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“No-Fault from Adverse Exam to Arbitration”

MTLA Magazine
March 1990

Article Author: Richard L. Tousignant


The insurance industry is requesting no-fault adverse examinations more frequently than ever before.  These exams are being requested from one to twelve months post accident.  The average seems to be six months post accident.

Chiropractic expenses in excess of $1,300.00 may trigger an adverse exam.  Others seem to schedule their adverse examinations six months post accident no matter what the expenses are to date.

A no-fault adverse examination can have some devastating effects on your client’s right to no-fault benefits and to your liability claim.  There are several things that can be done prior to the adverse exam to protect your client.


Section 65B.56 gives the insurer the right to have an adverse examination by a physician of its choice.  However, the statute also requires that the insurer schedule the exam in the insured’s city of residence.

IN the insurer schedules the adverse examination outside the city of your client’s residence, then you should refuse to allow your client to attend.  This portion of the statute can give you some minimal control over whom the insurance company is going to use to examine your client.  There are at least two district court decisions which support that adverse exams must e conducted in the city of residence.  In both of those district court opinions, the judge ordered that the insurer pay all outstanding medical bills incurred up to the date of the scheduling of the exam in the city of residence.  Be prepared prior to going before your judge or arbitrator to show that there are doctors in that city of residence who are willing to conduct the exam.  For example, in a smaller community such as Eden Prairie, you may want to contact several chiropractors in the Eden Prairie area and ask them if they would be willing to do an independent examination on behalf of the insurance company.  Obtain an affidavit from those doctors and present that to the judge or arbitrator to support your position. 

You should also notify the insurer of your refusal to attend the adverse in a timely fashion.  This avoids a late cancellation fee.  Refusing to attend the adverse will also buy your clients more time to receive their much-needed medical treatment.  Most insurance carriers will pay all medical bills up to the date of the adverse.

When an adverse examination is scheduled for your client, try to negotiate with the adjuster.  Since a permanency rating is not relevant in a no-fault examination, I will often negotiate with the adjuster for a guarantee that their doctor will not comment on permanency.  That way, the adverse exam will not be used against me during negotiation of the liability claim and generally will not be used during the trial.  If you are refusing the adverse because of the pace of the exam, you are in a good bargaining position to insist that if the question regarding permanency is not addressed, then you will allow your client to attend an examination outside the city of their residence.

Some insurance carriers will schedule an adverse examination without paying the outstanding medical expenses.  Insist that the insurance company pay all outstanding bills up to the date of the exam.  Advise them well in advance that you will be checking with the doctors prior to the exam and if the bills are not paid up to date you will not allow your client to attend.  Failure to pay breach of contract, the insurer has breached their portion of the contract, the insured no longer has an obligation to perform.  Therefore, if the insurance company refuses to pay the bills without your client attending the adverse exam, you can force them into an arbitration situation where they will not have an IME to present to the arbitrator.  File for arbitration immediately upon their refusal to pay, based on the bills being 30 days or more overdue.


Prior to your client attending the adverse medical examination, you should meet and instruct them thoroughly on what is expected of them and the purpose of the adverse exam.  The client should be instructed to be perfectly honest with the adverse examiner.  If the insured fails to tell the adverse examiner about a previous existing condition, or previous accident where there were no injuries, the defense will use that claiming treatment is for a pre-existing condition.  Even though this position will fail when presented to most arbitrators, it does give the defense something to talk about and they will argue that your client is not a credible witness.

You client should also keep track of the time spent with the adverse examiner.  This would include the time they entered the office, the time the history taking began, the time the doctor actually began the examination, and the time the exam ended.

They should conclude with the time they left the doctor’s office.  This information can be very valuable in the no-fault arbitration.  Some adverse medical examiners spend less than 5 minutes actually examining the insured.  IN a recent case, my client was with the doctor for less than two minutes and the adverse examiner did not even have him take his shirt off when he examined his back.  This was very persuasive when presented to the arbitrator. 

Your client should also keep track of any abusive behavior on the part of the adverse examiner.  This would include questions that are not relevant to the examination.  These questions would include information as to sleeping partners, and bedroom activity.  Any unusual questions should be documented so that the lawyer can use those should the need for cross-examination arise.

After the examination is completed, and you have received a report, that report should be forwarded to your client.  Ask your client to read the report thoroughly and mark any areas of disagreement or discrepancies in the history portion of the report.  This too can be used during the direct of your client in the arbitration.


Two of the major insurance carrier use “paper exams” to discontinued and/or limit benefits.  The paper exam is one in which the insured sends the medical records of the insured to a chiropractor – usually outside the State of Minnesota – for review and comment as to the reasonableness and necessity of future chiropractic care.

That is not a “physical examination” within the meaning of the Minn. Stat. § 65B.56.  During a paper examination only medical records are reviewed.  Therefore, there is no “physical exam” and termination or suspension of those benefits is unlawful.

When benefits have been suspended as a result of a paper exam you should file for arbitration immediately.  Michael Hatch, Commissioner of Insurance, has rendered an opinion as to the use of paper exams.  Mr. Hatch is of the opinion that the Minnesota No-Fault Act prohibits suspension of benefits based on paper examinations.  Commissioner Hatch states that any benefits which are terminated as a result of a paper exam must be paid by the insurer.  This should be pointed out to the arbitrator with supportive documentation as to Mr. Hatch’s ability to render such an opinion.

 Even without Michael Hatch’s opinion, most arbitrators are appalled by a paper exam.  The end result is that the vast majority of arbitrators will award in your favor when a paper exam is the only supportive documentation for the discontinuance of benefits. 

If the insurance carrier has discontinued benefits as a result of a paper exam, do not allow them to have a physical examination.  You should, at that point in time, negotiate with the insurance carrier advising them that you will allow an actual physical examination only if all benefits are paid up to the time of the requested physical examination.  Also, obtain an agreement from the insurer that the paper exam not be used in the arbitration process.


Prior to allowing your client to attend the adverse examination you should made some attempt to negotiate settlement.  Keep in mind that the adverse examination will have some effect on your future liability claim.  Prior to beginning your negotiations, review all medical records in your file and check the frequency of your client’s treatments.  You may also want to call the treating doctor and get their opinion as to the extent of future medical expenses.  You can then use those figures to begin your negotiations.  A favorable settlement to your client would not only include all outstanding medical bills, but should also include some consideration to compensate them for forfeiting their right to future claims against the no-fault carrier.  Settlement of this type should be limited to cases with soft tissue injuries and minimal care.

After the adverse exam, you are not in as good a position to negotiate a settlement.  Your client’s rights have already been affected and in most cases you are better off arbitrating the claim and letting a third party decide the issues.  By arbitration rather than settling your claim, whether you win or lose, you have the right to continue to arbitrate all future medical bills.  This can be very advantageous to your client and will also prompt the insurance carrier to make a reasonable settlement to obtain a release.


The adverse medical examiner’s report can be used to your benefit in arbitration and in your liability claim.  A copy of that report should be sent to the treating doctor with a request that they comment on the adverse examiner’s findings.  The treating doctor can then prepare a report for your arbitration that responds to the comments of the adverse examiner.

Make sure your client has a copy of the exam report and read it thoroughly.  One of the purposes of the adverse medical examination is to discourage insureds from continuing to treat for their injuries.  Once the insured has read the adverse exam, you should encourage them to continue with their medical care as long as they feel they need it.  Most clients are afraid to continue treating even though they need the medical care because they are fearful of incurring a great deal of medical expense.

It should be explained to them that the medical bills will be paid by either the no-fault carrier, or by the liability insurer should you lose at the no-fault arbitration.  Discontinuing all medical treatment will not only make your no-fault claim extremely weak, it will also serve to diminish your liability claim.


Claims of 5,000.00 or less can be filed with the American Arbitration Association.  Plaintiffs must pay a $50.00 filing fee.  The insurer must pay a $150.00 filing fee.  Arbitration through the AAA is mandatory in any case where the claim is less than $5,000.00 or, if the insurer fails to respond to a claim in writing within 30 days after the claims has been duly presented to the insurer.  When filing for arbitration, send the AAA a copy of the insurer’s letter of denial or a copy of your claim letter dated 30 days prior to your submission to AAA.  For claims in excess of 5,000.00, you must get the insurer’s permission to submit the claim to arbitration.  If they refuse to submit it to the arbitration, file a summons and complaint against the insurance company in the appropriate district court immediately.  When filing for arbitration, use the AAA’s Petition for Arbitration form.  They can be picked up at the AAA office or they will send you blank forms.

File for arbitration as soon as benefits are terminated.  There is very little to gain by waiting until the bills accumulate to file for arbitration.  At the present time, you will appear in front of your arbitrator approximately 290 days after filing.  In that 290 days, your medical bills will continue to multiply.  As long as you file for arbitration when the bills are under $5,000.00, arbitration, even if they exceed the $5,000.00 limit.

The AAA will send you a list of three potential arbitrators.  On that list, one will be predominantly a plaintiff’s attorney.  The other will be predominantly defense.  The third attorney will be what is considered a neutral.  It has been my experience that even this neutral will even sometimes do much more defense work than plaintiff work.  There are also many neutrals that do not practice in the area of personal injury law.  You must cross off the arbitrator which you do not wish to hear your claim and then number the other two in your order of preference.  In order to find out what area of the law the various arbitrators practice, you should contact the AAA.  They will read from the arbitrator’s application card what percentage of their practice is in plaintiff or defense work.  Even after you have checked with the AAA on your various arbitrators, you should ask other attorneys experienced in this field.  In doing so, you will not end up with an attorney who is sympathetic with the insurance industry.

Return that form to the AAA within 10 days and the AAA, once it has received the defense arbitrator picks, will send out the calendars.


Formal discovery is discouraged by the American Arbitration Association.  You should not respond to formal discovery requests such as interrogatories or depositions.  You should, however, cooperate in the voluntary exchange of information such as medical records, medical bills, and limited authorizations to obtain medical records.

In preparation for your arbitration, be sure that all medical bills are brought up to date.  You should not only be concerned with the outstanding balance but also be concern with total bills incurred.  Be sure that your file contains all medical records including those for previous injuries.

In requesting medical reports from treating doctors, be sure to obtain their opinion that the injuries which they’re treating are directly related to the automobile accident, reasonable and necessary.  You should also be sure that both you and your client’s doctors are fully aware of any prior conditions.  If those prior conditions are relevant, your doctor should comment on them in his or her report.

Prior to the arbitration, prepare your client for a short direct and cross.  The client should be advised that the elements necessary to winning the arbitration are that the treatment is related to the automobile accident, reasonable and necessary.  These three words can be sued by your client in responses to your questions to avoid the necessity for asking leading questions.  The client should also be prepared to talk about pre-existing conditions and how those conditions are different from those being treated at the present time.


There are numerous defense used by the insurance industry.  Of those, the most common is that the medical bills and treatment are not directly related to this accident.  Defense counsel will look for any prior problems no matter how remote and made the claim that these injuries pre-existed the accident and therefore the treatment is related to those injuries.

In responding to that, point out that the issue here is not whether some injuries pre-existed the accident, but whether the accident was a substantial contributing factor in bringing about the need for medical care.  This can usually be shown by the lack of any medical care prior to the accident and then substantial treatment post accident.

Another common defense is that there is no curative relief from the treatment received.  Again, that is not the issue in your no-fault arbitration.  The issue is whether the medical care rendered is reasonable and necessary to cure or relieve the symptoms from these injuries.  You can diminish this defense by having your client testify on direct how they feel before they receive the medical treatment as compared to how they feel after having the treatment.

Another common defense is that the insured is overtreating.  You can quash that defense with the testimony of your own client that the treatment helps relieve the symptoms even if that relief is temporary.


When getting ready for your arbitration, prepare your material well in advance.  All materials should be neatly bound for easy access of the arbitrator.  The statement of the case and related material should be sent to the arbitrator at least ten days prior to the date of your arbitration.  This will allow the arbitrator ample time to review your information.  It has also been my experience that the defense attorney rarely, if ever, gives their arbitration material to the arbitrator in advance of the hearing.  This, of course, puts the plaintiff at an advantage.

As in any tribunal setting, you must know your file.  Be prepared to respond to questions from the arbitrator regarding the issues surrounding your case.  You should also be well aware of the insurer’s defenses so that you can properly respond to those in your closing argument.

An arbitration is designed for the efficient resolution of claims.  Be short and to the point when presenting your case.  I usually waive opening statements since the arbitrator has had my statement of the case well in advance of the arbitration and has had plenty of time to read the issues.  Also, by waiving an opening statement you are preventing defense counsel from hearing the issues as you see them and are not giving then an opportunity to formulate defenses to your claims.

Do a short direct of your client.  Stick to the relevant information.  Remember, the issues here are whether the injuries and treatment are related to the automobile accident, reasonable and necessary.  If you have a high property damage claim, have your client describe the accident as well as the property damage.  If you have minimal claim, then you may just want to have him/her describe the basic facts of the accident, have the client prepared so that they respond to some of your questions indicating that the treatment is directly related to the accident, reasonable and necessary.  Since this is an informal setting, most arbitrators will let you ask leading questions as to reasonableness and necessity.  This can, however, be avoided with proper preparation of your client.


Probably the most important part of your arbitration will be your closing argument.  This is your opportunity to summarize all of the issues and facts for your arbitrator.  You can pull everything together by making a clear and concise statement of your position.  Your closing should be a short description of the accident facts including high property damage, if available, and your client’s body movement within the car, pointing out whether they struck anything inside the vehicle.

Next, give a short description of the treatment rendered and the opinions of the treating doctors.  Although permanency is not an issue in a no-fault arbitration, it may be helpful to point out your doctor’s opinions as to whether these injuries are permanent.  Also, be sure to point out that the treating doctors are relating the injuries and treatment directly to the automobile accident and that it is their opinion that the treatment has been both reasonable and necessary.  This is usually done on an individual doctor basis and end with your client’s feelings that the treatment is reasonable, necessary and related.

Comment on the adverse examiner’s report.  A surprisingly high number of times the insurer will not read their own doctor’s report.  There are times when their own doctors do not review all of the medical records and therefore do not have a clear picture of the injuries received in this particular accident.  I have also found times where the insurance company doctors have made recommendation as to future care and treatment and those recommendations have been ignored by the insurer.  It is important to point this out to the arbitrator and argue that it was their intent to discontinue benefits no matter what the adverse doctor found.

It is also important to consider whether you are arbitrating chiropractor or medical expenses.  If you are arbitrating chiropractic expense and the adverse examiner is a medical doctor, point out that at least in one case a worker’s compensation judge has ruled that a medical doctor is not qualified to render an opinion as to the need for chiropractic care.  You can also point out that it is extremely rare for a medical doctor to recommend or support a chiropractic professional since they are in competition for that business.

Be sure to include the applicable law in your closing argument.  This issues, as pointed out previously, are whether the accident was a substantially contributing factor in bringing about the harm or the need for the medical care.  The next issue is whether the treatment is reasonable and necessary to cure or relieve the discomfort which your client is experiencing from those injuries.  There is no need to show that the care will provide curative relief.  That is not an issue for the no-fault arbitration.  Remember, the burden of proof is on the plaintiff, but it is by a preponderance of the evidence.  A very slight standard, and in some cases if your arbitrator is inexperienced you may want to point that out.


You should end you closing by asking the arbitrator to award in your favor.  He/she is going to appreciate it if you spell out exactly what you are looking for.  Ask for all outstanding medical bills up to the date of arbitration.  They should be listed in the arbitrator book for easy access.  You should also ask for all mileage to and from the doctors from the date of discontinuance to the date of arbitration.  In addition, you are entitled to 15% interest for all bills incurred.  Point out to the arbitrator that this is not a punishment or a penalty to the insurer.  It is statutory and if they are going to award the bills, they must award the 15% interest.

In addition, you also have the right to be reimbursed for the costs incurred in bringing this matter to arbitration (Rule 17).  The first cost incurred is the $50.00 filing fee with the American Arbitration Association.  You should demand that reimbursement for your client.  In addition, you should ask for reimbursement to your client.  In addition, you should ask for cost in obtaining your medical reports.  Most doctors charge from $100.00 to $300.00 to write a narrative report outlining the reasonableness and necessity for the care and treatment rendered.  This is a cost which will be borne by the client.  Therefore, you should request that the arbitrator award that cost back to them.  I usually point out to the arbitrator that if only medical bills  are awarded and not the costs, the insureds loses even if they win their claim.  (Example, medical bills of $1,000.00 minus medical reports of $200.00 equals $800.00 to pay $1,000.00 of medical bills.)

Finally, the arbitrator has the right to require either side to pay his/her fee.  You should again point out to the arbitrator that the insurer should bear the expense of his fee and that is would be unjust to ask your client to pay the fee considering the money obtained is for medical bills already incurred.


Recent statistics from the American Arbitration Association show that the number of arbitrations have doubled over the last year.  I believe that they will continue to increase due to the insurance companies’ aggressiveness in trying to cut off benefits.

The same statistics also show that the plaintiffs prevail approximately 90% of the time.  Do not sell your client’s short.  If you have a claim which you feel is reasonable, then it should be arbitrated.

Remember, your client is asking for nothing more than he or she is entitled to under the insurance contract.  They paid a premium for the coverage and they have a right to have the insurer pay their bills.

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