The first step that any lawyer experienced in handling life insurance disputes will take is determining if the dispute is governed by state or federal law. This is critical, as federal law overrides or "preempts" most state laws. That is particularly the case if the life insurance policy is governed by ERISA.
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that governs employee benefits, such as pension plans, health insurance, disability insurance and life insurance. ERISA requires plans to provide participants with plan information regarding management, requirements, and protocols for accessing benefits. Employer provided life insurance is generally considered part of an ERISA welfare benefit plan. ERISA requires plans to provide participants with plan information, including the terms and limitations of the plans. Sometimes employers directly manage life insurance plans, but typically they are administered by large insurance companies such as Metlife, Prudential, Hartford, Aetna, Dearborn National, or Mutual of Omaha.
In general, ERISA does not cover group health plans established or maintained by governmental entities, churches for their employees, or plans which are maintained solely to comply with applicable workers compensation, unemployment, or disability laws. It is very important to contact a lawyer experienced in ERISA claims to determine if life insurance obtained through employment is indeed governed by ERISA.
ERISA provides spouses with certain protections for pension benefit plans. However, spousal protections are more limited for ERISA welfare benefit plans.
Special rules apply to ERISA disputes. They most often are resolved in federal courts and by Judges, not juries. Therefore, it is important that the attorneys you consult have experience in handling ERISA cases and appearing in federal court.
If a dispute arises regarding the proper beneficiary of a life insurance policy, insurance plan administrators rarely run the risk of paying twice if a court determines it paid the wrong claimed beneficiary. Therefore, federal law allows the insurance company to file what is known as an interpleader lawsuit so that a court can determine the proper beneficiary. The insurance company administrator is protected and the competing claimants are able to have a court determine the proper beneficiary. In our experience, many disputes can be resolved through settlement either before the interpleader is filed, or not long after as the parties evaluate the uncertainty and length of litigation.