In addition to the way State Farm handled new medical documentation, Mr. Nader also took issue with the way State Farm handled the termination of his benefits, and how it dealt with the follow-up information that he had not returned to work. In this respect, I agree that State Farm acted unreasonably, and Mr. Nader is entitled to a special award.
Dr. Armitage’s opinion that Mr. Nader could return to work was premised on the availability of a graduated return to work program, and the provision of active rehabilitation and other supports as may be reasonably required to facilitate the attempt. However, neither Dr. Armitage nor State Farm knew whether graduated work was available, and the OCF-9 provided no guidance or direction to Mr. Nader with respect to what was expected of him in terms of investigating, arranging or participating in a graduated work return. More importantly, when advised that Mr. Nader had not returned to work, State Farm took no steps to ascertain the reasons for his non-return to work, help determine the availability of graduated work, and either help facilitate a graduated return to work (if available) or proceed with a vocational assessment to explore other employment options, including possible upgrading. Instead, State Farm simply maintained its denial. [33] In these ways, State Farm acted unreasonably, and its withholding of income replacement benefits from this point became subject to a special award.
The leading case on the proper approach to the calculation of special awards is Liberty Mutual Insurance Company and Persofsky.[34] The calculation begins by first determining the amount of the benefits unreasonably withheld, plus applicable interest. The maximum permissible special award can then be determined by “adding the additional interest component in s. 282(10) two per cent per month, compounded monthly. To be clear, this calculation includes interest on the unpaid SABS interest. The maximum special award is 50 per cent of this total.” With at least an approximation of the maximum amount in mind, a lump sum is to be awarded, guided by principles of rationality and proportionality.
The principal amount of the income replacement benefits that are subject to the special award are approximately $18,000, exclusive of interest. I do not find it necessary to calculate the maximum permissible special award with any degree of precision. It is safe to say that, with interest (and special award interest on all amounts), the maximum award would be substantially higher than the more modest amount of $5,000.00 that I find appropriate to award in this case.