ERISA Litigation: How to Deal With ERISA Lawsuits and Settlements When Life Insurance Claims Are Denied
Employer-provided group life insurance policies are supposed to protect families when the unexpected happens. But for thousands of beneficiaries each year, the promise of financial protection is shattered by a denied ERISA life insurance claim. The Employee Retirement Income Security Act of 1974 (ERISA) governs most employer-sponsored group life insurance plans, and while the law provides important protections, it also creates a complicated and technical system that many families struggle to navigate—especially after the death of a loved one.
When an ERISA appeal is denied, the next step is ERISA litigation, a federal court process used to challenge wrongful denials, plan mismanagement, fiduciary breaches, and insurer negligence. Understanding how ERISA litigation works can significantly increase your chances of recovering wrongfully denied benefits.
In this comprehensive guide, our ERISA attorneys explain how lawsuits under ERISA work, what beneficiaries should expect, how settlements occur, and why legal representation is essential. If you are facing a denied ERISA life insurance claim, call (888) 510-2212 for a free consultation.
What Is ERISA Litigation?
ERISA litigation refers to the legal process of challenging a denied claim or fiduciary misconduct under the Employee Retirement Income Security Act. It typically involves:
Filing a lawsuit in federal court
Arguing that the insurance company or employer violated ERISA
Reviewing the administrative record and legal briefs
Seeking recovery of wrongfully denied benefits, interest, and attorney fees
While ERISA grants participants and beneficiaries the right to sue, the process is governed by strict rules, deadlines, and standards of review—making ERISA litigation very different from standard insurance lawsuits.
How ERISA Litigation Works
Once the internal appeal has been denied, the beneficiary may proceed to federal court. But to succeed, claimants must understand the key components that shape ERISA lawsuits.
1. Fiduciary Duty Under ERISA
One of the most important questions in ERISA litigation is whether the employer, plan administrator, or insurance company acted as a fiduciary. Under ERISA Section 3(21)(A), a person or entity is a fiduciary if they:
Exercise discretionary authority or control over the plan
Manage or make decisions about plan assets
Provide investment advice for a fee
Have discretionary responsibility over plan administration
Even individuals not formally listed as “fiduciaries” may become fiduciaries if they exercise authority over plan decisions—such as answering questions about coverage, explaining enrollment rules, or making eligibility determinations.
If a fiduciary breaches their duty—by providing misinformation, failing to notify employees of required forms, mishandling enrollment, or negligently administering coverage—they can be held liable in an ERISA lawsuit.
2. ERISA Lawsuits Are Heard in Federal Court
Although beneficiaries may file an ERISA lawsuit in state court, nearly all ERISA cases are promptly removed to federal court, where federal rules govern the case. This is because ERISA preempts state law, meaning state statutes and common-law claims (such as bad faith) do not apply.
Federal judges, not juries, typically decide ERISA cases.
3. ERISA Trials Are Different From Standard Lawsuits
ERISA cases rarely involve live testimony or traditional jury trials. Instead, federal judges decide the case based on:
Written legal briefs
The administrative record
Evidence submitted during the ERISA appeal
The insurer’s claim file
The biggest difference between ERISA litigation and other types of cases is that:
❗ Courts review ONLY the evidence that was included in the administrative appeal.
If key documents were not submitted earlier, they generally cannot be added during litigation. This is why building a strong administrative record during the appeal is essential.
Administrative Exhaustion: A Mandatory Step Before Litigation
Before filing a lawsuit, ERISA requires beneficiaries to exhaust administrative remedies—meaning they must file a formal appeal within the required deadline. Most plans allow only 60 or 180 days to file an appeal.
If the appeal is denied and no second appeal is permitted by the plan, litigation may begin.
Failing to submit an appeal within the deadline can bar the beneficiary from suing altogether.
What Benefits Can Be Recovered in ERISA Litigation?
If the beneficiary wins the lawsuit, they may recover:
✔ The full life insurance payout
The exact amount that would have been paid had the insurer approved the claim.
✔ Prejudgment interest
Federal courts may award interest for the time the payout was delayed.
✔ Attorney fees
ERISA allows courts to shift attorney fees to the losing party, often the insurance company.
What Damages Are NOT Allowed Under ERISA
ERISA does NOT allow recovery for:
Emotional distress
Lost wages
Consequential damages (e.g., foreclosure due to delayed payment)
Punitive damages
Even a spouse who loses their home because of the delay cannot recover those losses under ERISA. The remedies are limited to the denied benefit, interest, and possibly attorney fees.
Attorney Fees in ERISA Litigation
ERISA’s fee-shifting provision allows courts to award attorney fees to the prevailing party. Courts typically look at:
The insurer’s degree of fault or bad faith
Whether the insurer can pay the fees
Whether awarding fees deters future wrongdoing
Whether the litigation benefits other plan participants
The strength of each party’s legal position
When beneficiaries win, they are often presumed entitled to fees—but the final decision remains up to the judge.
Who Can Sue Under ERISA?
Under ERISA §502(a), only limited parties may sue:
Plan participants
Plan beneficiaries
The Secretary of Labor
Plan fiduciaries
Most ERISA lawsuits involving life insurance are filed by beneficiaries seeking payment of denied claims.
ERISA Statute of Limitations: Deadlines for Filing Lawsuits
Unlike many laws, ERISA does not include a single statute of limitations. Instead:
The plan itself often specifies the litigation deadline
These deadlines are enforceable if reasonable
Some deadlines start running before the final denial
A lawsuit must generally be filed within the plan’s contractual timeframe
Because deadlines vary from plan to plan, beneficiaries should consult a lawyer immediately after receiving a denial.
What Is the Litigation Process in a Federal ERISA Lawsuit?
The typical ERISA litigation process includes:
1. Filing the Complaint
Your attorney files a lawsuit in federal court outlining the wrongful denial and the relief requested.
2. The Insurance Company Responds
The insurer usually has 21–42 days to file a response.
3. Settlement Discussions
Many ERISA cases settle before trial, and federal judges often encourage early resolution.
4. Review of the Administrative Record
Both sides submit legal briefs. The judge reviews:
The record from the administrative appeal
Plan documents
Medical records
Internal insurer notes
Legal arguments
5. Bench Trial (Without a Jury)
The judge—not a jury—issues a ruling.
6. Possible Outcomes
The judge may:
Award the full life insurance benefit
Deny the claim
Remand the case back to the insurer for further review
Either party may appeal the court’s decision.
Possible Outcomes of an ERISA Lawsuit
If the beneficiary wins, they may receive:
Full life insurance payout
Prejudgment interest
Attorney fees
Sometimes, beneficiaries win even without full success. Courts may award fees when the plaintiff achieves “some degree of success,” even if the insurer must simply redo the review.
How Our ERISA Attorneys Can Help
ERISA litigation is one of the most complex areas of insurance law. Success requires:
Strong knowledge of ERISA regulations
Strategic appeal-building
Skilled brief writing
Familiarity with federal judges’ standards
Ability to identify fiduciary breaches
Experience arguing ERISA cases
Our ERISA life insurance attorneys work on a contingency fee basis, meaning you pay nothing unless we win.
We have successfully reversed denials involving:
Alleged misrepresentation
Employer negligence
Failure to provide health statements
Domestic partnership disputes
Ex-spouse issues
Contestability claims
Beneficiary disputes
ADD/policy exclusions
Portability and conversion errors
Our results include recoveries of $62,000 to over $1.1 million for wrongfully denied claims.
Free ERISA Lawsuit Consultation
If your ERISA life insurance claim has been denied, do not navigate litigation alone. Call (888) 510-2212 for a free consultation with an experienced ERISA attorney.
We will review your denial, analyze your rights, and help you pursue the benefits you are legally entitled to.
