cfey,
The instructor was giving IFR instruction for an unrated pilot in
actual IMC. Here is a link to an old thread on Instructor Medical


http://groups-beta.google.com/group/...b825fc9a3dfb2=
e2?dmode=3Dsource&hl=3Den

"In accordance with =A7 61.23(3)(iv) the instructor must hold a valid
third class medical to act as PIC or to be the safety pilot. This is
because of required crewmember status, not due to instruction duties. "