When upgrading my cluster of ESX hosts I noticed that as soon as I updated one host, HA would fail to work for that host. Errors occurred which were related to the different versions of VMware HA in use at the time.
To alleviate this issue I disabled VMware HA, updated the rest of my hosts using VMware Update Manager. Once all hosts were at the same level it was now safe to re-enable VMware HA. If I was moving VMs to the newly updated host, the fact that VMware HA was not running on that host properly caused VMotion to fail its tests. Disabling VMware HA until the upgrade process was completed also fixed that issue.
When using VMware Update Manager to upgrade hosts you may need to disable VMware HA until all hosts in the cluster are updated.