Fifth Circuit: Insurer’s Denial of Eating Disorder Benefits Violates ERISA

October 09, 2024

On September 19, 2024, in Dwyer v. United Healthcare Ins. Co., the United States Court of Appeals for the Fifth Circuit (the court) found that defendant United Healthcare (UHC) improperly denied benefits for the continuing treatment of a participant’s anorexia nervosa, disregarding both the plan’s own coverage terms and its claims and appeals procedures.

In this case, ED, the preteen dependent of plaintiff Kelly Dwyer, received inpatient care at a residential treatment facility that specializes in the treatment of eating disorders. After four months, UHC stepped down her treatment to partial hospitalization. Dwyer appealed this decision, but UHC denied the appeal. Despite ED’s continuing struggles, the facility’s doctors approved a three-day pass at home, during which her anorexia nervosa symptoms continued and her weight dropped. Nevertheless, UHC denied continued partial hospitalization treatment and discharged ED entirely in favor of outpatient-only treatment. ED’s doctors immediately objected, and Dwyer submitted an appeal, but UHC denied it on the grounds that the treatment was not medically necessary.

Simultaneously, Dwyer contested UHC’s payment of claims from the facility as out-of-network. The facility was covered by UHC’s so-called “MultiPlan benefit” and thus had a predetermined contract for services and rates. Dwyer’s plan through UHC participated in the MultiPlan program. UHC initially paid some claims from the facility at the MultiPlan rate, but most of them were paid as out-of-network. Dwyer repeatedly questioned UHC on this issue and eventually filed a detailed formal appeal. UHC acknowledged receipt of the appeal but did not respond.

First, the court rejected UHC’s argument regarding the lack of medical necessity for ED’s partial hospitalization treatment and ruled that “[UHC’s] denial letters are not supported by the underlying medical evidence. In fact, they are contradicted by the record.”

Second, the court emphasized that ERISA requires a full and fair review of benefit denials, including a “meaningful dialogue” between the administrator and the beneficiary. Here, the court found that UHC's denial letters fell short of these requirements by failing to explain how ED’s medical condition was evaluated under the plan’s provisions. In other words, given that UHC was provided with extensive information, its conclusory responses without citing the medical record did not afford a full and fair review.

Third, the court found that UHC failed to follow the administrative process by ignoring Dwyer’s appeal regarding the MultiPlan issue. (Incidentally, the court determined that UHC should have paid all facility claims at the negotiated MultiPlan network rate.)

In addition to causing potential issues under the MHPAEA, the exclusion and denial of benefits for the treatment of eating disorders is the subject of much ERISA litigation. Plan sponsors should ensure their claims administrators are exercising their discretionary authority carefully when adjudicating these (and other) claims and communicating their determinations to participants in a comprehensive manner. Benefit denial notices should be written in a way the average participant understands and should specify all information required by ERISA.

Dwyer v. United Healthcare Ins. Co.