Mrs Flannagan suffered a herniated disc in her neck after being rear-ended by a car in March 2008.
An Auckland legal assistant at the time, she had an operation, but her surgeon said it would take her up to four years to fully recover.
A previously fit and active mother of four, she was forced to quit her job - the main household income - because of the pain.
In May 2010, ACC stopped cover after a diagnosis by ACC-appointed specialist Brian Otto, who said the continuing pain was caused by degeneration.
At the appointment, Mrs Flannagan, accompanied by her husband, was stunned by Mr Otto's opening remark. "As he shut the door and walked around his desk to his chair, he announced, 'We are here today to discuss your degenerative condition'," she wrote in an affidavit to the court.
In the affidavit the 40-year-old said Mr Otto admitted he had not seen her x-rays and MRI scan, which made her believe he had "conducted the appointment with a predetermined purpose: to determine a degenerative condition". Shortly after the appointment he diagnosed a "pre-existing degenerative condition" as causing the pain and ACC stopped cover.
After the Dispute Resolution Services sided with Mr Otto's diagnosis, the family were left renting a run-down, leaking house and buying lower-quality food to save money.
"We went through hell," Mrs Flannagan told the Herald. "We lived so frugally it wasn't funny."
Her income was reduced to $18,000 on an invalid's benefit but she used an inheritance to buy a small house and finish her law degree.
Two new specialist reports, which she used in her District Court appeal, said the herniated disc was caused by the car crash. But before the case could be heard, ACC offered to pay the entitlements and backdate them.
"It makes me sick wondering how many other people like me are out there who did not deserve to have their cover taken away and who if they just had the money, energy and tenacity to fight would get it back."
Mr Otto argued he looked at every patient's x-rays and scans before making a diagnosis. The retired specialist told the Herald he had "absolutely no recollection" of Mrs Flannagan's case but believed she would not have realised he could receive x-rays via email and that he would have seen them before diagnosing her.
An ACC spokesman said it found the consistency and rationale of the two specialists' opinions "more compelling" than Mr Otto's report. "As a result ACC decided to reverse its decision."
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