Sixth Circuit Implies New Requirements for Denial-of-Coverage Communications

The U.S. Court of Appeals for the 6th Circuit may no longer be as favorable a venue for health plans engaged in legal disputes with members who allege that insufficiently detailed claim denials violate the Employee Retirement Income Security Act’s (ERISA) protections against “arbitrary and capricious” decision making.

On January 22, 2026, a three-judge panel ruled that claims administrators must explicitly address and reject the opinions of treating providers and cite medical necessity guidelines when communicating coverage denials to their members. While not a new perspective when viewed in a national context (similar opinions have been issued in the 10th and 5th Circuits since 2023), this decision marks a significant divergence from precedent set in similar cases reviewed by the 6th Circuit. In addition to suggesting that the 6th Circuit may no longer be as favorable to health plan defendants in the future, the decision may encourage more individuals to challenge coverage denials through ERISA claims against their health plan administrators.

Background and case context

This 6th Circuit appellate case involved a coverage dispute between a health plan and one of its members regarding the denial of continued coverage for mental health services at a residential treatment center. The services were provided to the member's minor son, who the plaintiff alleged had behavioral health issues requiring long-term care at a residential treatment facility. The claims administrator initially approved coverage for a 21-day stay but declined to authorize additional treatment days after its medical reviewer determined that the minor's condition had improved and no longer warranted round-the-clock residential treatment; the administrator then communicated this decision in writing.

The member disagreed with the decision and twice appealed to request continued coverage, arguing that continued residential care was medically necessary and including his son's complete medical records and physician notes. However, the claims administrator again upheld the denial of care after thoroughly reviewing the minor's medical record and medical necessity criteria. Following the second unsuccessful appeal, the member challenged the denial in federal court, alleging that his claims administrator and health plan had both violated ERISA by arbitrarily and capriciously denying coverage for medically necessary treatment and breached the Mental Health Parity and Addiction Equity Act (MHPAEA) by treating mental health benefits in a manner less comparable than medical or surgical benefits. The district court granted the joint motion for summary judgment filed by the health plan and the claims administrator on both claims, finding that the benefits decision was not arbitrary and capricious under ERISA and that the plaintiff had not established any MHPAEA violation.

The plaintiff’s appeal to the 6th Circuit, however, proved more successful. While the appellate panel affirmed the district court’s determination regarding the MHPAEA claim — namely, that the plaintiff failed to identify record evidence of the health plan’s treatment limitations on medical and surgical care and demonstrate how those limitations differ from or are less restrictive than the mental health care treatment limitations applied to the plaintiff — it came to a contrary conclusion regarding the ERISA claim. The panel characterized the decision to deny coverage as arbitrary and capricious, finding that the health plan had:

• • Ignored the opinions of the minor’s treating clinicians.
  • Selectively reviewed the record by cherry-picking portions of medical records while ignoring adverse evidence.
  • Provided a deficient explanation for denying additional coverage.

The court came to this conclusion even though internal notes indicated the claims administrator reviewed the records provided and addressed and rejected the treating physicians’ opinions in its denial letters. The panel noted that a claims administrator is required to address its departure from the treating physicians’ recommendations “head on” and explain why it chose to credit some evidence over other evidence — a major departure from existing 6th Circuit case law. The panel ultimately vacated the district court’s determination regarding the ERISA claim, remanding the matter to district court with instructions that the health plan should be ordered to conduct a “full and fair review of the requested coverage.”

Implications for health plans and third-party administrators

Prior to this decision, the 6th Circuit served as a favorable venue for health plans involved in claims denial cases due to its robust body of favorable case law. However, the panel’s ruling indicates that the 6th Circuit may be pivoting to align with viewpoints advanced in the 5th and 10th Circuits over the last several years.

A 10th Circuit court established adverse precedent during a 2023 case involving an ERISA dispute between a health plan and two of its members, who alleged that the plan had ignored crucial evidence when declining to cover continued residential behavioral treatment for their child. The court ruled in the members’ favor, finding that health plans must provide detailed explanations for denying coverage requests that include responses to issues raised by providers (even if those providers are non-treating experts). The 5th Circuit adopted similar reasoning in 2024, when a court determined that denial letters must contain detailed information, such as references to medical records, to satisfy ERISA’s “meaningful dialogue” standard. The court further noted that claims administrators must “weigh the evidence” provided by plaintiffs in their appeals and respond to “potential counterevidence from medical opinions” provided by treating providers.

These points are echoed in the recent 6th Circuit decision and similarly appear to impose very specific requirements for denial-of-coverage communications. However, the recent opinion is particularly concerning, as it seems to misinterpret the 6th Circuit’s case law. The panel concludes that plan administrators must “address the relevant aspects of a treating doctor’s opinion head on, not merely cite other, collateral portions of that opinion,” citing DeLisle v. Sun Life Assur. Co. of Canada in support. But in DeLisle, the court explicitly states that “the treating physician rule does not apply in ERISA cases” and asserts that plan administrators “may not arbitrarily ignore treating physicians.” (558 F.3d 440, 445 (6th Cir. 2009)) DeLisle says nothing about addressing opinions “head on,” nor does it even impose a requirement to cite collateral portions of any opinion. On a similar note, the panel held that a reviewer undertakes a “selective review” when it credits positive evidence in the record over negative evidence when the reviewer does not explain why it chooses to credit that evidence. The 6th Circuit imposes a new requirement to specifically address and explain why a treating physician’s evidence is rejected within the denial letter.

The panel also found fault with the fact that the health plan did not directly reference all relevant medical necessity criteria — in this case, the Milliman Care Guidelines (MCG) — when issuing its coverage denials. The letters in this case stated that the minor was “safe” and “stable,” referring to the MCG. But the court clarified in its opinion that whether the minor “remained safe or stable was not the dispositive question under the [] Guideline for discharge” because the health plan needed to also address whether his “‘[f]unctional status’ was ‘acceptable’ and his ‘needs’ were ‘manageable’ at an ‘available lower level of care.’” Instead, the claims administrator needed to explain why it decided to deny treatment after its initial approval under every MCG’s criterion for residential treatment center care. This reflects a rigid view of what content must be included in a denial letter and ignores that denial letters must comply with reading level guidelines.

This ruling appears to mandate that, when issuing denial-of-coverage communications, health plan administrators must explicitly acknowledge and refute treating physicians’ recommendations and include thorough reference to relevant medical criteria when explaining why a member’s condition does not warrant the claimed level of care — none of which is currently required by federal regulation or guidance. While potentially subject to reconsideration by a higher court, this decision could inspire more plan members to challenge their health plans under ERISA by alleging that coverage denials issued without such contextual details are arbitrary and capricious. At the very least, it indicates that the 6th Circuit may no longer be as sympathetic to health plans engaged in similar ERISA disputes.

Given the potentially profound implications of this decision for health plans and claims administrators beyond the behavioral health context, we highly recommend that all health plan administrators involved in ERISA-related denial litigation reach out to their preferred Crowell & Moring health care lawyer (or any of the authors listed below) for further insight on how to adjust their best practices for claims denial communications.