MetLife Inc. sued the U.S. government over a panel’s decision to label it critical to the economy, arguing that imposing higher regulatory standards will drive up the cost of financial protection for consumers.

The label would subject the company to more oversight, even though insurers already fall under a comprehensive state-level “regime that supervises every aspect of MetLife’s U.S. insurance business,” its lawyer Eugene Scalia wrote in a complaint filed today in Washington.

The U.S. Financial Stability Oversight Council relied on “vague standards and assertions, unsubstantiated speculation and unreasonable assumptions” in tagging MetLife with the SIFI label and denied the company an opportunity for rebuttal in violation of its due process rights, according to the complaint.

The company said it isn’t a systemically important financial institution, or SIFI, because it “is not predominantly engaged in financial activities” as defined by the Dodd-Frank law behind the designation.

It asked the court to set aside the decision.

MetLife doesn’t even qualify as a “U.S. nonbank financial company” eligible for designation because it derives more than 15 percent of its revenues from, and more than 15 percent of its assets are related to, insurance activities in foreign markets, Scalia wrote.

Company’s Lawyer

If the court agrees, “everything else does become irrelevant,” H. Rodgin Cohen, senior chairman of the Sullivan & Cromwell LLP, one of two law firms advising MetLife on the matter, said today on a conference call. The company also hired Gibson Dunn & Crutcher LLP, Scalia’s firm.

MetLife was the fourth nonbank to receive the SIFI label from the council, a panel of government officials led by Treasury Secretary Jacob J. Lew.

The council has 10 voting members including the heads of the Federal Reserve, the Securities and Exchange Commission and the Federal Deposit Insurance Corp.

The designation is the result of “a thorough analysis and extensive engagement with the company,” Suzanne Elio, a spokeswoman for the Treasury Department, said in an e-mailed statement. “We are confident in the council’s work.”

‘Compelling Evidence’

The largest U.S. life insurer called the label premature and said in a statement earlier today that it has offered “substantial and compelling evidence” it isn’t a systemic risk.

The company demonstrated to regulators “that its insurance and capital markets activities are not of a nature of magnitude that would expose other financial institutions or counterparties to meaningful threat of economic harm in the event of MetLife’s material financial distress,” according to the complaint.

The suit warns that the designation “will inevitably impose significant costs on the company -- and its shareholders and customers.”

The case should take about nine months to a year to resolve, Scalia said this afternoon in a phone briefing with reporters after the suit was filed.

“We respectfully believe that FSOC has things it can learn about how to go about this process better and more effectively,” the attorney said. “It would make sense for them to internalize some of the points that are made here.”

MetLife Chief Executive Officer Steve Kandarian said in an interview earlier that he doesn’t yet know the financial impact of the SIFI designation on MetLife.

Unseen Rules

“I honestly don’t have any way to quantify it at this point,” Kandarian said by phone. “We haven’t seen the capital rules, nor do we know what other prudential standards under Dodd-Frank the Federal Reserve will impose.”

MetLife faulted the government for focusing on its size to the detriment of a more tailored regulatory approach concentrating on specific business activities deemed to be especially risky.

The council “provided no reasoned explanation for failing to pursue an activities-base approach for insurance companies,” Scalia wrote in the complaint.

He argued that “the traditional business of life insurance” doesn’t depend on short term deposits and short term wholesale funding as banks do and thus “are not subject to the ‘run’ risks.”

No Access

The insurer said in the suit that the financial council “repeatedly and improperly denied MetLife access to the full record” on which its decision was based.

The SIFI tag is intended to head off financial crises by subjecting designated companies to stricter Federal Reserve oversight that could include tougher capital, leverage and liquidity requirements. Final rules haven’t been written.

FSOC should be blocked from making a determination on MetLife’s systemic risk status until those rules are completed, according to the complaint.

The suit is a blow to the council and the Treasury Department, which were wary of a legal challenge from Kandarian and took more than a year to analyze the company before voting to designate it as a SIFI.

MetLife is the first company to file such a challenge in court. Insurers American International Group Inc. and Prudential Financial Inc. were designated last year as non-bank SIFIs, as was General Electric Co.’s finance unit.

Kandarian attended a November hearing before the oversight committee to challenge the SIFI designation accompanied by Scalia, of Gibson, Dunn & Crutcher LLP, who has filed several other cases seeking to overturn regulations in the Dodd-Frank law.

The case is MetLife Inc. v. FSOC, 15-cv-00045, U.S. District Court, District of Columbia (Washington).