Ninth Circuit Affirms ERISA Violation for Mental Health Claim Denial but Orders Reconsideration, Not Benefits

In Oksana B. v. Premera Blue Cross, et al., No. 24-560, 2025 WL 1734443 (9th Cir. June 23, 2025), an unpublished memorandum decision, the Ninth Circuit addressed a dispute over denied mental health benefits for a minor child under an ERISA-governed health plan. The court affirmed in part, reversed in part, vacated in part, and remanded, offering key guidance on ERISA’s “meaningful dialogue” standard.

The plaintiffs—parents and their minor child—sought coverage for two mental health treatment programs under an employer-sponsored health plan administered by Premera Blue Cross: (1) Second Nature, a wilderness therapy program, and (2) Catalyst, a residential treatment facility. Premera denied both claims. The family challenged the denials under ERISA, and the district court ruled in their favor, awarding attorneys’ fees and ordering benefits for Catalyst.

The Ninth Circuit agreed with Premera that its denial of the Second Nature claim did not constitute an abuse of discretion. The court emphasized that the plan explicitly excluded coverage for “wilderness … programs or activities.” Second Nature, by its own description, provides “wilderness therapy,” falling squarely within that exclusion. The court also rejected the family’s argument that Premera failed to engage in a “meaningful dialogue” regarding the denial. It found that Premera’s rationale—categorizing the treatment as excluded wilderness programming—was clearly conveyed, and the family never directly rebutted this classification.

In contrast, the court found that Premera did violate ERISA when it denied the Catalyst claim. Specifically, the court cited two “meaningful dialogue” failures:

Failure to Address Inconsistency: The insurer had covered the first month at Catalyst but denied subsequent months without explaining what had changed. Premera never acknowledged the family’s argument that the basis for coverage had not shifted, violating ERISA’s requirement for responsive, reasoned denials.

Failure to Address Medical Evidence: The family submitted letters from two treating therapists supporting the necessity of residential treatment. Premera denied the claim without addressing these letters or explaining why they were insufficient. This silence also ran afoul of ERISA’s dialogue requirement.

Despite finding an ERISA violation, the court declined to award benefits outright. Citing Demer v. IBM Corp. LTD Plan, the court ruled that the appropriate remedy was a remand to Premera for a renewed evaluation of the Catalyst claim. The court noted that while the family’s evidence was strong, it was not conclusive. For example, an independent reviewer disputed the necessity of continued treatment, and the therapists who supported the claim had not treated the minor after admission to Catalyst.

Because the district court’s attorneys’ fees award was based on a now-partially-reversed decision, the Ninth Circuit vacated the fee award and remanded for reconsideration in light of the appellate ruling.

This case underscores that ERISA’s procedural safeguards, particularly the requirement for a meaningful dialogue in benefit denials, remain critical—especially when medical necessity is disputed. However, even when violations occur, courts may not order benefits unless entitlement is clearly established. Plan participants and their advocates should ensure strong, consistent documentation throughout the appeals process to avoid remand and delay.