of a claim.

In Schlussler, the Court explained: "Essentially, American Family argues that when it relies on a medical opinion, no matter how unreasonable, it is protected from any claim of bad faith. We do not agree." Id. at 528-529, 460 N.W.2d 756, 761.

In that case, the court articulated a two-part analysis to determine whether a jury could find bad faith even with a supportive defense expert opinion. First, the jury could find that the defense expert's opinion was patently unreasonable, because among other things, the expert did not take into account all relevant information, ignored important information, and/or failed to conduct testing.

The point is that Wisconsin courts have recognized that a biased expert opinion standing alone cannot as a matter of law extinguish a claim for bad faith. This is good news for Wisconsin policy holders.