ERISA controls many group life insurance plans. Among the many rights the law gives to plan members and participants is the right to bring a suit to recover plan benefits. But, as a federal law, ERISA is complex and this extends to how claims, appeals and lawsuits are handled. 

In this article, our ERISA attorneys have prepared a guide to help you better understand how ERISA lawsuits work. If you or someone you know has issues with a denied ERISA claim, call us at 888-510-2212 for a free consultation.

What Is an ERISA Lawsuit?

An ERISA lawsuit is the process of taking legal action involving a disability, pension, or health benefit plan governed by ERISA law. 

How Do ERISA Lawsuits Work?

Attorney Fees 

ERISA cases allow for reasonable attorney fees to be awarded to the prevailing party if certain factors are present. When a plaintiff wins a life insurance case against an insurance company, he/she is presumptively  entitled to attorney fees. Ultimately, the court will have discretion whether to grant the plaintiff’s motion to award attorney fees when the plaintiff is successful on the underlying merits of the case. Many courts rely on the following factors in deciding whether to grant attorney fees in ERISA life insurance lawsuits: 

1. The degree of the insurance company’s fault or bad faith;
2. Whether the insurance company can pay the winning party’s attorney fees;
3. Whether an award of attorney fees to the plaintiff would serve as a deterrent for other insurers from denying similar claims; 
4. Whether the winning party’s award of attorney fees would benefit all participants and beneficiaries of an ERISA plan. 
5. Merits of the parties’ positions. 

Actions in Courts

ERISA lawsuits are usually initiated in federal courts. Even if a life insurance denial lawsuit is filed in a state court it will most likely be transferred to a federal court of that state because federal issues (ERISA) are involved. State law claims are preempted by ERISA. ERISA actions must be filed within a certain deadline outlined in the Plan documents. 

Trial Rights

ERISA trials are very different in that most of them are decided by a judge based simply on the pleadings filed with the court. The court reviews the administrative record and decides whether the insurance company’s denial of benefits was wrongful. The administrative record consists of all the documents the insurance company has in its file and all the documents it reviewed in denying the claim. 

ERISA Lawsuit Damages

ERISA lawsuits do not allow for consequential damages or punitive damages. The remedy is usually limited to the denied benefit itself and reasonable attorney fees. If, for example, due to a life insurance claim denial a surviving spouse cannot make mortgage payments and loses her house, she cannot recover damages for the lost house even if she prevailed in her ERISA lawsuit for wrongful life insurance denial. 

Life Insurance Payout

If the beneficiary whose life insurance claim was wrongfully denied wins an ERISA lawsuit, he/she can recover the denied benefit. The amount of the benefit is the same amount that would have been paid if the claim had been approved initially. The court will have discretion as to whether to grant prejudgment interest and to set a rate. 

Administrative Exhaustion

Before filing an ERISA lawsuit a claimant must exhaust her administrative remedies first. When faced with an ERISA life insurance claim denial, the beneficiary will have to file an administrative appeal before filing a lawsuit. The administrative appeal is a mandatory step in the ERISA appeal process. The administrative appeal must be filed within the deadline indicated in the Plan documents. The deadline is usually 60 or 180 days from the date on the denial letter. If the appeal is denied and the Plan documents do not allow for a second appeal, the claimant may then file an ERISA lawsuit. 

Who Can Sue Under ERISA?

By statute, there are only four parties who may sue under ERISA: plan participants, plan beneficiaries, the Secretary of Labor, and plan fiduciaries. However, most ERISA lawsuits are filed by an employee or former employee against their employer or insurance company.

When Can You File a Lawsuit: ERISA Statute of Limitation

ERISA does not provide a statute of limitations. Usually, the plan’s insurance policy has a provision that designates separate deadlines for filing administrative ERISA claims, appeals, as well as lawsuits. Failing to file in time could leave you without any recourse.

ERISA petitioners whose ERISA life insurance claims have been denied must exhaust the mandatory administrative review process before bringing a court action for judicial review.

A plan’s participant’s cause of action under ERISA §502(a)(1)(B) does not accrue until the plan issues a final denial. However, a plan and its participants can agree to commence the limitations period before that time.

If your ERISA claim has been denied, please consult with an ERISA life insurance attorney to see what the limitations provision is. Generally, the plan can adopt any limitation period but a contractual limitations provision is enforceable as written so long as the limitations period is of reasonable length and there is no controlling statute to the contrary.

The plan can adopt any limitation period, as long If the limitation period is unreasonably short or there is a controlling statute to the contrary, the plan’s limitation period may be unenforceable.

Litigation Process: How Do You File a Lawsuit?

You cannot file an ERISA suit immediately after you were denied your employer-provided life insurance benefits. You must exhaust all administrative remedies before bringing a lawsuit. Otherwise, it will be barred. We recommend consulting with an ERISA attorney when filing an appeal since you have small chances of winning without a comprehensive legal brief. If your appeal is denied, they can use that during the course of the lawsuit. 

An ERISA lawsuit is filed when your attorney sends a summons and a complaint to a federal court. The insurance company has 21 to 42 days to respond. When litigation is ongoing, the plaintiff and the insurance company may still discuss and reach a settlement. If no settlement is reached, the case will proceed to trial. In ERISA cases, most cases are decided by a judge during a bench trial. A bench trial is a trial before a judge only and involves reviewing the administrative record and legal briefs submitted by both parties. ERISA lawsuits may resolve in favor of the beneficiary, the insurance company or the judge may  send the case back to the insurance company for re-evaluation. The losing party may file an appeal.

Our ERISA Attorneys Can Help File and Win A Lawsuit For You

It is important to consult with an experienced life insurance attorney if you consider filing a lawsuit or appealing a denied life insurance claim. If your ERISA claim has been denied, call our law firm at 888-510-2212 for a free consultation. We have successfully reversed many denied life insurance claims on appeal and will help you collect on your wrongfully denied claim fast.

Our lawyers work on a contingent fee basis – that means that you will pay attorney fees only if we win your case. Only then will we charge a reasonable legal fee. We take pride in offering competitive contingent fee structures and will work with you to ensure you are comfortable with the fee. 

Here are a few cases successfully handled by our ERISA lawyers:

• Denied ERISA claim due to material misrepresentation on Portability Application – We recovered $300,000 in a denied life insurance claim. 
• Denied ERISA claim based on employer and insurer negligence – We recovered $850,000 for a wrongfully denied claim based on employer misrepresentations. 
• Denied ERISA claim due to failure to provide statement of domestic partnership
• Denied ERISA claim based on failure to provide statement of health – We recovered $150,000 in a denied life insurance claim. 
• Denied ERISA claim for ex-spouse – We recovered over $400,000 for an ex-spouse whose claim was unfairly denied. 
• Denied claim due to material misrepresentation during the contestability period – We recovered $150,000 on appeal. 
• Denied claim due to beneficiary dispute – We recovered $1.1 million for our clients who successfully challenged the beneficiary designation. 
• Denied claim due to a beneficiary dispute involving ex-spouse and estate. We recovered over $200,000 for an ex-spouse whose designation was challenged by the estate of the insured. 
• Denied claim due to  beneficiary dispute between children and girlfriend – We recovered $200,000 for our clients whose beneficiary designation was removed by the insured in violation of a court order.