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State Farm to pay $23,000.00 Special Award for Unreasonably Withholding IRB’s

NOTE: This decision was overturned on appeal on October 1, 2012

In the decision Marcia Henry and State Farm Automobile Insurance Company [FSCO A09-000213] FSCO Arbitrator Denise Ashby ordered the insurer to pay a claimant’s income replacement benefits (IRB) with interest. The insurer was also ordered to pay a special award of $23,000.00 for unreasonably withholding the benefit.

Marcia Henry was a full-time emergency triage nurse in a hospital. The medical experts identified that she was only capable of engaging in sedentary work. Despite that, State Farm terminated her income replacement benefits prior to the 104-week mark, taking the position that she did not suffer a substantial inability to perform the essential tasks of her pre-accident work.

The Arbitrator also considered Ms. Henry’s entitlement to IRB’s after the 104-week mark, when the eligibility criteria changes to having to suffer a complete inability to engage in any employment for which she is reasonably suited, based on education, training and experience.

Although Ms. Henry took courses to upgrade her resume following the accident, it was determined that she still remained competitively unemployable when compared to her pre-accident job. The Arbitrator noted that, “It is unrealistic to believe that a woman of Ms. Henry’s age, disability and expected level of income would be hired over similarly educated, healthy and younger candidates who would likely have lower salary expectations.”

The Arbitrator went on to state that,

The accident occurred in February 2007. For the majority of her studies Ms. Henry was not engaged in employment and was able to work at her own pace. Notwithstanding this flexibility, it took four years to complete her degree. While Ms. Henry’s extensive experience and academic success might appear to make her an attractive candidate for employment as a nursing or public health instructor, her lack of teaching experience and accommodation requirements negate this. I accept that Ms. Henry enrolled in post-graduate studies as part of a career plan which would have seen her transition from the physically demanding role of emergency department nurse to a more sedentary role in public health. However, the injuries sustained in the accident prevented her from implementing her plan. Therefore, I find that Ms. Henry is entitled to post-104 week income replacement benefits.

With regard to a special award, the Arbitrator made the following comments:

State Farm stubbornly held to the opinion of its medical assessments of 2007 that Ms. Henry was not substantially disabled. Notwithstanding there was compelling evidence that Ms.
Henry continued to require significant medical intervention including shoulder surgery in June 2009.

An insurer has a continuing obligation to adjust a claim. State Farm failed to meaningfully revisit its opinion as the 104 week period elapsed and Ms. Henry had not returned to work.

I find that State Farm unreasonably withheld income replacement benefits from Ms. Henry and as a consequence she is entitled to a special award. As State Farm essentially abdicated its responsibility to adjust the file in respect of the post-104 week period, the award should be at the higher end of that available.

The full decision can be read by clicking below.

Henry and State Farm.

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