ERISA Life Insurance Denial Upheld on a Reading the Court Called “Low on the Reasonableness Scale”

In Richards v. Lifepoint Health Welfare Benefits Plan, No. 3:25-CV-03541-X, 2026 WL 1480796 (N.D. Tex. May 27, 2026), the United States District Court for the Northern District of Texas, per Judge Brantley Starr, granted a motion to dismiss an ERISA beneficiary’s claim for a $480,000 benefit, holding that the claim administrator did not abuse its discretion when it read the plan to require continuous active employment throughout the entire eligibility waiting period, even as the court acknowledged the plan did not expressly compel that reading.

What were the plan’s eligibility terms?

The benefit at issue arose under a Group Disability Income Policy issued by Lincoln National Life Insurance Company. The policy provided that an enrollee was not covered until completing the “Eligibility Waiting Period,” defined as the continuous length of time the enrollee must be in “Active Employment” in an eligible class to reach the “Eligible Date.” The Eligible Date was the first of the month following 30 days of continuous, active employment. “Active Employment” in turn required working a minimum of 30 regularly scheduled hours per week. The decedent began working for the employer on November 25, 2024, enrolled in coverage, and named Plaintiff as the beneficiary. He worked full-time until he collapsed at the end of his shift on December 26, 2024. He never returned to work and died on February 2, 2025.

Why did the administrator deny the claim?

Plaintiff submitted a claim for the benefit, and Lincoln denied it on the ground that the decedent had not satisfied the eligibility waiting period. On appeal, Lincoln denied the claim again, reasoning that the decedent was not a covered employee because he was not in active employment on January 1, 2025, the first of the month following 30 days of active employment. Lincoln read the plan to require the employee to remain in active employment throughout the entire waiting period, meaning the 30 days of continuous active employment plus any remaining days until coverage began. Because the decedent never returned to work after December 26, he was not actively employed when coverage would have commenced.

What standard of review applied under ERISA?

The court explained that ERISA plan language is interpreted under federal common law, giving terms their ordinary and generally accepted meaning, reading provisions as a whole rather than in isolation, and construing ambiguity in favor of the insured only after the traditional rules of contract interpretation are exhausted. Where, however, the plan grants the administrator discretionary authority to determine eligibility or construe plan terms, the court applies abuse-of-discretion review. The policy gave Lincoln authority to determine eligibility and construe the policy’s terms, so the deferential standard governed. Under that standard, an administrator’s decision survives so long as it falls somewhere on a continuum of reasonableness, even at the low end, and is upheld unless made without a rational connection between the known facts and the decision.

Was the administrator’s interpretation reasonable?

The court concluded it was. Reading the eligibility waiting period to require continuous active employment for its entire duration was not unreasonable, the court reasoned, because the waiting period appeared to encompass more days than just the 30 days of continuous active employment needed to reach the Eligible Date. The court was candid that the policy did not expressly require this reading and that the interpretation “may be low on the reasonableness scale.” But under abuse-of-discretion review, a low-end-but-rational interpretation is enough, and the court declined to find an abuse of discretion on that basis.

Did Plaintiff have a path to amend?

Yes. The court noted that if Plaintiff could allege facts showing Lincoln and the employer had treated similarly situated claimants differently, that disparate treatment might constitute an abuse of discretion, or at least raise a pleading dispute warranting discovery. On that basis the court dismissed without prejudice and granted Plaintiff leave to file an amended complaint within 28 days.

The court granted the motion to dismiss, dismissed the complaint without prejudice, and granted Plaintiff 28 days to amend.