One of the first questions I ask a potential client with a life insurance dispute is whether or not the insured obtained the policy through their employer. This helps me determine whether state or federal law applies to the dispute. This is crucial because the particular federal law that governs employee benefits, ERISA, preempts most state law rights and remedies. It also generally determines the forum where the dispute will be heard and if a jury will be involved in deciding the case.
ERISA typically applies when an employee obtains life insurance through an employer, even when the employer may have only a limited role in administering the coverage and claims. In a typical arrangement, a group insurance policy is issued to an employer who determines that it will provide coverage to certain eligible employees. The employer also may contribute at least part of the cost of the employee’s coverage or performs other functions or actions indicating that the employer endorses the program or has adopted the policies as part of its overall employee benefit program.
This is a complex area of the law. Anyone confronting a potential life insurance beneficiary dispute should consult an attorney experienced in evaluating whether state or federal law applies.