Mistakes in Life Insurance Beneficiary Forms: When Courts Still Enforce the Change Under ERISA
Life insurance beneficiary disputes often arise because of paperwork mistakes.
A wrong box checked.
An outdated address.
Missing information
A form that was submitted—but later “lost.”
After the insured dies, those small errors suddenly matter. Insurers freeze benefits. Families argue. And the outcome may determine who receives hundreds of thousands of dollars.
Under ERISA-governed life insurance policies, courts frequently resolve these disputes using a powerful doctrine known as substantial compliance. One federal case explaining clearly how this doctrine works is Metropolitan Life Insurance Co. v. Johnson, decided by the Seventh Circuit.
This case shows that a beneficiary change can be valid even when the form is imperfect, as long as the insured clearly intended to make the change and took affirmative steps to do so.
Why Beneficiary Designation Mistakes Are So Common
Beneficiary designation forms are deceptively simple. They are often completed:
During onboarding or open enrollment
Years before death
Without legal guidance
Using employer-provided forms with multiple plan options
Online without any record of successful submission or acceptance
Common mistakes include:
Checking the wrong plan box
Using an outdated address
Incorrect marital status
Missing plan names
Allocating percentages that do not add up to 100%
Clerical errors by HR or the plan administrator
After death, insurers often default to the last “clean” form on file, even if strong evidence suggests the insured intended something different. That is when disputes arise.
ERISA and Beneficiary Designations: The Legal Framework
Most employer-provided life insurance policies are governed by the Employee Retirement Income Security Act of 1974 (ERISA).
ERISA:
Preempts most state law
Requires plan administrators to follow plan documents
Pushes disputes into federal court
But ERISA has a critical gap: It does not explain how to resolve disputes between competing beneficiaries when forms are incomplete, erroneous, or disputed. That gap is filled by federal common law, including the doctrine of substantial compliance.
The Case: Metropolitan Life Insurance Co. v. Johnson
Background Facts
Jimmie Johnson was a long-time employee of General Electric and participated in an ERISA-governed life insurance plan insured by MetLife.
In 1968, he named his wife, Mildred Johnson, as beneficiary.
Years later, the couple divorced.
In 1996, Johnson completed a new beneficiary designation form naming:
LaShanda Smith
Leonard Smith
Carolyn Hall
Johnson died in 1999.
At the time of his death, the original beneficiary form naming Mildred was still on file. However, the newer 1996 form existed—and that form contained multiple errors.
The Problems with the Beneficiary Change Form
The 1996 beneficiary designation form was not perfect:
Johnson checked the box for the wrong GE life insurance plan
He listed his mother’s address, not his own
He marked himself as “separated” instead of divorced
MetLife initially claimed it had no record of the change
Despite these errors, Johnson’s children produced:
A copy of the 1996 beneficiary designation form
A confirmation letter from GE, acknowledging receipt of the completed form
Because multiple parties claimed the proceeds, MetLife filed an interpleader action, depositing the money with the court and asking a judge to decide who should be paid.
The Central Legal Question
The case turned on a single question:
Did Jimmie Johnson effectively change his life insurance beneficiary despite errors on the form?
To answer this, the court had to decide:
Whether state law applied (it did not)
Whether ERISA provided a rule (it did not)
Whether federal common law could validate the change (it could)
ERISA Preemption and Federal Common Law
The Seventh Circuit first held that ERISA preempts state beneficiary-designation rules, because beneficiary determination is a core aspect of plan administration.
However, ERISA itself does not explain how to evaluate defective or incomplete beneficiary changes.
When ERISA is silent, courts are permitted—indeed required—to develop federal common law to fill the gap.
That is where substantial compliance comes in.
What Is Substantial Compliance?
Under federal common law, an insured substantially complies with beneficiary-change requirements when:
The insured clearly intended to change beneficiaries, and
The insured took affirmative steps to carry out that intent, even if technical requirements were not perfectly satisfied.
This standard focuses on intent and action, not clerical perfection.
Applying Substantial Compliance in Johnson
The Seventh Circuit held that Johnson substantially complied with the plan’s requirements.
Here’s why:
1. Clear Intent Was Shown
Johnson completed the official GE beneficiary designation form
He named specific individuals as beneficiaries
He had only one life insurance policy, making his intent clear
2. Affirmative Steps Were Taken
He signed and submitted the form
The form was sent to the correct GE enrollment center
GE sent a confirmation letter acknowledging receipt
3. Errors Did Not Defeat Intent
The court emphasized that:
Checking the wrong plan box did not negate intent
Clerical errors are precisely what substantial compliance is designed to address
The employer’s confirmation letter did not warn Johnson of any defect
The court refused to let technical mistakes override clear evidence of intent.
Why the Original Beneficiary Lost
Mildred Johnson argued that:
The old beneficiary designation was the only “valid” form
The new form was defective
ERISA requires strict compliance
The court rejected those arguments.
ERISA does not require perfect paperwork when:
The insured’s intent is clear, and
The insured did everything reasonably within their control
As a result, the original beneficiary lost, and the newer beneficiaries received the proceeds.
Why This Case Is So Important
Metropolitan Life v. Johnson is frequently cited because it establishes that:
Beneficiary changes do not fail simply because of clerical errors
Courts will look beyond formality to substance
Intent matters more than administrative perfection
Insurers cannot rely on technical defects to deny rightful beneficiaries
This case is especially important in disputes involving:
Lost or missing beneficiary forms
Employer or HR errors
Conflicting plan records
What This Means for Families and Beneficiaries
If an insurer tells you:
“The beneficiary change was invalid because the form wasn’t perfect.”
That is not the end of the analysis.
Courts routinely enforce beneficiary changes when:
The insured clearly intended the change
The insured took reasonable steps to effectuate it
Errors were clerical or administrative in nature
Why Insurers Often File Interpleader Actions
When beneficiary designations are disputed, insurers often:
Deposit the money with the court
Step out of the case
Force beneficiaries to litigate entitlement
This protects the insurer—but places the burden on families to prove intent and compliance.
Without experienced legal representation, rightful beneficiaries can lose simply because they do not know how to marshal the evidence.
Evidence That Matters in Substantial Compliance Cases
Courts often look at:
Copies of beneficiary forms
Employer or plan confirmation letters
HR records
Prior consistent beneficiary designations
Statements made by the insured
Whether the insured had multiple similar plans
Small details can make or break the case.
Frequently Asked Questions (FAQs)
Can a beneficiary change be valid if the form has mistakes?
Yes. Courts often enforce beneficiary changes under the doctrine of substantial compliance when intent and affirmative action are clear.
Does ERISA require perfect compliance with beneficiary forms?
No. ERISA does not mandate strict technical compliance when evidence shows the insured intended the change and took reasonable steps.
What is substantial compliance in ERISA cases?
It is a federal common-law doctrine that validates beneficiary changes despite clerical errors when intent and action are established.
What kinds of mistakes are usually excused?
Courts often excuse:
Wrong plan boxes
Clerical errors
Minor inaccuracies
Employer processing failures
Can insurers deny claims based on technical defects alone?
They often try—but courts do not always agree. Substantial compliance can override technical defects.
Do I need a lawyer for a beneficiary dispute?
If the policy is employer-provided, yes. ERISA beneficiary disputes are complex and unforgiving.
If your claim has been denied—or paid to the wrong person—because of alleged paperwork errors, call us today. Call Us at (888) 510-2212 for a free consultation.
