"index" not working properly?

[mike]

Why is this not finding index.html?

server {
    listen 80;
    server_name domain.com;
    index index.htm index.php index.html;
    root /home/mike/web/domain.com/;

   if (!-e $request_filename) {
       rewrite ^(.+)$ /index.htm last;
   }

}

The file exists just fine, and I can access it directly by going to
domain.com/admin/index.html

However, it matches the if (!-e) check somehow... when I comment it
out, it works.

Anyone have any ideas?