MetLife Inc. on Tuesday sued U.S. regulators over a decision to subject the insurer to tougher oversight because it harbors enough risk to endanger the financial system if the next crisis hits.

The largest U.S. life insurer unsuccessfully contested a ruling by the Financial Stability Oversight Council (FSOC) last month, and a lawsuit is its last resort to escape being overseen by the U.S. Federal Reserve.

“We just think that FSOC got this call wrong, and we believe that an appeal in this case is the right thing for our customers and for our other stakeholders,” MetLife Chief Executive Officer Steve Kandarian told Reuters in an interview.

MetLife shares closed down 1.2 percent on Tuesday.

The lawsuit will renew scrutiny of the process laid out in the 2010 Dodd-Frank financial reform law, which gives FSOC, the top U.S. risk council, the power to designate large financial companies as “systemically important,” imposing tougher rules and oversight by the Fed on them.

The lawsuit is also important for large asset managers such as BlackRock Inc and Fidelity Investments that could be added to the list of risky firms, though they have aggressively campaigned to avoid the FSOC designation.

Lawmakers and companies alike have complained that the designation process is opaque and that the risks are not sufficient to warrant the tighter rules.

“This is the first real challenge to the FSOC’s deeply flawed … designation authority,” said U.S. Representative Patrick McHenry, a Republican from North Carolina. “It is my hope this case will begin to shed some light on what metrics—if any—are used in the arbitrary and opaque FSOC review process.”

Treasury Secretary Jack Lew, who chairs FSOC, said last year the council may tweak its procedures. The council, comprised of the top U.S. regulators, plans to discuss potential reforms this month, a person familiar with the matter said.

“The question we keep asking FSOC is, ‘how can you actually designate a company without knowing what the consequences are?'” said Alice Joe, a managing director at the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness.

A spokeswoman for the Treasury Department, which houses the FSOC, said on Tuesday, “The council’s decision to designate a … company is reached only after a thorough analysis and extensive engagement with the company, both of which occurred in this case. We are confident in the council’s work.”

Fed Job Unfinished

Regulators, in their decision to deem MetLife “systemic,” cited the firm’s large size, its range of activities in risky financial markets outside its core insurance business, and its connections to a raft of other companies, among other factors.

In its complaint, MetLife gave several reasons why FSOC’s decision was “arbitrary and capricious,” the only way the law provides for it to win its case. Lawyers say this poses a high, though not insurmountable, hurdle.

The decision was “fatally premature” because it will likely take the Fed months before it finalizes capital and other requirements for the industry, and a framework on how to cooperate with state regulators, the firm said.

“It … takes institutional courage to challenge the nine federal agencies that make up FSOC, even when you know that it is the right thing to do,” said Thomas Vartanian, a former regulator and a partner at Dechert LLP.

Including MetLife, the Fed oversees almost one-third of the industry in the United States, a study by the Bipartisan Policy Center, a Washington think tank, showed last year.

MetLife was the third insurer designated by the FSOC as systemic. American International Group Inc, which almost collapsed during the credit meltdown, and Prudential Financial Inc chose not to fight the decision.

Insurers say they do not harbor the same type of risks as banks, which make large loans to clients that they cannot get back on short notice during a financial crisis.

The company also said it was denied several meetings with the regulators, and that it did not have access to information FSOC had used when looking at the other two insurers.

MetLife filed its lawsuit in the U.S. District Court for the District of Columbia and has hired law firms Gibson, Dunn & Crutcher LLP and Sullivan & Cromwell LLP.

Eugene Scalia, a lawyer at Gibson Dunn, is on MetLife’s team. The son of Supreme Court Justice Antonin Scalia, he has a track record of successfully fighting federal regulators.

Scalia said the court would likely take nine months to a year to render its decision.

“Sometimes regulatory agencies that are taking on new responsibilities falter at first, and need to learn through what can be a bit of trial and error,” Scalia said during a conference call with journalists.

(Additional reporting by Sarah N. Lynch and Emily Stephenson; Editing by Eric Walsh, Doina Chiacu, Jeffrey Benkoe and Lisa Shumaker)