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March 31, 2023

Ninth Circuit Rejects “Reprocessing” as a Remedy for Denial of Benefits Claims in ERISA Cases

In a closely tracked and often cited case—Wit et al. v. United Behavioral Health—a Ninth Circuit panel in January 2023 reversed a Northern District of California ruling that had permitted plaintiffs to seek reprocessing of denied mental health claims under ERISA plans. Plaintiffs argued that United Behavioral Health improperly developed and relied on guidelines that were inconsistent with the terms of plaintiffs’ health plans. The case involved thousands of plans and the potential reprocessing of more than 65,000 benefit claims. 

The Ninth Circuit held that the district court abused its discretion in certifying the denial of benefits claims as class actions, including because it used certification to expand the rights provided by ERISA. The court also made a number of other rulings that will have a significant impact on ERISA and class litigation, including that the futility exception to the exhaustion requirement does not apply to contractual exhaustion requirements such as those in ERISA plans. A petition for rehearing en banc in the Ninth Circuit is pending. 


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