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Rasha El-Tawil of Siskinds LLP recently conducted a successful arbitration against State Farm Insurance in which the arbitrator awarded all benefits claimed and a significant punitive special award against State Farm.

The claimant was injured in a motor vehicle accident on September 9, 2008 in which he suffered a spinal cord injury, radiculopathy and cervical myelopathy, all of which rendered him substantially impaired. He spent the past 6 years trying to regain his pre-accident condition. Unfortunately his recovery was compromised by the constant denial of medical, rehabilitation and attendant care benefits by his automobile insurer, State Farm. A week long arbitration on the issues of medical and rehabilitation benefits, attendant care benefits, and a special award, took place in June 2014. State Farm failed to call a single witness at the arbitration.

In an arbitration decision released on December 9, 2014, arbitrator Knox Henry awarded the claimant all of the benefits claimed plus interest plus a significant special award. A full copy of the decision can be found here.

The arbitrator was quite unimpressed that State Farm felt it was not necessary to bring any of its experts to the hearing that would enable their opinions to be cross-examined. He found the claimant to be a very credible witness. He preferred the evidence of the claimant’s testimony as opposed to the untested opinions contained in the reports of the insurer’s assessors. He therefore attached more weight to oral testimony than to untested written reports. He also found that State Farm failed to provide a reasonable challenge to the claimant’s evidence.

The total award of medical and rehabilitation and attendant care benefits was $60,644.55, 100% of the items claimed, plus interest at 2% per month compounded. The award included compensation for a therapeutic hot tub, occupational therapy and ergonomic work equipment, massage therapy treatments, psychological treatment, attendant care, and interest.

The arbitrator also awarded a significant special award against State Farm in the amount of $32,852.07 as it unreasonably withheld or delayed payments to the claimant. Special awards are punitive, and are awarded when it is determined that the insurer has unreasonably withheld or delayed payments to its insured. The insurer has an obligation to make its decisions on the best available evidence, and it must not prefer its own interests over those of its insured. An insurer cannot simply paper a termination of benefits by obtaining a report from an assessor. The insurer must open its mind to other information potentially available to it that might cast its decisions or actions in doubt. The insurer has an obligation to always act in its insured’s best interest and in good faith. In this case, the Arbitrator found that State Farm acted unreasonably in denying treatments and withholding payments; that they accepted the opinions of its medical assessors to support its routine denials of benefits; and it should have been aware that these denials would cause the claimant undue stress and financial hardship, and reduce his opportunity to recover from his injuries. In short, State Farm acted unreasonably and in a stubborn and unyielding manner.

Insurers should take heed of this decision, as it is clearly not enough to simply file and rely upon insurer’s examination reports which are clearly skewed in favour of the Insurer. Ignoring the rules of evidence and the requirement to prove your case on a balance of probabilities may backfire.

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