Employer Group Life Insurance and ERISA: Claims, Appeals and Coverage Gaps

When ERISA applies

ERISA, the Employee Retirement Income Security Act of 1974, governs most benefit plans that private employers set up for their workers, including group life and accidental death coverage. Whether a particular policy is part of an ERISA “plan” is a fact question. In Wickman v. Northwestern National Insurance Co., the First Circuit found a group life and AD&D policy was part of an ERISA plan where the employer offered a full benefits program, distributed a handbook listing ERISA rights and a summary plan description, and set eligibility rules, and it noted that the mere purchase of insurance, without more, is not always enough. 908 F.2d 1077 (1st Cir. 1990).

Why it matters: once ERISA applies, the claim runs through the plan’s federal claims procedure, and the court in Wickman held that common-law claims about the processing of benefits under an ERISA-regulated policy were preempted. The beneficiary’s main tool becomes a federal suit “to recover benefits due to him under the terms of his plan,” 29 U.S.C. § 1132(a)(1)(B), as quoted in Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989).

When ERISA does not apply

Not every job-based policy is covered. ERISA’s coverage section excludes, among others:

• governmental plans, such as coverage for public employees of a state, city or school district;
• church plans, unless the plan has elected into coverage under the tax code; and
• plans maintained solely to comply with workers’ compensation, unemployment or disability insurance laws.

29 U.S.C. § 1003(b). Claims under those plans generally proceed under state law and the policy terms instead.

A Department of Labor regulation also carves out certain voluntary group or group-type insurance programs. Such a program is not an ERISA plan if all four conditions are met: (1) the employer makes no contributions; (2) participation is completely voluntary; (3) the employer’s only role, without endorsing the program, is to let the insurer publicize it, collect premiums through payroll deduction and send them to the insurer; and (4) the employer receives no consideration beyond reasonable compensation, excluding profit, for the payroll work. 29 C.F.R. § 2510.3-1(j). If the employer pays any part of the premium or endorses the program, this safe harbor does not apply.

Claim and appeal deadlines

The Department of Labor’s claims regulation sets minimum rules every covered plan must follow. For life and AD&D claims (which are neither health nor disability claims), the key numbers are:

A few rules sit underneath those numbers:

• The clock starts at filing. The decision period begins when the claim is filed under the plan’s reasonable procedures, whether or not every document came with it. If an extension is taken because the claimant has not sent needed information, the clock pauses until the claimant responds. § 2560.503-1(f)(4).
• Boards that meet quarterly may decide appeals at their next regular meeting (or the second, if the appeal arrives within 30 days of a meeting), with a possible further extension to the third. § 2560.503-1(i)(1)(ii).
• No fees to file or appeal. Requiring a fee or costs as a condition of making a claim or appealing is treated as unduly inhibiting claims. § 2560.503-1(b)(3).
• Representatives are allowed. The procedures may not prevent an authorized representative from acting for the claimant. § 2560.503-1(b)(4).

What a denial letter must say

A written denial must explain, in a way the claimant can understand:

• the specific reasons for the denial;
• the specific plan provisions it relies on;
• any additional material needed to perfect the claim and why it is needed; and
• the plan’s review procedures and time limits, including the right to sue under ERISA § 502(a) after a denial on review.

§ 2560.503-1(g)(1)(i)–(iv). A letter missing these pieces is worth pointing out in the appeal.

Building the appeal

The appeal is usually the beneficiary’s best chance to shape the record. Under the regulation, a full and fair review must:

• let the claimant submit written comments, documents, records and other information;
• give the claimant, on request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the claim; and
• take into account everything the claimant submits, whether or not it was considered the first time.

§ 2560.503-1(h)(2)(ii)–(iv). “Relevant” is defined broadly. It includes anything relied on, and anything submitted, considered or generated in making the decision, even if it was not relied on. § 2560.503-1(m)(8).

Practical steps:

1. Request the claim file and the plan documents early, in writing, so you have them well before the appeal deadline.
2. Calendar the appeal deadline from the date you received the denial. Do not assume an extension.
3. Answer each stated reason for the denial with evidence: records, statements, a corrected death certificate, an independent medical opinion where useful.
4. Assume a court may see only this record. In Perry v. Simplicity Engineering, the Sixth Circuit held that even when a court reviews a denial de novo, it reviews “based on the record before the administrator” and need not hear evidence that was not presented to the plan administrator. 900 F.2d 963 (6th Cir. 1990). Some other circuits may allow additional evidence in limited situations, so check the rule in the circuit where a case would be filed. Either way, put everything you want considered into the appeal.

If a plan fails to establish or follow procedures consistent with the regulation, the claimant is deemed to have exhausted the plan’s remedies and may go to court. § 2560.503-1(l)(1).

Standard of review in court

ERISA itself does not say how closely a court should review a denial. The Supreme Court filled that gap in Firestone Tire & Rubber Co. v. Bruch: a denial challenged under § 1132(a)(1)(B) is reviewed de novo unless the plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the plan’s terms. 489 U.S. 101, 115 (1989).

When the plan does grant that discretion, review is deferential. Even then, the Court said, if the decision-maker is operating under a conflict of interest, that conflict must be weighed as a factor in deciding whether there was an abuse of discretion. Id.

Conflicts of interest after Glenn

In Metropolitan Life Ins. Co. v. Glenn, the Supreme Court held that a plan administrator that both decides claims and pays them out of its own pocket has a conflict of interest of the kind Firestone described, and that this is true when the administrator is an insurance company, not only when it is the employer. 554 U.S. 105 (2008). The Court also held that:

• the conflict does not change the standard of review from deferential to de novo; it is one factor a court weighs in deciding whether discretion was abused;
• the factor matters more where circumstances suggest it affected the decision, such as a history of biased claims administration, and less (perhaps to the vanishing point) where the administrator has taken active steps to reduce bias and promote accuracy; and
• procedural problems count. In Glenn, the lower court properly weighed the insurer’s emphasis on a report favoring denial over others, its failure to give its own reviewers all the relevant evidence, and its inconsistent positions on the claimant’s Social Security disability award.

Id. For beneficiaries, the lesson is to document procedural unfairness in the appeal record, since that is what a reviewing court can weigh alongside the conflict.

How the Eleventh Circuit applies it

Federal courts in Florida, Georgia and Alabama follow a six-step sequence. The court first asks whether it disagrees with the administrator’s decision on a fresh look (“de novo wrong”); if not, the denial stands. If it is wrong and the plan gave no discretion, the denial is reversed. If the plan did give discretion, the court asks whether reasonable grounds supported the decision, and only then weighs any conflict of interest as one factor, with the burden on the claimant to show the decision was arbitrary. Blankenship v. Metropolitan Life Ins. Co., 644 F.3d 1350 (11th Cir. 2011).

State bans on discretionary clauses

In practice, the plan documents, and specifically whether they contain discretionary language, can decide how hard a denial is to overturn. Some states void those clauses in insurance policies. Texas bars an insurer from using a life, accident or health policy form, group forms included, that contains a discretionary clause, defined to include any provision granting deference to the insurer’s adverse claim decisions or setting a deferential standard of review (Tex. Ins. Code § 1701.062; see the Texas page). Illinois’s rule is narrower: it reaches health and disability coverage, not life (50 Ill. Adm. Code 2001.3). California’s ban also covers life policies; see the California page.

Texas takes a similar approach through its policy-form law. An insurer may not use a policy, certificate, application, rider or endorsement in Texas that contains a discretionary clause, and the forms covered include group and individual life insurance. A discretionary clause includes one that binds the claimant to, or requires deference to, the insurer’s adverse claim decisions or policy interpretations, or that sets an appeal standard giving deference to the original claim decision. Tex. Ins. Code § 1701.062; see § 1701.002. The enacting law applies to documents delivered, issued for delivery or renewed on or after January 1, 2012 (H.B. 3017, 82nd Leg., R.S., 2011, § 3).

Conversion and portability

Group life coverage usually ends when employment ends. Two features may let it continue:

• Conversion lets a departing employee turn group coverage into an individual policy, typically without new medical questions, if applied for within a short window.
• Portability lets the employee keep group-rate term coverage after leaving, usually by applying and paying the insurer directly.

Disputes arise when an employee dies during or shortly after that window, or when the employer did not pass along the notice. State law often sets the conversion terms. Kansas, for instance, requires group life policies to allow conversion within 31 days after coverage ends and to pay the convertible amount if the person dies within that window before an individual policy takes effect (K.S.A. 40-434; see the Kansas page). California adds a rule extending the window when the employee was not told about conversion in time (details).

New York’s rules are similar but differ on notice. A group life policy delivered in New York must let a covered employee whose coverage ends because employment ends, among other events, apply within 31 days for an individual policy (not term insurance) without evidence of insurability, and must pay the convertible amount as a death benefit if the employee dies during that 31-day period before the individual policy takes effect. N.Y. Ins. Law § 3220(a)(6). The certificate holder must be told about the conversion privilege within 15 days before or after the triggering event. If notice comes more than 15 but less than 90 days after the event, the conversion period is extended to 45 days after the notice; if no notice is given within 90 days, the privilege expires at the end of those 90 days. § 3220(a)(8).

Because these windows are short, a beneficiary should find out exactly when coverage ended, when (and whether) a conversion notice was sent, and whether the death fell inside any extended period. Whether an employer can be held responsible for not sending a conversion notice depends on the facts and the circuit. In one Sixth Circuit case, a divided panel held that an employer had no general ERISA duty to send a personal conversion notice when the plan documents described the right and nobody asked about it. Vest v. Resolute FP US Inc., 905 F.3d 985 (6th Cir. 2018). What the employer said, what it knew and what the documents disclosed can change the result. The Fourth Circuit, hearing a Virginia case, let a widow pursue fiduciary claims against an employer that was the named plan administrator, kept deducting premiums after her husband went part-time and lost eligibility, never told him about conversion, and later advised her she did not need to appeal the insurer’s denial while it was “working through the details” (Dawson-Murdock v. National Counseling Group, Inc., 931 F.3d 269 (4th Cir. 2019)). Plan wording can also help directly: in an Ohio case where the plan promised the convertible amount as a death benefit during the conversion period whether or not the employee had applied or paid, the Sixth Circuit held the insurer’s narrower reading arbitrary (Tonguette v. Sun Life & Health Ins. Co., 595 F. App’x 545 (6th Cir. 2014)).

Evidence-of-insurability problems

Supplemental or “optional” group life above a guaranteed amount often requires evidence of insurability (EOI): a health questionnaire the insurer must approve. A recurring problem is that premiums for the extra coverage are deducted from paychecks for months or years even though the EOI form was never submitted or approved. When the employee dies, the insurer pays only the guaranteed amount.

A federal settlement addressed this practice head-on. In April 2023 the U.S. Department of Labor announced an agreement with the Prudential Insurance Company of America after an investigation found that, from 2017 to 2020, Prudential denied more than 200 supplemental group life claims because EOI was missing, and that since at least 2004 it had collected premiums for that coverage without the EOI on file. Starting four months after the agreement took effect, Prudential may not deny a supplemental claim under an ERISA group policy solely because EOI was never submitted or approved once it has received three or more months of premiums for that coverage. It may ask for missing EOI only while the employee is alive and within one year after the first premium, and it must tell employers not to deduct these premiums without first confirming that EOI was approved, warning that an employer who does may be liable to the beneficiaries. The department also said Prudential told it that it would voluntarily reprocess claims denied since June 2019 solely for lack of EOI and pay those benefits (U.S. Department of Labor news release, April 19, 2023; settlement agreement).

This is a settlement, not a court ruling. Prudential neither admitted nor denied that it was an ERISA fiduciary or that it breached any duty, and the terms bind only Prudential. What it shows is that the federal agency that enforces ERISA treats years of paycheck deductions for coverage the insurer later says never took effect as a serious problem; the department also said parallel investigations had found similar practices at other insurers. When a Prudential group claim was denied for missing EOI after months of premiums, the agreement’s terms are worth checking against the denial letter.

Beneficiaries in this situation should gather pay stubs showing deductions, enrollment confirmations, benefits statements and any EOI correspondence. Two federal appeals decisions show that a refund of premiums is not necessarily the end of the matter:

• McCravy (4th Cir. 2012). MetLife took premiums for years for dependent life coverage on a daughter who had aged out of eligibility, then denied the claim after her death and offered a refund. After the Supreme Court’s decision in CIGNA Corp. v. Amara (2011), the court held that a beneficiary suing a plan fiduciary under ERISA § 502(a)(3) is not limited to a premium refund as a matter of law; surcharge and equitable estoppel are available remedies. McCravy v. MetLife, 690 F.3d 176.
• Silva (8th Cir. 2014). An employee enrolled late in supplemental life, premiums came out of his paychecks for about six months, and MetLife denied the claim because no statement of health was on file. The plan did not define “evidence of insurability” or mention the form, and about 200 other employees were missing the same paperwork. The court reversed summary judgment for the insurer and employer and let the beneficiary pursue both a benefits claim and a fiduciary-breach claim. Silva v. MetLife, 762 F.3d 711.

Neither decision says the beneficiary wins in the end. Both kept the claims alive for further proceedings.

Sources

• U.S. Department of Labor, “US Department of Labor reaches settlement with Prudential Insurance Company of America to revise life insurance practices that denied claims” (news release, April 19, 2023): dol.gov; settlement agreement: dol.gov.
• 29 C.F.R. § 2560.503-1, ERISA claims procedure (official eCFR): ecfr.gov. Text read via the Legal Information Institute’s eCFR copy.
• Firestone Tire & Rubber Co. v. Bruch, 489 U.S. 101 (1989) (full opinion): supreme.justia.com.
• Wickman v. Northwestern National Insurance Co., 908 F.2d 1077 (1st Cir. 1990) (full opinion): law.justia.com.
• Metropolitan Life Ins. Co. v. Glenn, 554 U.S. 105 (2008) (full opinion): supreme.justia.com.
• 29 U.S.C. § 1003 (official U.S. Code, Government Publishing Office, 2023 edition): govinfo.gov.
• 29 C.F.R. § 2510.3-1 (official eCFR; text read via LII’s copy): ecfr.gov.
• Perry v. Simplicity Engineering, 900 F.2d 963 (6th Cir. 1990) (full opinion, CourtListener): courtlistener.com.
• Vest v. Resolute FP US Inc., 905 F.3d 985 (6th Cir. 2018); McCravy v. Metropolitan Life Ins. Co., 690 F.3d 176 (4th Cir. 2012); Silva v. Metropolitan Life Ins. Co., 762 F.3d 711 (8th Cir. 2014) (full opinions, CourtListener): Vest, McCravy, Silva.
• Blankenship v. Metropolitan Life Ins. Co., 644 F.3d 1350 (11th Cir. 2011) (opinion PDF, U.S. Court of Appeals for the Eleventh Circuit): ca11.uscourts.gov.
• Dawson-Murdock v. National Counseling Group, Inc., 931 F.3d 269 (4th Cir. 2019) (official opinion, Fourth Circuit): ca4.uscourts.gov.
• Tonguette v. Sun Life & Health Ins. Co., 595 F. App’x 545 (6th Cir. 2014) (official opinion, GovInfo): govinfo.gov.
• 50 Ill. Adm. Code 2001.3 (official text, Illinois General Assembly JCAR): ilga.gov.
• Kansas K.S.A. 40-434 (official text, Kansas Revisor): ksrevisor.gov.
• New York Insurance Law § 3220 (official text): nysenate.gov. Re-read on the official site November 2, 2026.
• Texas Insurance Code §§ 1701.002, 1701.062 (official text, Texas Legislature): statutes.capitol.texas.gov. Enacting bill H.B. 3017 (2011): capitol.texas.gov. Statute text re-read on the official Texas file server November 2, 2026.
• Texas Insurance Code § 1701.062 (official text, Texas Legislature): statutes.capitol.texas.gov.

Not legal advice. This page summarizes general rules and the specific statutes cited. Your policy's wording, the state whose law applies, and whether the coverage came through an employer can all change the result. See the disclaimer and editorial policy.