September 10, 2015

Better Safe Than Sorry: Don’t Take Your Chances If Your Benefit Is Denied

Murillo v State Farm Mutual Automobile Insurance Company, FSCO A14-006098, Arbitrator Charles D. Matheson



 Kasia Kosacka

MVC August 29, 2010. The Applicant, Ms. Murillo, applied for and received statutory accident benefits from State Farm Mutual Automobile Insurance Company (“State Farm”). The benefit in dispute in this case was Ms. Murillo’s non-earner benefit, which was terminated on November 23, 2011. The issue at this hearing was whether Ms. Murillo was statute-barred from claiming further entitlements to non-earner benefits, given the timing of her application for mediation.

Ms. Murillo argued that the OCF-9 (Explanation of Benefits form) provided to her by State Farm, and dated November 23, 2011, did not provide sufficient and correct information to constitute a valid refusal. Ms. Murillo’s main argument discussed during this hearing appeared to be that State Farm incorrectly cited section 36 of the SABS instead of section 37. As a result, she argued that the limitation period clock was not triggered.

State Farm’s position was that the benefit was terminated on November 30, 2011 by way of explanation or OCF-9, dated November 23, 2011, so Ms. Murillo had until November 2013 to apply for mediation. Instead, she applied four months later on March 13, 2014. State Farm indicated that when evaluating an insurer’s refusal to pay a benefit, insurers are not held to the standard of perfection, but rather the standard of sufficiency. This is because the overall purpose of the notice is to ensure that the applicant has been provide with enough information to decide whether to accept or dispute the refusal. State Farm argued that they clearly conveyed to Ms. Murillo in straight forward language that she was not eligible to continue receiving her benefit, and that no further benefits would be issued.

Arbitrator Matheson agreed with the position of State Farm and concluded that the denial as set out in the OCF-9 was proper. Ms. Murillo was statute-barred from any further entitlement to the non-earner benefit as her application for mediation was made well beyond the specified imitation period. In regard to Ms. Murillo’s argument about citing the wrong section of the SABS, Arbitrator Matheson stated that no issue was raised that State Farm failed to comply with section 36 or 37 of either of the Regulations, and there were no issues raised by Ms. Murillo that State Farm did not provide the notice or the reasons for the refusal. Arbitrator Matheson agreed with the fact that a refusal to pay a benefit needs to only be informative in nature to allow the insured to decide whether or not to challenge the cancellation, and indicated that State Farm’s refusal was just that.

In order to guarantee yourself a fair chance at disputing a denial of your benefit, you must apply for mediation within the prescribed two-year timeframe. If you are under the impression that you are being denied a benefit but are not 100% certain, contacting your insurance company is always an option. As this case demonstrates, arguing that a denial was somehow unclear after missing the deadline will likely prove unsuccessful and it is simply not worth the risk.


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