Second Circuit Affirms Denial of Residential Mental Health Treatment and Limits Reach of Wit Under Arbitrary-and-Capricious Review

In Savage v. Rabobank Med. Plan, No. 24-2759-CV, 2026 WL 303600 (2d Cir. Feb. 5, 2026), the Second Circuit affirmed summary judgment in favor of an ERISA medical plan, holding that the plan administrator did not act arbitrarily and capriciously in denying continued residential and partial hospitalization treatment for a dependent suffering from a severe eating disorder and related mental health conditions. The decision reinforces the breadth of deference afforded to administrators operating under a discretionary grant and sharply cabins efforts to use Wit v. United Behavioral Health to invalidate level-of-care guidelines outside the Ninth Circuit.

The plan at issue delegated discretionary authority to UnitedHealthcare and its behavioral health administrator, United Behavioral Health (UBH), to interpret plan terms and make final benefit determinations, including level-of-care decisions governed by UBH’s internal guidelines. The dependent had a long history of eating disorder treatment, including outpatient care, prior residential admissions, and repeated relapses. UBH initially authorized residential treatment and later partial hospitalization but ultimately determined that the claimant no longer met criteria for those higher levels of care and could be safely treated in a less intensive setting. Despite the denial of coverage, residential treatment continued at the facility, paid entirely out of pocket.

On appeal, the claimant advanced three principal arguments: (1) that UBH was precluded from relying on its level-of-care guidelines in light of Wit; (2) that the benefit denials were arbitrary and capricious when viewed against the treating providers’ recommendations; and (3) that UBH’s failure to adjudicate later post-service claims required de novo review and an award of benefits.

The Second Circuit rejected each argument, beginning with the attempted reliance on Wit. The court first held that any collateral estoppel theory based on Wit was forfeited because it had not been raised in the district court. But the panel went further, explaining that Wit would not compel reversal even if properly preserved. Citing the Ninth Circuit’s subsequent decision in Wit, the Second Circuit emphasized that while some ERISA plans require treatment to be “consistent with generally accepted standards of care,” they do not mandate coverage for all care that satisfies those standards.

The court next addressed the sufficiency of the administrative record under deferential review. The claimant argued that UBH failed to consider all submitted evidence and that the district court improperly discounted the treating clinicians’ detailed recommendations for continued residential and partial hospitalization treatment. The panel acknowledged that the record contained evidence supporting continued higher-level care, including provider opinions describing ongoing risk and fragility. However, it also emphasized that the record included countervailing evidence supporting UBH’s conclusions, such as weight restoration, treatment participation, and clinical improvement at various points.

Under arbitrary-and-capricious review, the court reiterated, the question is not whether the claimant’s evidence is persuasive or even compelling, but whether the administrator’s decision is supported by substantial evidence and is reasoned and principled. Here, UBH relied on its guidelines, peer physician reviews, and direct communications with the facility. That was sufficient to withstand judicial scrutiny.

Finally, the court rejected the argument that UBH’s failure to issue a decision on later post-service claims triggered de novo review. The claimant characterized the post-service submission as a new claim requiring a fresh merits determination, arguing that the absence of a decision eliminated any discretionary judgment to which the court could defer. The Second Circuit disagreed, concluding that the post-service submission largely repackaged claims for services previously denied for overlapping periods. ERISA, the court explained, requires only one mandatory appeal, and administrators are not obligated to repeatedly re-adjudicate duplicative claims simply because they are resubmitted in a different procedural posture. The Second Circuit affirmed the district court’s judgment granting summary judgment to the plan and upholding the denial of benefits under the arbitrary-and-capricious standard of review.