Sixth Circuit Finds Termination of Residential Mental Health Coverage Arbitrary and Capricious Under ERISA but Affirms Dismissal of Parity Act Claim

In T.E. v. Anthem Blue Cross & Blue Shield, No. 25-5407, —F.4th—-, 2026 WL 172050 (6th Cir. Jan. 22, 2026), the Sixth Circuit held that Anthem Blue Cross and Blue Shield acted arbitrarily and capriciously under ERISA when it terminated coverage for a minor’s residential mental health treatment after initially approving that care but affirmed summary judgment for Anthem on the plaintiff’s Mental Health Parity and Addiction Equity Act (MHPAEA) claim. The court vacated the district court’s ERISA ruling and remanded with instructions that the claim be returned to Anthem for a full and fair review.

The plaintiff enrolled his son, C.E., in a residential treatment center after years of unsuccessful outpatient, partial hospitalization, and inpatient interventions for serious mental health and behavioral disorders. Anthem initially approved coverage for residential treatment under its medical necessity guidelines and paid for the first 21 days. Despite continued behavioral dysregulation, aggression, and functional impairment, Anthem later denied further coverage, asserting that residential treatment was no longer medically necessary. Anthem upheld the denial through two internal appeals.

Applying arbitrary-and-capricious review, the Sixth Circuit emphasized that ERISA requires reasoned decisionmaking, which has both procedural and substantive components. The court focused on procedural deficiencies and concluded that Anthem’s decision failed at that threshold level.

First, the court found that Anthem ignored the opinions of C.E.’s treating clinicians, all of whom supported continued residential treatment. The Sixth Circuit reiterated its long-standing rule that while plan administrators are not required to defer to treating physicians, they may not summarily reject treating-provider opinions without explanation. Here, Anthem adopted the conclusions of in-house physician reviewers who conducted only cursory file reviews and failed to explain why they disagreed with treating clinicians who had evaluated C.E. in person. Anthem’s denial letters likewise failed to acknowledge or address those opinions, a defect the court characterized as a hallmark of arbitrary-and-capricious decisionmaking.

Second, the court concluded that Anthem selectively reviewed the administrative record, citing favorable snippets while ignoring substantial contrary evidence. The court highlighted multiple instances where Anthem’s reviewers quoted isolated observations suggesting cooperation or stability while disregarding contemporaneous records documenting aggression, self-harm, refusal to follow instructions, and significant dysfunction in daily living. In some cases, Anthem’s reviewers misstated the record by presenting tentative or qualified observations as evidence of improvement. The court stressed that cherry-picking evidence and ignoring key adverse facts violates ERISA’s requirement of a full and fair review.

Third, the court found that Anthem failed to adequately explain its reversal from approving residential treatment to denying continued coverage. Anthem’s stated rationale—that C.E. was no longer at risk of serious harm requiring 24-hour care—was inconsistent with both its initial approval and the governing medical necessity guideline. Anthem had initially approved treatment based on C.E.’s mood disorder and executive functioning deficits, not imminent danger. Moreover, the guideline required consideration of multiple discharge criteria, most of which did not turn on risk of harm alone. Anthem’s harm-based explanation therefore failed to address the relevant standards and did not rationally justify its change in position.

The court also criticized Anthem’s denial letters and physician reports as conclusory and disconnected from the plan’s criteria. Bare assertions that a claimant is “stable” or “improved,” without reference to baseline functioning or lower-level care suitability, were insufficient under ERISA. The court emphasized that conclusory statements are not explanations and cannot substitute for reasoned analysis.

As to remedy, the Sixth Circuit declined to award benefits outright. Although the plaintiff presented significant evidence supporting medical necessity, the court concluded that Anthem’s errors were primarily procedural. In such circumstances, remand—not an award of benefits—is the appropriate remedy to allow the administrator to conduct a proper review.

Finally, the court affirmed summary judgment for Anthem on the MHPAEA claim. The plaintiff alleged that Anthem mishandled mental health claims more restrictively than medical or surgical claims but failed to identify record evidence demonstrating how Anthem applied treatment limitations to medical or surgical benefits in practice. Without a meaningful comparator, the plaintiff could not establish an as-applied parity violation.