State Farm to pay award for terminating benefits

State Farm Insurance Company must pay a claimant’s income replacement benefits (IRB) with interest, plus a special award of $23,000 for unreasonably withholding the benefits, an arbitrator from the Financial Services Commission of Ontario (FSCO) has ruled.

Arbitrator Denise Ashby ordered the payment and special award in the decision Marcia Henry and State Farm Automobile Insurance Company, released Mar. 1, 2012.

Henry was a full-time emergency triage nurse at a hospital who was injured in a motor vehicle accident in February 2007. Medical experts determined she was only capable of engaging in sedentary work.

State Farm cut off her income replacement benefits prior to the 104-week mark, arguing that Henry did not suffer a substantial inability to perform the essential tasks of her pre-accident work.

“State Farm stubbornly held to the opinion of its medical assessments of 2007 that Ms. Henry was not substantially disabled,” Ashby wrote in her decision. “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.”