S054199, Opinion — Ivanov v. Farmers Ins. Co.

421
Argued and submitted June 19, 2007, decision of Court of Appeals reversed;
judgment of circuit court reversed; case remanded to circuit court for further
proceedings May 8, 2008
Kiril IVANOV,
Nicole Busse, Tricia Kerns,
Teresa Chun,
fka Teresa Roelfs,
and Michael Shawn-Chun,
fka Michael Shawn,
Petitioners on Review,
and
Richard TYLER
and Natalya Gladysh,
Plaintiffs,
u.
FARMERS INSURANCE COMPANY OF OREGON,
an Oregon corporation;
Farmers Group, Inc.,
a foreign corporation;
Farmers Insurance Exchange,
a foreign corporation;
Mid-Century Insurance Company,
a foreign corporation,
Truck Insurance Exchange,
a foreign corporation,
and any Farmers Company whose name will subsequently
be identified that should be made a Defendant in this case
in order that complete relief can be granted to
Plaintiffs and to the class,
Respondents on Review.
CCC 9910- 10826; CA A123043; SC S054199)
185 P3d 417

422 Ivanov v. Farmers Ins. Co.
CJS, Insurance § 1690.
En Banc
On review from the Court of Appeals.*
Appeal from Multnomah County Circuit Court, Jean Kerr Maurer, Judge.
207 Or App 305, 140 P3d 1 189 (2006).

Cite as 423
Phil Goldsmith, Law Office of Phil Goldsmith, Portland,
argued the cause for petitioners on review. With him on the
briefs were Thomas D'Amore, D'Amore & Associates, PC,
Gatti Gatti, Maier, Krueger, Sayer & Assoc. , and Nelson &
MacNeil.
James N. Westwood, Stoel Rives LLP, Portland, argued
the cause for respondent on review. With him on the briefs
were Robin Beck Skarstad, Michael D. Hoffman, and Mark
Elgin Olmstead.
Meagan A. Flynn, Portland, submitted a brief on behalf of
amicus curiae Oregon Trial Lawyers Association.
Richard S. Yugler and David N. Goulder, Landye Bennett
Blumstein LLP, Portland, submitted a brief on behalf of
amicus curiae Strawn.
DE MUNIZ, C. J.
The decision of the Court ofAppeals is reversed. The judg
ment of the circuit court is reversed. The case is remanded to
the circuit court for further proceedings.
Balmer, J., concurred in part and dissented in part and
filed an opinion, in which Kistler and Linder, JJ., j oined.

Ivanov v. Farmers Ins. Co.
DE MUNIZ, C. J.
This case involves Oregon's Personal Injury Protec
tion (PIP) statutes, ORS 742.518 to 742.540. Plaintiffs initi
ated this case by filing what they initially styled as a class
action against defendant insurance companies (Farmers),
seeking payment of PIP-related medical expenses that
Farmers had denied . Plaintiffs also sought a declaratory
judgment holding that "Farmers may not deny [PIP] benefits
to its insureds solely on the basis of generalized criteria not
specific to claimants' injuries," and that "Farmers may not
deny [PIP] benefits to (its] insureds * * * unless [the] deter
mination is based on a contemporaneous physical exam
ination [IME] of the insured by a physician selected by
Farmers." In response, Farmers filed a "Motion for Summary
.Judgment and Memorandum in Opposition to Plaintiffs'
Motion for Class Certification."1
In its summary j udgment motion, Farmers did not
address plaintiffs' claims that, in using generalized pre
planned criteria not specific to each claimant, Farmers' claim
review process breached its insurance contracts and violated
the PIP statutes. Instead, Farmers argued that: ( 1 ) under
ORS 7 42.524, insureds such as plaintiffs, whose PIP claims
had been timely denied, had the burden of proving that their
claims were medically necessary before their challenge to
Farmers' claims review process could proceed to a trier of
fact, and (2) plaintiffs had failed to produce sufficient medical
opinion evidence on that issue in response to Farmers' sum
mary judgment motion. In opposing summary judgment,
plaintiffs argued that Farmers' denials of their PIP claims
were based on generalized criteria that ( 1 ) were not specific
to the insured's injuries; (2) were not based on an IME ; and
( 3) in any event, involved bills for medical charges that were
presumed to be medically reasonable and necessary at the
time they were submitted, thus allowing the medical bills
themselves to provide the evidence needed for plaintiffs' case
to proceed to a determination on the merits.
The trial court subsequently granted Farmers' sum
mary judgment motion and disposed of all of plaintiffs'
1 The trial court resolved the case on Farmers' motion for summary judgment
and therefore did not decide plaintiffs' motion for class certification.

Cite as 344 Or 421 425
claims. The trial court concluded that, "[as] a matter of law
the PIP statutes do not require a contemporaneous medical
examination [IME] of the insured prior to the denial of any
claim" and that, in any dispute over the payment of a PIP
claim, "the insured bears the burden of [proving that their
medical expenses are medically reasonable and necessary] ."
On appeal, the Court ofAppeals affirmed, albeit on narrower
grounds. It held that, as a predicate to challenging Farmers'
claims review process, plaintiffs were required to prove that
their PIP expense claims were medically reasonable and nec
essary and that, in the absence of expert medical opinion,
plaintiffs had failed to produce "evidence from which a trier
offact could infer that the claimed expenses were necessarily
incurred[.]" Ivanov v. Farmers Ins. Co. , 207 Or App 305, 317,
140 P3d 1 189 (2006). We allowed plaintiffs' petition for
review and, for the reasons explained below, reverse the deci
sion of the Court of Appeals and the j udgment of the trial
court.
In reviewing a grant of summary judgment, we view
the facts from the summary judgment record and all reason
able inferences that we may draw from them in the light most
favorable to the nonmoving party-in this case, plaintiffs.
Oregon Steel Mills, Inc. v. Coopers & Lybrand, LLP, 336 Or
329, 332, 83 P3d 322 (2004). In accordance with that meth
odology, the record establishes that plaintiffs are Oregon res
idents who each purchased automobile insurance policies
from Farmers and were subsequently involved in automobile
accidents. Because of those accidents, plaintiffs each submit
ted claims for their respective medical expenses under the
PIP provisions of their policies and Farmers denied those
claims.
As a result ofthose claim denials, plaintiffs filed this
action against Farmers, alleging that the process underlying
Farmers' denial of their PIP-related medical claims consti
tuted breach of contract, fraud, breach of the implied cove
nant of good faith, tortious breach of the duty of good faith,
and intentional interference with contractual relations .2 Spe
cifically, plaintiffs alleged that Farmers had failed to inform
" In the course of considering Farmers' summary judgment motion, neither the
parties nor the trial j udge raised issues regarding the individual elements of the
various legal claims set out in plaintiffs' complaint. The parties have similarly
ignored those matters on review.

426 Ivanov v. Farmers Ins. Co.
its insureds that, as part of an undisclosed cost containment
policy, Farmers had made a business determination to
employ computerized billing or file review services as a way
to justify the denial of otherwise valid claims for PIP benefits.
According to plaintiffs' complaint, Farmers knew that the
review services it employed used automatic medical cost con
tainment software based on generalized, preplanned criteria
not specific to a claimant's particular injuries. Farmers' goal
in using such review services, plaintiffs asserted, was to
avoid full reimbursement of otherwise "reasonable and nec
essary" medical expenses.3 In addition to money damages,
plaintiffs' complaint also sought declaratory relief prohibit
ing Farmers from denying medical treatment claims based
on generalized criteria not specific to a claimant's injuries
and on determinations that specific treatments were not
medically necessary, unless those determinations were made
by an examining physician .
As previously noted, Farmers moved for summary
judgment on all of plaintiffs' legal claims, contending that the
overriding question presented by plaintiffs was a question of
law that could be resolved under ORS 742. 524( 1 )(a). In mov
ing for summary judgment, Farmers did not deny that it used
the software and protocols just described to decide whether to
pay plaintiffs' claims. Neither did Farmers attempt to estab
lish on the record that its claims review process met contrac
tual and statutory PIP requirements, either as to plaintiffs'
specific claims, or as to general claims for medical expenses
like those that plaintiffs made. Farmers argued, instead, that
plaintiffs were required to prove the medical reasonableness
' Throughout their action, plaintiffs have used the statutory terms "necessary"
and "reasonable" primarily to distinguish between two distinct classes of complain
ants: those to whom Farmers denied PIP benefits based on a determination that
the services they received were not medically necessary, and those denied PIP ben
efits based on a determination that the fees charged for those services were not
reasonable-allegedly because those fees exceeded Farmers' predetermined fee
schedules. Plaintiffs contended that the use of fee schedules was improper, and the
resulting "fee schedule" issue came to denominate a specific damages subclass
within plaintiffs' class action framework. Plaintiffs, however, abandoned those
particular claims on appeal. See Ivanov, 207 Or App at 309 n 2 (so stating). Never
theless, because plaintiffs' fee schedule claims class was, as a matter ofrecord, dis
tinct from the class of policyholders whose medical expenses were denied as medi
cally unnecessary, there is no basis from which to infer that plaintiffs'
abandonment of their fee schedule issue was meant to have any impact on the pri
mary issue now before this court.

Cite as 344 Or 42 1
and necessity of their individual claims. However, as we
explain below, plaintiffs' complaint challenged Farmers'
claims review process itself as failing to comply with contrac
tual and statutory PIP criteria, and the issues raised by the
complaint thus are logically akin to the issue of whether a
specific plaintiff's medical expenses should be covered.
A briefrecitation ofthe purposes and functions ofthe
PIP statutes provides a useful foundation for our analysis.
ORS 742.524(1 ) provides, in part:
"Personal injury protection benefits as required by ORS
742.520 shall consist of the following payments for the
injury or death of each person:
"(a) All reasonable and necessary expenses of medical,
hospital, dental, surgical, ambulance and prosthetic serv
ices incurred within one year after the date of the person's
injury, but not more than $ 15,000 in the aggregate for all
such expenses of the person. Expenses of medical, hospital,
dental, surgical, ambulance and prosthetic services shall be
presumed to be reasonable and necessary u nless the provider
[of those services] is given notice ofdenial ofthe charges not
more than 60 calendar days after the insurer receives from
the provider notice of the claim for the services. At any time
during the first 50 calendar days after the insurer receives
notice of claim, the provider shall, within 10 business days,
answer in writing questions from the insurer regarding the
claim. For purposes of determining when the 60-day period
provided by this paragraph has elapsed, counting of days
shall be suspended if the provider does not supply written
answers to the insurer within 10 days and shall not resume
until the answers are supplied."
(Emphasis added. )
I n Perez v. State Farm Mutual Ins. Co. , 289 Or 295,
300, 613 P2d 32 ( 1980), this court described the PIP statutes
as having been created "to provide, promptly and without
regard to fault, reimbursement for some out-of-pocket losses
resulting from motor vehicle accidents." Under that no-fault
format, every motor vehicle liability policy issued in Oregon
must provide "personal injury protection benefits" to the per
son insured under the policy. ORS 742.520. Claims for those
statutorily mandated benefits are presumed to be "reason
able and necessary" unless the insurer denies a claim within

Ivanov v. Farmers Ins. Co.
60 days of receiving it. ORS 742.524 ( l )(a). Among other
things, the benefits set out in the statutes cover "[a]ll reason
able and necessary expenses of medical, hospital, dental, sur
gical, ambulance and prosthetics services incurred within
one year after the date of the person's injury, but not more
than $15,000 in the aggregate for all such expenses of the
person." Id. The statute requires an insurer to "pay all per
sonal protection benefits promptly after proof ofloss has been
submitted to the insurer." ORS 742.520(4) (emphasis added).
The term "promptly" takes into consideration a 60-day period
following an insurer's receipt of the claimed expenses
during which time the insurer can deny the claim. ORS
742.524(1)(a). During the first 50 days of that period, an
insurer may tender written questions to the healthcare pro
vider regarding the claim and the provider must answer
within 10 business days of the tender. Should a provider fail
to respond within that time, the 60-day period is tolled until
the insurer receives an answer from the healthcare provider.
Id. To challenge a denied claim, the insured may submit to
binding arbitration under ORS 742. 520(6) and ORS 742.522
or, as plaintiffs did in this case, file a civil action against the
insurer.4 If the insured prevails, the insured can recover
attorney fees from the insurer. ORS 742.061.
To prevail on summary j udgment as the moving
party, Farmers had the burden of showing that there were no
genuine issues of material fact and that it was entitled to
judgment as a matter of law. Stanfield v. Laccoarce, 288 Or
659, 665, 607 P2d 177 ( 1980). As noted, according to Farmers,
plaintiffs cannot challenge Farmers' PIP claim processing
practices in this civil action unless plaintiffs can first dem
onstrate, in response to Farmers' summary judgment
motion, that their claimed medical expenses were necessary.
Specifically, Farmers asserts, as it did before the trial court
and the Court of Appeals, that plaintiffs' medical bills alone
are insufficient to establish the requisite proof of medical
necessity.
1 The potential existence of a tort cause of action against any person does not
relieve an insurer from its duty to pay P I P benefits under the statutes . ORS
742.520(5).

Cite as 344 Or 421 429
Farmers' argument in that regard, however, and its
framing of the issue to be decided on summary judgment, are
both premised on a faulty reading of ORS 7 42.524( 1 )(a). ORS
742.524( 1)(a) creates a presumption that PIP-related claims
for medical expenses submitted by a healthcare provider are
reasonable and necessary at the time that they are submitted
to an insurer. The effect of such a presumption is set forth in
ORS 40. 120, which provides:
"In civil actions and proceedings, a presumption
imposes on the party against whom it is directed the burden
of proving that the nonexistence of the presumed fact is
more probable than its existence."5
Consequently, we believe that it follows that the presump
tion established by the legislature in ORS 742.524(1)(a)
attaches to PIP claims at their inception and, once estab
lished, functions as any other civil presumption, i.e. , it shifts
the burden of proof to the party against whom it is directed
in this case, the insurer. That means that the legislature
intended that, under ORS 742.524( 1)( a), the presumption
would operate as follows: When a healthcare provider sub
mits a PIP claim for medical expenses on behalf of an
insured, the expenses are presumed to be reasonable and
necessary. An insurer may issue a timely denial of a claim to
a provider and, once it does so, the expenses are no longer
entitled to that presumption. However, it is not the validity of
Farmers' claim denials that plaintiffs seek to challenge in
this action. Instead, plaintiffs challenge the sufficiency of
Farmers' investigation of their claims before Farmers' issued
its denials, i.e. , they challenge Farmers' actions or lack
thereof at the time the claims were presumed medically
reasonable and necessary.
We note that, at one time, the legislature distinguished among conclusive
presumptions, rebuttable presumptions, and permissive inferences within
Oregon's statutes. That no longer is true. In State v. Rainey, 298 Or 459, 462 n 2,
693 P2d 635 ( 1985), this court explained that, because the legislature had since
omitted any reference to conclusive presumptions in the Oregon Evidence Code,
the only presumption remaining in this state's evidentiary rules is one that is dis
putable or rebuttable within the terms specified in ORS 40 .120. See also State v.
Dahl, 336 Or 481, 487, 87 P3d 650 (2004) (concluding that, when legislature
referred to a "rebuttable presumption" within the statutes at issue in that case, it
intended to refer to the procedural device described in ORS 40.120).

Ivanov v. Farmers Ins. Co.
In Best v. U. S. National Bank, 303 Or 557, 561, 739
P2d 554 ( 1987), the court restated the long standing rule in
Oregon "that there is an obligation of good faith in the per
formance and enforcement of every contract." That obligation
of good faith performance and enforcement applies equally to
the contractual relationship that exists between Farmers
and its insureds seeking their contractual and statutory PIP
benefits. In determining the manner in which the common
law obligation of good faith imposed on Farmers applies here,
we note that the legislature has prohibited insurers from
denying payment of claims without conducting a "reasonable
investigation" of those claims. In that regard, ORS 746.230(1)
provides, in part:
"No insurer or other person shall commit or perform any
of the following unfair claim settlement practices:
"* * * * *
"(d) Refusing to pay claims without conducting a rea-
sonable investigation based on all available information [.J"
(Emphasis added.) Under that statute, an insurer is obli
gated to conduct a "reasonable investigation" sufficient to
support a decision to deny a medical expense claim that is
statutorily "presumed to be reasonable and necessary." Obe
dience to that prohibition is a component of Farmers' good
faith obligation in this context.
Contrary to the determinations below that plaintiffs
had the initial burden of establishing medical necessity, the
nature of plaintiffs' claims instead required Farmers to
establish that the denials it had issued were based on reason
able investigations before Farmers could prevail on its sum
mary judgment motion. As the moving party, Farmers had
the burden of showing "that there is no genuine issue as to
any material fact and that the moving party is entitled to
prevail as a matter of law." ORCP 47 C. At the time that
Farmers was processing the medical claims at issue here,
those claims were presumed to be medically necessary; as a
result of that presumption, plaintiffs were not responsible for
establishing medical necessity at that point in time. Conse
quently, because the gravamen of plaintiffs' complaint was
that Farmers' review methodology was an impermissible

Cite as 344 Or 421 431
one, Farmers needed to establish that the procedures it
employed to deny plaintiffs' claims satisfied its statutory and
common-law duties and did not violate the prohibition set out
in ORS 746. 230( l)(d). In seeking summary judgment, how
ever, Farmers presented nothing to support the validity of its
claims review process in general, nor any evidence in partic
ular establishing that the process included a reasonable
investigation of the submitted claims in this case. Because
the resulting evidentiary record failed to establish that
Farmers' claim denials were supported by reasonable inves
tigations, plaintiffs did not have to produce evidence of med
ical necessity (beyond the still-valid presumption regarding
their medical bills) in order to defeat Farmers' summary
judgment motion.6
We do not intend our disposition of the parties' sum
mary judgment arguments to resolve the question of whether
Farmers' claim denials are legally sustainable with respect to
the named plaintiffs in this case; that is an issue which has
yet to be decided at trial. As already noted, the trial court
ruled, as a matter oflaw, that the PIP statutes do not require
an IME to be an integral part of each and every investigation
of each and every claim for which payment is denied. We
agree with that statutory interpretation-as far as it goes
but note that the basis for the trial court's holding was, in
part, the now-rej ected notion that the presumption set out in
ORS 742.524(1 ) exists only if an insurer does not deny a PIP
claim within 60 days. We have corrected that error here and
this case must be returned to the circuit court for further pro
ceedings. As to those proceedings, we note only that,
although it is clear that the statutes do not expressly require
an IME in every instance, an IME may nevertheless be
required as part of a reasonable investigation, depending on
the facts of an individual claim.
We conclude that at the time an insurer decides to
accept or deny a PIP claim-the time period at issue in this
6 Plaintiffs did not file a cross-motion for summary judgment and have not con
tended at any stage of the proceedings that they were entitled to anything more
than the right to have their claims decided by a trier of fact.

432 Ivanov v. Farmers Ins. Co.
action-those expenses are presumed to be medically reason
able and necessary. Because the record on summary judg
ment did not raise any factual question concerning validity of
Farmers' claim review process-much less establish the
validity of that process as a matter of law-Farmers was not
entitled to prevail on its summary judgment motion. Both the
trial court and Court of Appeals erred in granting judgment
in Farmers' favor.
The decision of the Court of Appeals is reversed. The
judgment of the circuit court is reversed. The case is
remanded to the circuit court for further proceedings.
BALMER, J., concurring in part and dissenting in
part.
I
I agree with the majority that the C ourt of Appeals
erred in holding that plaintiffs could not challenge Farmers'
claims review process without producing evidence, in addi
tion to their medical bills, "from which a trier of fact could
infer that the claimed expenses were necessarily incurred
* * *." Ivanov v. Farmers Ins. Co. , 207 Or App 305, 3 17 , 140
P3d 1 189 (2006). Like the maj ority, I understand plaintiffs'
legal challenge to be focused on the claims review process
itself, rather than on whether a particular expense was prop
erly denied. In those circumstances, the statutory question
upon which the Court of Appeals decision turned-whether
plaintiffs could rely upon the presumption in ORS
742.524( 1)(a) with respect to "reasonable and necessary"
medical expenses-was simply not relevant.
However, in my view, the majority misconstrues the
issues that were raised and litigated in the trial court and
therefore errs in reversing the trial court's entry of summary
j udgment for Farmers. 1 The trial court accurately summa
rized the complaint:
1 As I discuss in greater detail below, the trial court issued two letter opinions,
one with respect to the "IME issue" and one with respect to the "fee schedule" issue.
Before the Court of Appeals, plaintiffs expressly abandoned the fee schedule issue,
Ivanov, 207 Or App at 309 n 2, so this case concerns only the trial co urt's decision
regarding the IME issue.

Cite as 344 Or 421 433
"[Plaintiffs] contend that any denial of benefits without the
support of a contemporaneous physical examination of the
insured constitutes breach of contract, contractual and tor
tious breach of the duty of good faith and fair dealing, inten
tional interference with contractual relations, and fraud."
(Emphasis added.) That was plaintiffs' claim, and Farmers
moved for summary judgment on the ground, among others,
that no statute or contractual provision required such exam
ination. As I describe below, the trial court properly granted
Farmers' motion for summary judgment, and I respectfully
dissent from the majority's decision to the contrary. I would
affirm the trial court's judgment, but I would do so for the
reasons articulated by the trial court, rather than those given
by the Court of Appeals.
I should note at the outset that the majority has
done yeoman work in seeking to make sense of the shifting
positions of the parties in the trial court and on appeal. This
case illustrates the not infrequent circumstance in which a
class action is filed, often as one of a series of similar cases
around the country, challenging a particular practice of a
large insurer or other corporation. (Indeed, plaintiffs here
cite numerous pending cases in other jurisdictions making
almost identical claims against these and similar defen
dants.) The plaintiff is faced with the challenge of drafting a
complaint that alleges sufficient facts about the defendant's
conduct to demonstrate violation of a statutory or contractual
obligation and avoid summary judgment; at the same time,
the allegations must be sufficiently generic and common to
the potential class members to permit the plaintiff to obtain
class certification. For its part, the defendant looks for a clean
issue on which it may prevail on summary judgment, even if
that means highlighting some allegations in the complaint
and ignoring others. In response, the plaintiffs counsel faces
the dilemma of trying to defeat summary judgment as to the
named plaintiff by pointing to disputed issues of material
fact, while not asserting facts with respect to the named
plaintiff that may also be used by the defendant to defeat
class certification. The busy trial judge, now examining the
fifth version of a lengthy complaint and a case file that now
covers six volumes, with the actual trial nowhere in sight,
tries to focus the parties' attention on the specific legal issues.

Ivanov v. Farmers Ins. Co.
Then, on appeal, and again on review in this court, the par
ties have time to reconsider and perhaps regret concessions
or positions that they took at earlier stages in the litigation.
All of this is part of the civil litigation process and
nothing in this record suggests that any party was not acting
in good faith, but we need to take care not to let the parties
shift the primary issues in a case once those issues are liti
gated and decided in the trial court. Considerations of effi
ciency and finality require us to be circumspect in allowing
parties to recast their case on appeal. In my view, the maj or
ity errs in deciding this case on a legal issue that is different
from the issue that the parties presented as the controlling
legal question on summary j udgment and that the trial court
correctly decided.
II
The majority, focusing on the issue decided by the
C ourt of Appeals and on plaintiffs' petition for review, asserts
that Farmers' argument on summary j udgment was that
"plaintiffs were required to prove the medical reasonableness
and necessity of their individual claims." 344 Or at 426-27 .
The Court o f Appeals had agreed with that proposition and
had concluded that because the claims had been denied,
plaintiffs could not rely on the "presumption" in ORS
742.524( 1)(a) that a submitted medical expense is "reason
able and necessary" if the insurer does not deny it within 60
days. 207 Or App at 3 10. In the Court of Appeals' view,
because plaintiffs could not rely on that presumption and
because they failed to submit other evidence to establish that
the claims were reasonable and necessary, Farmers was enti
tled to summary j udgment. Id. at 3 14- 17.
I agree with the majority that the Court of Appeals
erred because, as the maj ority states, "the gravamen of plain
tiffs' complaint was that Farmers' review methodology was
an impermissible one * * * ." 344 Or at 430-3 1 . In other words,
contrary to the Court of Appeals' analysis, plaintiffs retained
the benefit (if any) from the statutory presumption because
they did not challenge any specific claim denial, but rather
the review process that led to the denials.

Cite as 344 Or 421
My disagreement with the maj ority is based on my
understanding of the issues litigated in the trial court. As
noted, the majority frames the issue as whether Farmers was
correct in arguing that "plaintiffs were required to prove the
medical reasonableness and necessity of their individual
claims." Although that may have been one of Farmers' argu
ments, the primary legal issue that the parties disputed and
that the trial court decided on summary j udgment was, as
plaintiffs themselves put it ( and as the trial court repeated in
its opinion), "whether Farmers was required to have support
from a medical examination conducted by a qualified profes
sional before it could reject a claim." That was the issue that
the parties litigated and that was the issue on which the trial
court based its decision to grant summary judgment. The
maj ority errs, first, in allowing plaintiffs to raise a new and
different argument on appeal, and second, in reversing sum
mary j udgment on that basis.
III
In their fourth amended complaint, plaintiffs made
various allegations that Farmers had a policy of paying less
than 100 percent of "reasonable and necessary" PIP medical
expenses, in violation of its statutory and contractual obliga
tions. Plaintiffs alleged that this policy was implemented by
means of cost containment programs, including treatment
protocols, computer programs, bill or file review services, and
fee schedules that arbitrarily determined that certain serv
ices were not "necessary'' and that also arbitrarily estab
lished payment amounts for particular services that were not
"reasonable." Although plaintiffs asserted various claims for
relief, including breach of contract, fraud, and so on, all their
claims were based on Farmers' claims review procedures, as
described above. Paragraph 19 is illustrative of plaintiffs'
theory:
"* * * Farmers devised and continued a wrongful scheme
which enabled Farmers to avoid the payment of legitimate
costs for reasonable and necessary accident-related health
care, to the damage of Plaintiffs and class members. Under
this scheme Farmers made determinations that medical
treatments were not necessary without having a contempo
raneous physical examination of the insured conducted by a

436 Ivanov v. Farmers Ins. Co.
physician selected by Farmers. In addition, Farmers deter
mined that the fees charged for medical treatments were
not reasonable based on its fee schedules. * * *"
(Emphases added.)
As I understand the summary judgment record, both
parties and the trial court viewed those two issues-the "IME
issue" and the "fee schedule" issue-as dispositive ofthe case.
I focus on the IME issue, because, as noted earlier, plaintiffs
now have abandoned the fee schedule issue. In their class
certification motion, plaintiffs stated that the "overriding
question" on class certification (with respect to the IME class)
was whether Farmers was "required to have support from a
medical examination conducted by a qualified physician
before it could reject a claim." In its summary j udgment
motion, Farmers argued-correctly, it seems to me-that
plaintiffs' theory of the case had evolved to that point through
the filing of several amended complaints, apparently in an
effort to identify a common question in order to prevail on
their class certification motion.
Farmers' motion for summary judgment argued,
among other things, that nothing in the PIP or insurance
statutes or in the insurance contract required them to con
duct an IME before denying every claim or provided that any
denial without an IME was necessarily "arbitrary."2 Plain
tiffs, in their opposition to the summary judgment motion,
also treated that issue as dispositive. Plaintiffs argued that
an IME was the only permissible basis upon which Farmers
could legitimately deny a medical expense claim. As to the
presumption that a submitted medical expense is "reason
able and necessary'' if not denied within 60 days, ORS
742.524, plaintiffs stated: "[T] o validly rebut this prima facie
case, an insurer must have evidence based on a comparable
2 The majority thus incorrectly describes Farmers' summary judgment motion
as based solely on the argument that plaintiffs had the burden of proving that their
claims were medically necessary and that plaintiffs had failed to submit medical
evidence to support those claims. 344 Or at 424-25. In fact, Farmers clearly
asserted in briefing and oral argument that one reason that it should prevail on
summary judgment was that plaintiffs' claims turned on whether Oregon law
required an IME prior to every denial. Farmers continued to assert that argument
before the Court of Appeals; moreover, Farmers also correctly asserted that plain
tiffs, on appeal, were advancing arguments in opposition to summary judgment
that plaintiffs had not made in the trial court.

Cite as 344 Or 421
professional's physical examination of the insured." Plain
tiffs' Opposition at 5. Plaintiff later asserted, "During the 60
day [review] period, an insurer may contest a covered medi
cal bill as unreasonable or unnecessary as long as that
insurer has conducted an !ME." Id. at 7 (emphasis added).
Plaintiffs made precisely the same argument with respect to
their claim that Farmers' practices were inconsistent with
the terms of the insurance policy: the policy "obligates them
to accept bills submitted by a claimant's medical profession
als as reasonable and necessary absent an IME." Id. at 9.
The oral argument on the summary judgment
motion shed less rather than more light on the topic. Plain
tiffs' counsel, at some points, seemed to suggest that he
viewed all of Farmers' procedures for reviewing claims as
"arbitrary" and that because, on summary j udgment,
Farmers had failed to demonstrate that they were not arbi
trary, "it follows necessarily that the only way-the only non
arbitrary way that they could deny claims on the basis of
necessity is by using an IME." Transcript at 224. (That view,
however, is inconsistent with the fourth amended complaint,
which clearly alleges, as quoted above, that any denial with
out an IME is invalid, not that every basis defendant has
used for a denial is arbitrary and therefore only an IME will
suffice.) At other points during the summary judgment argu
ment, however, plaintiffs' counsel clearly rested his case on
his theory that the statute and the policy affirmatively
required an IME before any claim could be denied. Farmers'
counsel told the trial court that the issue of whether an IME
was required by statute was not a question of fact for the j ury,
but rather an issue oflaw. The court asked plaintiffs' counsel
whether he agreed with that, and he said that he did. Tran
script at 179-80. And, when the trial court summarized plain
tiffs' statutory argument as asking the court "to draw the
final conclusion that [a denial of a claim as unreasonable or
unnecessary] is arbitrary when a denial is made without an
!ME [,] " plaintiffs' counsel agreed. Transcript at 189 (empha
sis added). Moreover, plaintiffs' counsel acknowledged that it
would be problematic to base plaintiffs' case on the general
allegation that all of Farmers' denials that were based on pro
grams or procedures other than an IME were "arbitrary."
" [W] e called it [the concept that Farmers denied claims on a
variety of grounds that plaintiffs believed were improper]

Ivanov v. Farmers Ins. Co.
fee schedules and it turns out that this is a word that I
meant I will admit I made the word up and apparently [it?]
meant nothing to anybody else other than me. We could
have said we wanted to have a class based on people who
had their claims denied on arbitrary means. And you can
imagine I mean I guess I wouldn't have said that because I
would imagine that you would find that objectionable. I
mean[,] what is an arbitrary means?
"I mean what we did basically was rather than using a
term, an unspecific term that could include or not include a
variety of things, we said this is only things that work, and
we have-what I'm going to show you is that we have evi
dence that everything else is or at least for summary judg
ment there are genuine issues of material facts suggesting
that everything else [other than an IME] is arbitrary."
Transcript at 221-22.
The trial court also understood that the legal dispute
between the parties on the IME issue was whether Oregon
statutes or the insurance policy required Farmers to conduct
an IME before denying any PIP expense. In the trial court's
letter opinion, the trial court stated plaintiffs' position as that
"defendants must refute the proof which plaintiffs have
offered by obtaining the opinion of a physician who physically
examined plaintiff prior to the denial." The trial court
addressed and rejected that argument: "As a matter of law
the PIP statutes do not require a contemporaneous medical
examination of the insured prior to a denial of any claim,
whether it is for the necessity of the medical treatment or the
reasonableness of the bills." The trial court therefore granted
Farmers' motion for summary j udgment.
Plaintiffs then filed a document that they styled as
an "Opposition to Entry of Judgment," objecting to the form
of judgment that Farmers had prepared. Again, plaintiffs
made it absolutely clear that they viewed the two "theories"
for class certification and summary judgment as follows:
"( 1) that PIP claims could not be denied as unnecessary
without a contemporaneous physical examination con
ducted on behalf of defendants and (2) that such claims
could not be denied as unreasonable based on Farmers' fee
schedules."

Cite as
Plaintiffs acknowledged that the trial court had resolved the
IME issue against them, but stated that the trial court's opin
ion "le [ft] unaddressed the 'fee schedule' claim." For that rea
son, plaintiffs argued that the trial court's order had not dis
posed of all the claims in the complaint. In their obj ection to
the judgment, however, plaintiffs never argued to the trial
court that its understanding of their position on the IME
issue was flawed.
In response, the trial court issued a second letter
opinion addressing the "fee schedule" issue. The trial court
noted that,
"Because the plaintiffs had identified the IME-only as the
issue before the court, the Opinion focused on that theory.
However, this court did intend, in its conclusions [at the
end of the earlier opinion] to address the 'fee schedule' class
to the extent that it was not tied to the IME theory."
The court acknowledged that further clarification was appro
priate and went on to conclude that, as to the fee schedule
issue, because plaintiffs had failed to present evidence to
establish the reasonableness and necessity of the expenses,
beyond the bills themselves, Farmers was entitled to sum
mary j udgment.
On appeal, plaintiffs continued to characterize their
complaint as based on the theory that the PIP statutes and
the insurance policy barred Farmers from denying a medical
expense as "unnecessary" unless Farmers had conducted an
IME. In their opening brief in the Court of Appeals, plaintiffs
described the case this way:
"Plaintiffs alleged that Farmers devised a scheme to
avoid paying PIP benefits for reasonable and necessary
accident-related health care. * * * One element of that
scheme involved Farmers determining that medical
expenses were not necessary without having a contempo
raneous examination of the insured conducted by a physi
cian it selected ('the IME issue'). * * * Another part of the
scheme involved Farmers determining based on its fee
schedules that fees charged for medical treatments were
not reasonable ('the fee schedule issue'). * * *"
Appellants' Opening Brief at 1-2 (citations to complaint omit
ted). At that point plaintiffs included a footnote: "Plaintiffs

440 Ivanov v. Farmers Ins. Co.
expressly abandon the fee schedule issue and will not discuss
it on appeal."
It is true that, at certain points in their brief, plain
tiffs combine their assertion that an IME always is required
before a claim can be denied with the slightly different asser
tion that "all other methods * * * used for such denials violate
the settled prohibition against a PIP insurer acting arbitrar
ily" (emphasis added) . What plaintiffs apparently fail to rec
ognize, however, is that the argument that "all other meth
ods" leading to a claim denial are arbitrary and therefore
improper is simply the other side of the coin of the argument
that the PIP statutes and the policy require an IME for a
valid denial. To the extent that plaintiffs alleged-as they
did-that as a matter of statute and contract, the "methods"
Farmers used to deny claims were invalid and the only valid
basis for a denial was an IME, their IME claim was vulner
able to Farmers' legal argument that the statutes and con
tract do not require an IME . I discuss below whether that
argument is correct or not, but the point here is that Farmers'
summary judgment motion was dispositive of plaintiffs' IME
claims (although not necessarily of their fee schedule
claims).3
The Court of Appeals viewed the proceedings in the
trial court the same way I do:
"Plaintiffs' underlying theory of recovery for each claim was
that, either by statute or based on their insurance policies,
defendants were precluded from using arbitrary methods to
review the reasonableness and necessity of claimed medical
expenses, that the only nonarbitrary method of review was
to conduct an independent medical examination (!ME), that
3 Another interpretation of plaintiffs' position that is consistent with the rec
ord is that plaintiffs' "fee schedule" claim subsumes their claim that "all other
methods" upon which denials of claims were based (other than IMEs) were "arbi
trary." That certainly is the gist of the statement of plaintiffs' counsel, quoted pre
viously, that he "made up" the term "fee schedule" to cover Farmers' different pro
cedures for reviewing expenses because he thought that the court would object to
the general claim that those procedures were "arbitrary." Transcript at 221-22. So
read, plaintiffs' two claims were: ( 1) IMEs always are required before a claim can
be denied; and (2) all other methods for denying claims (generally referred to as fee
schedules) are arbitrary and inconsistent with Farmers' statutory and contractual
obligations. Plaintiffs lost on both claims in the trial court and appealed only the
IME issue.

Cite as 344 Or 421 (2008) 441
defendants failed to conduct IMEs in reviewing plaintiffs'
claims, and that, therefore , defendants' denials of PIP ben
efits were wrongful.
"Defendants moved for summary judgment on all of
plaintiffs' claims, arguing that plaintiffs had the burden of
proving that the medical expenses they claimed were
reasonable and necessary and that plaintiffs had failed to
produce any evidence on those issues. Defendants further
argued that, as a matter of law, neither the PIP statutes nor
the insurance policies required defendants to conduct an
!ME before denying a claim, and therefore, there was no cog
nizable basis for any of plaintiffs' claims. The trial court
agreed with both of defendants' arguments * * *."
207 Or App at 308-09 (footnotes omitted; emphases added).
In my view, the question that this court should
decide is the same question presented to the trial court
(which decided it) and to the Court of Appeals (which did not,
because it based its decision on a different ground): do the
PIP statutes or the applicable insurance policy provisions
require the insurer always to conduct an IME before denying
a claim?
IV
The short answer to that question-the only one
that, in my view, plaintiffs legitimately are entitled to have
answered on appeal-is that the statutes do not make an
IME a prerequisite for every valid denial of a PIP medical
expense claim. The maj ority agrees with that interpretation
of the statute. 344 Or at 43 1. ORS 742.520(4) provides:
"An insurer shall pay all personal injury protection ben
efits promptly after proof of loss has been submitted to the
insurer."
Additionally, ORS 742.524( 1)(a) provides that PIP benefits
are to include all "necessary and reasonable expenses of med
ical, hospital [and similar] services * * *." As the majority cor
rectly points out, those expenses "shall be presumed to be
reasonable and necessary unless the provider is given notice
of denial of the charges not more than 60 calendar days" after
receiving notice of the claim from the provider. Id. The stat
utes provide a process for the insurer to ask questions of the

442 Ivanov v. Farmers Ins. Co.
provider with respect to a claim (and receive responses),
before being subjected to the "reasonable and necessary" pre
sumption. Id. Moreover, other insurance statutes applicable
to Farmers make it an unfair claim settlement practice for an
insurer to refuse to pay a claim "without conducting a reason
able investigation based on all available information [.] " ORS
746.230( 1 )(d).
The statutes quoted above require an insurer to pay
valid claims for personal injury protection benefits promptly
after submission. They encourage prompt processing by
establishing a presumption that a claim is reasonable and
necessary if the insurer does not deny the claim within 60
days, and they penalize an insurer that fails to resolve claims
promptly by requiring it to pay the insured's attorney fees.
ORS 742.061. Nothing in the PIP statutes even suggests that
an IME always is required before a claim can be denied. The
prohibition on unfair claim settlement practices further
undercuts plaintiffs' argument, because it specifically says
what an insurer is required to do before refusing to pay a
claim. And what an insurer is required to do is to "conduct[ ]
a reasonable investigation based on all available informa
tion[.)" It may be the case that the reasonable investigation of
a particular claim will require an IME, but that is a far cry
from the requirement that plaintiffs purport to find-or,
more accurately, ask this court to find-in the statutes.
Plaintiffs also argue that the applicable insurance
policy requires an IME before a PIP claim can be denied.
That argument also is without merit. The policy simply
echoes the statutory requirements. The policy covers PIP
benefits and defines those benefits as "the benefits required
by Sections 742.520 and 742.524 O.R.S." The policy covers
medical expenses, which are "all reasonable and necessary
expenses * * *." What this court said about the PIP policy in
Perez v. State Farm Mutual Ins. Co. , 289 Or 295, 299, 6 13 P2d
32 ( 1980), is equally applicable here:
"Although the arrangement of the policy provisions varies
slightly from that of the statute, the dis positive language is
virtually identical. We find no indication of an intention to
provide broader coverage than the statute requires."

Cite as 344 Or 421 443
The only specific policy provision that plaintiffs iden
tify as a basis for their claim that IMEs are mandatory is the
requirement that " [t]he injured person shall submit to phys
ical examination by physicians at our expense selected by us
when and as often as we may reasonably require." But that
provision simply gives Farmers a contractual right to require
a claimant to appear for an IME. It does not require Farmers
to conduct an IME before denying a claim.
Because neither the statutes nor the insurance pol
icy require an IME before every denial of a PIP claim, the
trial court did not err in granting Farmers' motion for sum
mary judgment on that ground.
v
The majority concludes that the trial court erred in
granting summary j udgment and remands the case to the
trial court. The issues on remand will include whether, in
using the different protocols, bill review processes, computer
programs, or other grounds upon which Farmers denied PIP
claims, Farmers violated its obligation under ORS
746.230( 1)(d) not to deny claims except upon reasonable
investigation. It certainly is possible that some plaintiffs can
demonstrate that the specific method by which Farmers
reviewed their claims failed to give them the reasonable
investigation to which they were entitled and resulted in an
improper denial of a claim that was reasonable and neces
sary. However, at least according to the evidence in the sum
mary judgment record, Farmers has used a wide variety of
protocols, programs, and individual reviewers at different
times, in different geographic areas, and for different kinds of
claims. In other words, in contrast to the question of whether
an IME is always required-a question common to every
member of the purported class-the profusion of other review
methods suggests that the issue of class certification will look
quite different on remand. The trial court will need to apply
the ORCP 32 A and ORCP 32 B criteria in light of the differ
ent, allegedly arbitrary procedures Farmers has used to
review claims, rather than the single issue of whether an
IME is required for every valid denial. Moreover, because the
maj ority concludes that an IME is not required in every
instance, but "nevertheless [may] be required as part of a

444 Ivanov v. Farmers Ins. Co.
reasonable investigation, depending on the facts of an indi
vidual claim," 344 Or at 431, it is uncertain whether there is
any basis for the case to proceed as a class action at all.
For the reasons set out above, I concur with the
maj ority's legal conclusions with respect to the effect of ORS
742 .524( 1 )(a), but I respectfully dissent from its conclusion
that the trial court judgment should be reversed.
Kistler and Linder, JJ ., j oin in this concurring and
dissenting opinion.